These Five Stocks Are Trending Following Earnings; Here’s What You Should Know

Although the S&P 500 is trading only slightly lower, the NASDAQ is sharply in the red due to several tech earnings reports released yesterday after the closing bell. In this article, we take a look at three of these tech companies, particularly Apple Inc. (NASDAQ:AAPL), Twitter Inc (NYSE:TWTR), and eBay Inc (NASDAQ:EBAY), as well as we will discuss the earnings reports of several other non-tech companies such as Chipotle Mexican Grill, Inc. (NYSE:CMG), and Buffalo Wild Wings (NASDAQ:BWLD). Let’s also examine what hedge funds think of each of these five stocks.

Hedge fund sentiment is an important metric for assessing the long-term profitability. At Insider Monkey, we track over 700 hedge funds, whose quarterly 13F filings we analyze and determine their collective sentiment towards several thousand stocks. However, 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).

Apple Inc. (NASDAQ:AAPL)’s stock opened 8% lower after the tech giant reported second fiscal quarter earnings of $1.90 per share on sales of $50.6 billion, missing the estimates by $0.10 and $1.37 billion, respectively. Although Apple slightly beat expectations with 51.2 million iPhones and 10.3 million iPads shipped in the quarter, the company’s 4.0 million Macs figure fell short of the consensus estimate. Management’s third-quarter revenue guidance of between $41 billion and $43 billion is also below the $47.32 billion expected by analysts. In addition, the company’s third-quarter gross margin guidance in the range of 37.5% to 38% is down from the second-quarter’s 39.4% figure, which was also 140 basis points lower year-over-year. On the other hand, Apple increased its buyback authorization to $175 billion from $140 billion and raised its dividend by 10% to $0.57 per share. Carl Icahn’s Icahn Capital LP was the largest shareholder of Apple Inc. (NASDAQ:AAPL) among 133 funds in our database that were long the stock at the end of 2015.

Twitter Turns in Disappointing Quarter

Twitter Inc (NYSE:TWTR) reported a mixed first quarter yesterday, and its shares have lost around 16% so far today. For the time period between January 1 and March 31, Twitter earned $0.15 per share on sales of $594.5 million, beating earnings expectations by $0.05 per share, but missing sales estimates by $13.34 million. The first-quarter number of monthly active users inched up 3% year-over-year to 310 million, while mobile monthly active users made up 83% of the total MAU base. However, the company’s guidance is a bit soft, with revenue in the range of $590 million to $610 million, which is below the analyst estimates of $677.6 million, while full-year adjusted EBITDA margin is forecasted by the company to be between 25% and 27%. The number of funds that we track that were long Twitter Inc (NYSE:TWTR) inched up by three quarter-over-quarter to 30 at the end of 2015.