It’s the heart of earnings season, as many big companies are now reporting their first quarter results. Among the stocks that reported earnings this morning or yesterday evening are UnitedHealth Group Inc (NYSE:UNH), Johnson & Johnson (NYSE:JNJ), Goldman Sachs Group Inc (NYSE:GS), Harley-Davidson Inc (NYSE:HOG), and Philip Morris International Inc. (NYSE:PM). Let’s take a closer look at how these companies performed during the first quarter and see how the smart money tracked by Insider Monkey was positioned in each stock heading into the period.
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UnitedHealth Reports a Good Quarter
UnitedHealth Group Inc (NYSE:UNH) reported solid quarterly results, posting first quarter earnings of $1.81 per share on revenue of $44.53 billion. The results beat expectations by $0.09 per share and $570 million respectively, and UnitedHealth’s shares are over 1% higher today because of it. Driving the strong performance was healthy premiums growth of 9.9% year-over-year to $34.8 billion and products growth of 419.8% year-over-year to $6.39 billion. Management expects more of the same strong results for the full 2016 year, with stated guidance of $7.75-to-$7.95 per share, up from previous guidance of $7.60-to-$7.80 per share. Hedge fund sentiment in UnitedHealth Group Inc (NYSE:UNH) has been steady of late, with the number of funds in our database holding shares of the company falling by just one quarter-over-quarter to 50 as of the end of December. Cliff Asness‘ AQR Capital Management owned more than 4.00 million UnitedHealth shares at the end of 2015.
Johnson & Johnson Beats, Shares on the Rise
Johnson & Johnson (NYSE:JNJ) earned $1.68 per share on revenue of $17.48 billion for the first quarter, beating analysts’ consensus earnings estimate by $0.02 per share. Although its top-line missed by $20 million, the healthcare giant’s quarterly revenue was essentially in-line with estimates. Leading the way in terms of growth was Johnson and Johnson’s Pharmaceutical division, which saw its revenue jump by 5.9% on the back of strong oncology and immunology drug sales. For 2016, the company expects non-GAAP EPS of $6.53-to-$6.68 and revenue of $71.2 billion-to-$71.9 billion. Shares of Johnson & Johnson are up by 1.97% this morning after trading nearly flat in the pre-market, so investors appear to like what they see as they have more time to dig deeper into the results. Johnson & Johnson (NYSE:JNJ) was the 40th-most widely held stock in our hedge fund database on December 31, as 72 elite funds held shares of the company. Ken Fisher‘s Fisher Asset Management reported owning 10.8 million shares as of March 31.
On the next page we examine how three big names: Goldman Sachs Group Inc, Harley-Davidson Inc, and Philip Morris International Inc. performed during the past quarter.
Goldman Beats on Bottom-line, Misses on Top-line
Goldman Sachs Group Inc (NYSE:GS) shares are now up by 2.44% after the global investment bank turned in a mixed first quarter. For the period, Goldman Sachs earned $2.68 per share on revenue of $6.34 billion, beating earnings estimates by $0.23 per share but missing revenue expectations by $390 million. Revenue dropped by 40.3% year-over-year due to headwinds in almost every business line.
CEO Lloyd Blankfein summed up the results thusly:
“The operating environment this quarter presented a broad range of challenges, resulting in headwinds across virtually every one of our businesses. Looking ahead, we will continue to focus on delivering superior service to our clients and managing our business efficiently, which remain essential to generating shareholder value over the long term.”
To Mr. Blankfein’s credit, Goldman’s compensation and benefits expenses also fell by 40% year-over-year, meaning that the company’s employees and shareholders are sharing the pain equally. Tangible book value rose by 1% to $163.54 per share. 59 elite funds owned 7.7% of Goldman Sachs Group Inc (NYSE:GS) at the end of the fourth quarter.
Harley-Davidson Proves Bearish Analysts Wrong
Although some analysts were bearish on Harley-Davidson Inc (NYSE:HOG) due to channel checks that indicated competitors taking market-share, the company soundly beat expectations for the first quarter, delivering EPS of $1.36 on sales of $1.58 billion. Those results were $0.06 per share and $80 million better than the consensus estimates respectively. Global shipments rose by 1.4% year-over-year to 57,458 units while Harley’s operating margin dropped by 180 basis points to 21.1%. Harley Davidson expects to ship a total of between 269,000 and 274,000 motorcycles in 2016 and to report full year operating margin of between 16% and 17%. The company expects to ship between 82,500 and 87,500 units in the second quarter. Nonetheless, Harley-Davidson Inc (NYSE:HOG) is now down by 2.45% this morning after being up by 1.7% at one point in pre-market trading. The number of funds that we track with holdings in the stock was unchanged during the fourth quarter at 24.
Philip Morris Misses the Mark
Philip Morris International Inc. (NYSE:PM) turned in a disappointing first quarter with EPS of $0.98 on net sales of $6.08 billion both missing the consensus estimates, by $0.13 per share and $280 million respectively. The strong dollar had a big impact on the company, as Philip Morris would have experienced a 2.4% revenue rise when factoring out currency effects versus the actual 8.2% revenue decline. Due to the falling revenue, the company’s adjusted operating margin dropped by 280 basis points to 41.9%. The company anticipates making $4.40 per share-to-$4.50 per share for fiscal year 2016. The number of elite funds in our system with holdings in Philip Morris International Inc. (NYSE:PM) fell to 35 from 42 quarter-over-quarter during the fourth quarter.