Crude futures are in the green today after yesterday’s API report showed a surprise draw in inventories. Not surprisingly, the major index futures are also in the green as earnings reports from various companies trickle in.
Given that it’s the middle of earnings season, let’s examine more in depth the latest quarterly results of Morgan Stanley (NYSE:MS), U.S. Bancorp (NYSE:USB), Halliburton Company (NYSE:HAL), Canadian Pacific Railway Limited (USA) (NYSE:CP), and SUPERVALU INC. (NYSE:SVU). In addition, we are going to take a closer look at the hedge fund sentiment surrounding each stock to get some perspective on their long-term performance.
While there are many metrics that investors can assess in the investment process, the 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 to beat the S&P 500 by around 95 basis points per month (see the details here).
Given that most of its peers have reported solid results, Morgan Stanley (NYSE:MS) didn’t catch many investors by surprise after the bank reported excellent results of its own, powered in part due to robust trading activity. For its third quarter, the investment bank earned $0.81 per share, beating the Street by $0.18 per share. Revenue was $8.91 billion, up 21.6% year-over-year, and $740 million ahead of the average analyst estimate. Book value came in at $37.11 per share while tangible book value was $32.13. The company remains on track to deliver around $1 billion of cost cuts by the end of next calendar year. Ken Fisher‘s Fisher Asset Management boosted its stake in Morgan Stanley (NYSE:MS) by 657% to 2.35 million shares during the third quarter.
Traders are watching U.S. Bancorp (NYSE:USB) after the bank reported in-line third-quarter EPS of $0.84 on sales of $5.39 billion, which were $40 million higher than the consensus estimate. Return on average assets for the time period came in at 1.36% and average common equity was 13.5%. Management returned 79% of the bank’s earnings through buybacks and dividends. Average total loans grew by an adjusted 6.4% year-over-year and net interest margin was 2.98%, down by 6.0 basis points from the third quarter of 2015. Of the around 749 top funds Insider Monkey tracks, 48 funds owned $5 billion worth of U.S. Bancorp (NYSE:USB)’s stock, which accounted for 7.20% of the float on June 30, up slightly from 47 funds and $4.91 billion respectively on March 31.
On the next page, we will take a closer look at the earnings results of Halliburton Company, Canadian Pacific Railway, and SUPERVALU.
Halliburton Company (NYSE:HAL) is trending after the service giant reported a surprise profit for its third quarter, with EPS of $0.01 versus analyst expectations of a loss of $0.07 per share. Revenue for the period fell by 31.4% year-over-year to $3.83 billion, missing the Street’s estimates by $70 million. Although weak oil prices continued to weigh on the top-line, Halliburton managed to beat on the bottom-line due to ‘relentlessly managing costs’. Also helping pad the numbers was the fact that the company’s primary North American market sales rose by 9% sequentially, the first rise since oil prices began crashing. As for the future, Haliburton’s management thinks ‘that things are getting better for us and our customers’. The number of funds from our database with holdings in Halliburton Company (NYSE:HAL) went up by eight quarter-over-quarter to 62 at the end of June.
Canadian Pacific Railway Limited (USA) (NYSE:CP) shares are lower in the pre-market after the railroad reported better-than-expected profit and revenue numbers for its third quarter. For the three months, Canadian Pacific earned $2.73 per share on revenue of $1.55 billion, beating the Street by $0.56 per share and $320 million. Sales declined 9.4% year-over-year due to a delayed grain harvest, lower crude volumes, persistent economic challenges and the strengthening Canadian dollar. Profits beat due to better sales and a solid operating ratio of 57.7%. As for guidance, management expects mid-single-digit EPS growth this year. Outlook is likely the reason for the stock decline given that the market was expecting better guidance. 31 top funds had a bullish position in Canadian Pacific Railway Limited (USA) (NYSE:CP) at the end of the second quarter, down 5 funds from the previous quarter.
A few days after it announced that it had struck a deal to sell its Save-A-Lot business, SUPERVALU INC. (NYSE:SVU) is in the spotlight again after the company reported in-line fiscal second-quarter EPS of $0.10 per share. Revenue for the period came in at $3.87 billion, $80 million below the consensus estimate, and was down by 4.7% year-over-year. Adjusted EBITDA for the period amounted to $147 million, and the company reduced outstanding debt by around $100 million during the quarter. A total of 28 funds from our database had a bullish position in SUPERVALU INC. (NYSE:SVU) at the end of June, unchanged from the previous quarter.