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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 Deep In the Red on Earnings Miss

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.
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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.

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On the next page, we are going to examine the earnings reports from eBay, Chipotle Mexican Grill, and Buffalo Wild Wings.

eBay Beats Estimates

eBay Inc (NASDAQ:EBAY)’s stock has advanced by 6% after the e-commerce giant beat both earnings and sales estimates for the first quarter of 2016. eBay earned $0.47 per share on sales of $2.14 billion in the quarter, exceeding the consensus estimates by $0.02 and $60 million, respectively. The eCommerce giant’s gross merchandise volume was $20.5 billion and the company repurchased $1 billion of its common stock during the quarter. For the second quarter, the company expects revenue in the range of $2.14 billion and $2.19 billion, non-GAAP earnings per diluted share from continuing operations in the range of $0.40-$0.42 and GAAP EPS from continuing operations of $0.32-$0.34. For the full 2016, management expects net revenue between $8.6 billion and $8.8 billion. Cliff Asness’ AQR Capital Management owned more than 6.7 million shares of eBay Inc (NASDAQ:EBAY) at the end of December.

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Chipotle Lower on Mixed Quarter

Although the company has moved on from its past food safety issues, Chipotle Mexican Grill, Inc. (NYSE:CMG)‘s business is still feeling some of the negative after effects. Sales for the restaurant chain’s first quarter dropped 23.4% year-over-year to $834.5 million and Chipotle posted a loss of $0.88 per share as some previously-loyal customers stayed away. The EPS was $0.07 per share higher than expectations, but the revenue was $45.71 million than estimates. Comparable restaurant sales dropped 29.7% year-over-year, while restaurant level operating margin retreated to 6.8% from the previous year’s 27.5%. The number of investors from our database holding Chipotle increased by 11 to 39 during the fourth quarter of 2015.

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Buffalo Wild Wings Flies Lower After Bad Quarter

Buffalo Wild Wings (NASDAQ:BWLD)’s shares have retreated by 13% on the back of the company missing both earnings and revenue estimates. For the first quarter, Buffalo Wild Wings posted earnings of $1.73 per share on sales of $508.3 million, missing the estimates by $0.04 and $21.99 million, respectively. Franchised same store sales dropped 2.4% year-over-year, while company–owned restaurants’ same store sales inched down by 1.7% year-over-year. Buffalo Wild Wings’ expects 2016 EPS to be between $5.65 and $5.85, versus analyst estimates of $6.10. A total of 24 funds tracked by Insider Monkey held 15.2% of Buffalo Wild Wings (NASDAQ:BWLD)’s stock heading into 2016.

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Disclosure:None