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WebMD Health Corp. (WBMD), Wells Fargo & Co (WFC): Are These 4 Post-Earning Movers a Buy?

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Earnings season has officially begun, and there were several companies that either reported earnings or provided preliminary earnings, which created a significant amount of stock movement. In this piece, I am looking at the most volatile of stocks on Friday, determining if any are a post-earnings buy.

Wells Fargo & Co (NYSE:WFC)

Solid Quarter, But Worthy of a Premium?

Wells Fargo & Co (NYSE:WFC) has the largest market capitalization of any bank in the U.S., and after earnings, the stock ticked higher by 1.55%. The company’s quarter was solid, as it beat on both the top and bottom line with flat revenue and a 14% rise in its EPS year-over-year.

What stuck out most to me was a decline in charge-offs. This decline reflects an improving credit quality for the bank. However, with both Bank of America Corp (NYSE:BAC) and Citigroup Inc (NYSE:C) trading below their book value per share and JPMorgan Chase & Co. (NYSE:JPM) creating double-digit revenue growth, it’s hard for me to pay a premium to invest in Wells Fargo & Co (NYSE:WFC).

Moreover, Wells Fargo & Co (NYSE:WFC) is the mortgage leader, controlling 22% of the market. To many, this might be a positive. But with uncertainty surrounding rates, and the company heavily dependent on this business, I think the stock’s premium is too much in an industry that is quite cheap.

Business Volume on the Decline

United Parcel Service, Inc. (NYSE:UPS) saw a decline of almost 6% on Friday after its preliminary earnings report. United Parcel Service, Inc. (NYSE:UPS) essentially issued a warning, lowering EPS guidance for Q2 and for the full year by about 10%. The company didn’t really jump into specifics, but did mention that package volume growth is slowing.

To me, the EPS is irrelevant compared to package volume, as EPS is a measure of efficiency while package volume notes operational strength. Sure, the industrial economy has been weak, and we all knew it, but volume is a metric that everyone believed was beginning to stabilize. As a result, at 1.59 times sales and 16 times future earnings, United Parcel Service, Inc. (NYSE:UPS) is slightly more expensive than the S&P 500. Thus, I’d seek value elsewhere.

Still Need More Proof?

WebMD Health Corp. (NASDAQ:WBMD) was the biggest gainer of the day, with a 25.63% pop after preliminary earnings. First, the company said it expects revenue between $124 and $125 million; the Street was expecting $115 million in Q2 sales. Then, WebMD Health Corp. (NASDAQ:WBMD) disclosed that it would earn $0.05 per share, which shows a significant gain from last year’s $0.11 loss.
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