Stocks to Watch Wednesday: Exponent, Discover Financial, Canadian Pacific Railway, More

The U.S market is showing signs of positivity on Wednesday, following strong earnings results from Microsoft Corporation (NASDAQ:MSFT) and Morgan Stanley (NYSE:MS). Some other companies that are making headlines on the back of their latest quarterly results are Allied World Assurance Co Holdings, AG. (NYSE:AWH), Blackhawk Network Holdings Inc (NASDAQ:HAWK), Canadian Pacific Railway Limited (USA) (NYSE:CP), Discover Financial Services (NYSE:DFS), and Exponent, Inc. (NASDAQ:EXPO). We’ll dig deeper into these companies’ latest reports to find out how they performed last quarter. We’ll also see what investors in our database think about them.  

While there are many metrics that investors can assess in the investment process, hedge fund sentiment is something that is often overlooked. However, hedge funds and other institutional investors allocate significant resources while making their bets and their long-term focus makes them the perfect investors to emulate. This is supported by our research, which determined that following the small-cap stocks that hedge funds are collectively bullish on can help a smaller investor beat the S&P 500 by around 95 basis points per month (see more details here).

Allied World Assurance Beats Estimates

Allied World Assurance Co Holdings, AG. (NYSE:AWH) is in the spotlight after posting better than expected second quarter results after the closing bell on Tuesday. The Swiss company posted EPS of $0.91, dwarfing the estimates of $0.39. Revenue of $738.5 million also sharply beat the consensus estimate of $621.16 million. Allied World Assurance’s CEO Scott Carmilani said in a statement that the strong quarterly results were driven by the firm’s underwriting and investment portfolios. Mr. Carmilani added that with a combined ratio of 92.3%, the company’s North American business is showing significant strength. Among the funds tracked by Insider Monkey, 14 of them were bullish on Allied World Assurance Co Holdings, AG. (NYSE:AWH) at the end of the first quarter of 2016. Allied World shares have jumped by over 13% today on the back of the impressive results.

Blackhawk Network Narrows Losses

Blackhawk Network Holdings Inc (NASDAQ:HAWK)‘s shares have gained over 4% today after the company reported a second quarter loss of $11.3 million, or $0.20 per share, beating the estimates of a loss of $0.25 per share. The California-based prepaid payment network company’s revenue came in at $183.7 million for the quarter, narrowly topping the estimated $183.6 million. In a press statement, Blackhawk’s CEO Talbott Roche said that strong performance incentives and a lower than expected EMV-related impact on the U.S retail segment helped the company deliver sound financial results. Claus Moller’s P2 Capital Partners was one of the 35 investors in our database that held long positions in Blackhawk Network Holdings Inc (NASDAQ:HAWK) at the end of the first quarter.

On the next page we’ll discuss how Canadian Pacific Railways, Discover Financial and Exponent performed in their latest quarters.

Canadian Pacific Railways’ Revenue Slips, Company Appoints New CEO

Canadian Pacific Railway Limited (USA) (NYSE:CP) posted second quarter EPS of $2.05, better than the consensus estimate of $2.04. Revenue for the quarter plummeted by 12% year-over-year to $1.45 billion however and missed estimates of $1.47 billion. The Canada-based transcontinental company had already warned of a revenue decline due to lower shipping volumes, the wildfires in Alberta, and a stronger domestic currency. Canadian Pacific Railway also announced the appointment of Keith Creel to the position of CEO. Mr. Creel will succeed Hunter Harrison effective July 1, 2017. CP shares are 3.7% in the green today.

Discover Financial Reports a Profitable Quarter

Discover Financial Services (NYSE:DFS)’s stock is making a move in the wrong direction today, down by 1.68% after the company posted second quarter EPS of $1.47, beating estimates of $1.42. The Riverwoods, Illinois-based payment services company’s aggregate loans jumped by 4% to $71.9 billion, mainly due to growth in student loans and credit card lending. Profit in the quarter jumped by 3% to $616 million. However, revenue for the quarter came in at $2.22 billion, slightly missing the consensus estimate of $2.23 billion. Discover Financial’s CEO said in a statement that the company experienced a “post-recession record” for new card accounts in the quarter.

38 hedge funds in our database were bullish on Discover Financial Services (NYSE:DFS) at the end of March, down from 47 funds a quarter earlier. The aggregate value of those 38 holdings was approximately $1.08 billion.

Exponent Posts Mixed Results, Cuts 2016 Guidance

Exponent, Inc. (NASDAQ:EXPO) is in the spotlight today after the company posted second quarter EPS of $0.43 and revenue of $77.3 million. While the bottom-line results were in-line with expectations, the top-line figure widely missed the consensus estimate of $80.46 million. The California-based company also cut its fiscal year 2016 outlook. Exponent now expects revenue before reimbursements to decline by 1%-to-2% year-over-year for the fiscal year. Underlying growth is also expected to be in the low single digits. Ten hedge funds out of those we track were shareholders of Exponent, Inc. (NASDAQ:EXPO) at the conclusion of the first quarter.

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