Big-time earning reports earlier this week, but for the most part, we have seen very little movement. In this piece, I am looking at the top reports from Tuesday, with my takeaways, as I look for stocks to buy and to add to My CAPS picks.
Does Diagnostics Really Matter?
Johnson & Johnson (NYSE:JNJ) has traded mostly flat on the week after beating on both the top and bottom line. The company’s revenue grew 8.5% year-over-year and they increased EPS guidance to $5.43, a 15% year-over-year gain.
For a company with revenue of $68.5 billion, this growth is simply incredible, and it was led by global pharmaceutical sales growth. With the stock trading at 15.61 times earnings, I see no reason why investors would think it is too expensive. Therefore, I can’t find a reason why the stock would not be trading significantly higher.
Moreover, the initial headlines for the quarter indicate that weakness, or a lack of stock strength, might be in response to a struggling medical device business. However, it grew 9.6% in the quarter. Therefore, with Johnson & Johnson (NYSE:JNJ) growing significantly faster than peers Pfizer Inc. (NYSE:PFE), Eli Lilly & Co. (NYSE:LLY), etc. I think it is a clear buy!
Blame it on the Weather?
The Coca-Cola Company (NYSE:KO) traded lower by 2% after its report, and rightfully so. Not only did revenue miss expectations, but Europe’s unit case volume was lower by 4% year-over-year.
The Coca-Cola Company (NYSE:KO) has faced increased competition from beverage makers who have turned their focus to healthier alternatives, including flavored water. Rather than The Coca-Cola Company (NYSE:KO) admitting to this problem, the company blamed the weak quarter on weather! Since when does weather prevent people from drinking liquids?
Overall, I view The Coca-Cola Company (NYSE:KO)’s quarter as highly problematic. They have remained the top player in the beverage industry for decades, and it appears as though new players in the field are beginning to steal its share. Thus, I wouldn’t buy.
A Massive Beat, But a Lower Stock
In my opinion, Goldman Sachs Group Inc (NYSE:GS) produced the most impressive quarter of the day. Not only did they beat on the top-line, but with an EPS of $3.7, they beat earning expectations by $0.89, as earnings nearly doubled.
Of the company’s $8.61 billion in revenue, it saw investment banking revenue increase 29% to $1.55 billion; its underwriting revenue increased 45% to $1.07 billion; and trading revenue increased 12% year-over-year to $2.46 billion.