Why Are These Four Stocks Trending Today?

On the last full trading day before Christmas, shares of Micron Technology, Inc. (NASDAQ:MU), Nike Inc (NYSE:NKE), Lindsay Corporation (NYSE:LNN), and Bed Bath & Beyond Inc. (NASDAQ:BBBY) are each trending on the back of financial results and/or guidance updates. Let’s take a closer look.

In addition, let’s analyze hedge fund sentiment towards some of these stocks. In the eyes of most traders, hedge funds are assumed to be underperforming, old investment tools of the past. While there are more than 8000 funds in operation at present, Hedge fund experts at Insider Monkey look at the aristocrats of this group, around 730 funds. Contrary to popular belief Insider Monkey’s research revealed that hedge funds underperformed in recent years because of their short positions as well as the huge fees that they charge. Hedge funds managed to outperform the market on the long side of their portfolio. In fact, the 15 most popular small-cap stocks among hedge funds returned 102% since the end of August 2012 and beat the S&P 500 Index by 53 percentage points (see the details here).

Shareholders of Micron Technology, Inc. (NASDAQ:MU) received some coal in their stockings yesterday after the semiconductor company reported its latest earnings results. For the first quarter of fiscal 2016, Micron posted earnings of $0.24 per share on revenue of $3.35 billion, exceeding EPS estimates by $0.01 but missing revenue expectations by $110 million. Due to oversupply and increased competition, Micron’s gross margin shrank by 2.0 percentage points quarter-over-quarter to 25% and its outlook is a little disappointing with management expecting a second quarter loss of $0.05 to $0.12 per share and gross margin of 17-20%, substantially below analyst earnings estimates of $0.22 per share and first quarter’s 25% gross margin. Hedge fund sentiment towards Micron Technology, Inc. (NASDAQ:MU) is mildly bearish, with the number of funds with long positions in the company falling by eight to 71 during the third quarter. Shares of Micron are off by 6.5% in the first hour of trading.

Nike Inc (NYSE:NKE) continued its streak of bottom-line earnings beats yesterday and shares of the athletic apparel maker are now at an all-time high of over $135 per share. For its second fiscal quarter, Nike reported earnings of $0.90 per share, beating estimates by $0.04 per share, and sales of $7.69 billion, up by 4.2% year-over-year. Gross margin rose by 0.5 percentage points from this time in 2014, powered by higher selling prices as well as contained costs. Most encouragingly, Nike’s future demand is strong, with management announcing that the company’s worldwide futures orders were up by 15% year-over-year on a dollar basis and up 20% on a constant currency basis. Among the 59 elite funds that owned shares of Nike Inc (NYSE:NKE) is Stephen Mandel’s Lone Pine Capital with a holding of 5.7 million shares as of the end of September.

On the next page, we examine Lindsay Corporation, and Bed Bath & Beyond Inc.
Lindsay Corporation (NYSE:LNN), a leading provider of infrastructure products and irrigation systems, is trending today after reporting first-quarter EPS of $0.62 on revenue of $121.62 million. Although the company’s sales missed estimates by $7.52 million, Lindsay’s EPS exceeded expectations by $0.07 per share. The strong dollar and weak Brazilian economy had something to do with the top-line miss while better-than-expected gross margins of 28.3% (versus last year’s 27.4%) had a positive impact on the company’s profit. CEO Rick Parod said:

“The irrigation markets continue to be constrained by lower commodity prices, and foreign exchange rates continue to negatively affect international sales. While it appears we are at or near the bottom of the cycle, we expect the market environment will remain challenging at least through 2016. We do not expect to have visibility into the primary selling season until February or March. Longer term, drivers for the Companys markets of population growth, expanded food production, efficient water use, and infrastructure upgrades and expansion, support our expectation for growth.”

A total of 11 funds from our database owned shares of  Lindsay Corporation (NYSE:LNN) at the end of the third quarter, down by two from the end of the second quarter.

Although it didn’t report quarterly earnings, Bed Bath & Beyond Inc. (NASDAQ:BBBY) shares are down substantially due to the company issuing disappointing third-quarter guidance. For the quarter, Bed Bath & Beyond Inc. (NASDAQ:BBBY) now expects net sales growth of 0.3% year-over-year, off substantially from its previous guidance of 1.8%-4%, and EPS in the range of $1.07-$1.10, down from the previous guidance of $1.14-$1.21. Sales were weak because comparable store sales declined 0.4% year-over-year.

CEO Steven Temares said:

“Our performance in the third quarter reflects the recent trends we have been experiencing. On the one hand we experienced softer in-store transaction counts, and on the other hand sales from our customer-facing digital channels demonstrated strong growth, in excess of 25%. These mixed results were also impacted by the overall softness reported in the macro-retail environment during the quarter. As the retail environment continues to evolve, we remain focused on positioning our Company for long-term success.”

Disclosure: none