The Daily Dose: Sorting Earnings Reports

 | Apr 25, 2014 | 10:00 AM EDT  | Comments
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It's 4 a.m. EDT on a jam-packed day for earnings. There are five conference calls from the prior evening that you missed because you were listening to two at once. So, you now have a backlog of earnings call transcripts to read.

The issue: more companies are reporting the next morning, and the headlines are focusing on those releases instead of your growing backlog. I am getting anxious writing this piece! Here is my advice: ignore the previous day's earnings calls and place 100% attention to the fresh round of financial reports. Doing so will keep you relevant socially and will help to add another layer of knowledge in working down the transcript backlog. Of course, companies you own take priority.

I followed this route on Thursday as opposed to key wording Apple's (AAPL) earnings transcript. I am glad I did as this is what was learned through massive info ingestion. (Note: after a while you will just know which earnings reports are of the most relevance).

DR Horton (DHI): another homebuilder where order value (+20%) outstripped new orders (+9%). Homebuilders are being very piggish on price increases for new properties, and that is really beginning to stunt the housing recovery. Ryland (RYL) is another example, notched a +18.2% increase in average closing prices.

United Parcel Service (UPS): sure did like average daily shipments of 4.2%, amidst harsh weather, outpacing GDP growth.

Caterpillar (CAT): bullish moments on China construction; seems company-specific as corporate commentary on China demand has been mixed at best.

Hershey (HSY): specifically called out mass merchants for having weak sales trends. Reiterate: no reason to own Walmart shares.

Under Armour (UA): strong quarter here, and coupled with Nike continuing to do well, all arrows point to Foot Locker (FL) as the way to play the trend (at 12.5x forward earnings, it's a chance worth taking).

Returning to Apple

I think this was an extremely overlooked statement by CEO Tim Cook on the Apple earnings call, underscoring what I said earlier in the week: there may be no wearable device until late 2015. His words:

"But for us, we care about every detail and when you care about every detail and getting it right, it takes a bit longer to do that and that's always been the case, that's not something that just occur. As you probably know from following us for a long time, we didn't ship the first MP3 player, or the first smartphone, or the first tablet. In fact, there were tablets being shipped a decade or so before then, but arguably, we shipped the first successful modern tablet and the first successful modern smartphone and the first successful modern MP3 player. And so it means much more to us to get it right than to be first."

Aside from that, Apple plans to triple the number of China retail stores over the next two years, according to Tim Cook. At about 10 total stores currently, that is a meaningful increase in the retail store operations. The reason for the boost is obvious: Apple wants to better control its own global destiny in wearable devices.

Former Burberry CEO Angela Ahrendts starts next week at Apple and probably is well aware of the company's ambitious store count goal. That may be another reason she took the job. Successfully tripling a store base with elaborate exterior designs in two years would solidify her place on the Mount Rushmore of retail execs alongside Sam Walton and Mickey Drexler. She clearly has her plate full right from the start.

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