Earnings season has unofficially begun with the announcement of Alcoa Inc (NYSE:AA)’s quarterly report, and already we saw some exciting volatility on Tuesday, but are any of these stocks a post-earnings “buy”? In this piece, I am looking at the quarters from four companies, and determining if the movement presents value or a value trap.
Post-Earnings Volatility at its Best
To the naked eye, WD-40 Company (NASDAQ:WDFC)’s Tuesday loss of 0.99% does not qualify as “post-earning movement,” but when you consider its early gains of 10%, you can see that the movement is significant.
WD-40 Company (NASDAQ:WDFC) crushed expectations, beating on both the top and bottom line with sales growth of 7% year-over-year and net income growth of 12% in the same period. Therefore, margins also increased, but in addition, the company boosted its full-year revenue and EPS expectations for the year; significantly higher than the consensus.
So, why did the stock fall from gains of 10% to a loss of 1% throughout the trading day? Honestly, there is no answer to this question; it was an illogical trade as investors took profits. Personally, I love this stock. It is a non-cyclical company that is growing several times faster than GDP, returning a yield over 2%. Hence, I used the pullback as an opportunity to add the stock to both my portfolio and my Motley Fool CAPS.
Great Synergy Creates an Undervalued Stock
Much like WD-40 Company (NASDAQ:WDFC), Wolverine World Wide, Inc. (NYSE:WWW) lost early gains throughout Tuesday’s trading session, but still managed to produce a gain of 3.8% after earnings.
The shoe company significantly beat on the bottom-line with an EPS of $0.46 (beat by $0.12) but then slightly missed on the top-line. The company reaffirmed its revenue guidance, which was in-line with expectations, and represents a 70% gain over 2012.
Wolverine World Wide, Inc. (NYSE:WWW) is a company that is growing rapidly, due to the acquisition of PLG, but is still producing “core” growth of 5% year-over-year. The company’s acquisition of PLG looks to have great synergy and has created a company that is trading at just one times 2013’s sales, with a forward P/E ratio of 17.5. Thus, I think Wolverine is cheap, and I really like it at current levels.
What would an earnings assessment from Tuesday be without the inclusion of Alcoa Inc (NYSE:AA)? Like most quarters, Alcoa Inc (NYSE:AA) traded flat, continues to trade as dead money, and posted a mixed quarter.