Headline-Making Stocks of the Day: Zynga, Fox, Metlife, More

The markets have rallied on Thursday following a 3% jump in oil prices. Many of the major companies making headlines today are due to the announcement of their latest quarterly financial results. This article will examine the earnings reports of five such companies: Zynga Inc (NASDAQ:ZNGA), Metlife Inc (NYSE:MET), Weight Watchers International, Inc. (NYSE:WTW), Twenty-First Century Fox Inc (NASDAQ:FOX), and Becton Dickinson and Co (NYSE:BDX) and see how they fared during the quarter. We will also take a look at what hedge funds think of these companies.

Our research has shown that the best strategy is to follow hedge funds into their small-cap picks. This approach can allow monthly returns of nearly 95 basis points above the market, as we determined through extensive backtests covering the period between 1999 and 2012 (see the details here).

Zynga Soaring on Beat

Zynga Inc (NASDAQ:ZNGA)’s stock has soared by more than 10% this morning after the company posted first quarter revenue of $187 million yesterday, surpassing Wall Street’s estimate of $162.19 million. The social game development company reported a loss of $0.01 per share, better than the expected loss of $0.02 per share. The earnings beat was achieved thanks to the company adopting some cost-cutting strategies after suffering some poor results that sent shares crashing to less than $2.00 in early-February. In March, Frank Gibeau became the CEO of the company after co-founder Mark Pincus stepped down from the role. In the earnings call, Gibeau said that he was “surprised” by the available operating leverage at Zynga which could be used to unlock new resources, and improve planning and execution.

Out of the 785 funds tracked by us, 20 held positions in Zynga Inc (NASDAQ:ZNGA) at the end of last year.

Metlife Suffers Due to Weak Hedge Fund Performance

Metlife Inc (NYSE:MET) is 1.29% in the red today after the company reported first quarter EPS of $1.20, worse than the estimated $1.38. Metlife faced difficulties in its private equity and hedge fund investments, with its variable investment income coming in at just $165 million, down from $371 million in the first quarter of 2015, mainly due to weak hedge fund performance. The company faced a decline in earnings in most regions. The insurance company reported revenue of $16.61 billion, missing the Zacks estimate of $17.07 billion. On Tuesday, the Financial Industry Regulatory Authority, a securities regulator, announced that Metlife will pay $25 million in penalties for allegedly misleading its customers about a type of retirement investment plan.

Among the funds that we track, 41 held long positions in Metlife Inc (NYSE:MET) at the end of 2015, with a total value of approximately $1.7 billion.

We will discuss the results of Weight Watchers, Fox, and Becton Dickinson on the next page.

Weight Watchers Enjoys the “Oprah Effect”

Weight Watchers International, Inc. (NYSE:WTW)’s stock is more than 3.5% in the green today after the company reported a loss of $0.17 per share, better than the estimated loss of $0.18 per share. The weight management services company’s revenue came in at $306.9 million for the quarter, narrowly missing the consensus of $308.9 million. Memberships grew by 4.8% to 3.1 million in the quarter. For the full year, the company now expects EPS in the range of $0.80-to-$1.05. Analysts think that the company’s partnership with Oprah Winfrey has indeed boded well for the company as evidenced by the solid membership growth in a challenging environment. Ms. Winfrey bought a 10% stake in the company in October.

There were 24 hedge funds in our database with positions in Weight Watchers International at the end of 2015. Adam Usdan‘s Trellus Management added a new stake of 30,500 shares of Weight Watchers to its portfolio during the first quarter.

Twenty-First Century Fox Beats Estimates

Shares of Twenty-First Century Fox Inc (NASDAQ:FOX) have gained 0.27% today after the media company posted solid results for its third quarter of fiscal year 2016, thanks to strong affiliate fees, ads revenue, and the success of the movie ‘Deadpool’, which was released in February. The media company posted EPS of $0.47, in-line with estimates. Revenue increased by 5.7% year-over-year to $7.2 billion during the fiscal quarter, topping estimates of $7.1 billion. Revenue from the cable business, which accounts for half of the company’s revenue, grew by 10% to $3.94 billion. In an earnings call, Fox’s CEO, James Murdoch, confirmed that the company is in talks with Hulu regarding a new online TV service partnership.

Overall, 31 hedge funds in our database had positions in Fox as of the end of last year.

Becton Dickinson Rising on Medical Unit Sales

Becton Dickinson and Co (NYSE:BDX)’s stock has gained more than 2% today after the company reported EPS of $2.18 for the second quarter of fiscal year 2016, beating analysts’ consensus estimate of $2.02. Quarterly revenue increased by 5% year-over-year to $3.07 billion, meeting analysts’ expectations. The New Jersey-based medical technology company reported that sales in its medical unit skyrocketed by 93% to $2.13 billion. For the full year, the company expects EPS in the range of $8.50 to $8.57, better than its previous EPS guidance range of $8.37 to $8.44.

First Eagle Investment Management holds more than 1.39 million shares of the company as of March 31, having inched its position up by 2% during the first quarter.

Disclosure: None