We won't have time to do much of this in the coming weeks since there is an avalanche of reports to review, but yesterday was a light day of earnings so I am going to lay out some of the things I review on my own time, on the blog. As long time readers will know, I ignore almost all the government reports because they are so flawed; the only reason we are forced to pay attention is because the lemmings of the stock market react to them as gospel. For example just last week we had all the retailers report - yet today we ignore everything they say and clutch to a government report on retail sales. A report that showed better than 'expected' mostly because... gasoline prices were higher. (i.e. consumers had to spend more because gas prices were up - green shoots) Exactly the same justification for a "good" government retail report a month ago. Why waste the time - companies are the way to learn about what is really going on but even with them you can't focus on the "art" of earnings - revenue, margins, and commentary that is not just the "hopeful" forward looking nonsense.
2 major earnings reports last night - Novellus (
) and CSX (
); the former is in the very cyclical semi space; basically similar to Applied Materials (AMAT) and the latter is a railroad.
Pretty similar stories to both, and exactly as we predicted. Revenue (which cannot be gamed) stunk; they are holding their head over water by chopping a lot of humans, right sizing the business and finishing off with the "we are seeing stabilization" or "bottoming" CEO commentary. Almost exactly the same playbook as 3 months ago, and it's working again for both - despite a large miss (and being down yesterday after hours) NVLS is up 2% for the day and CSX is up 7%. So this says to me, people's expectations are still low and as long as the CEO repeats the exact same tag lines of 3 months ago, we're good. At least for now.
CSX is more important to me as a tell on the US economy but technology has been our leadership group, so in terms of "keeping Wall Street propped up" the semiconductor story is very important. I am frankly a bit surprised with what I read that investors are happy with NVLS but that's why playing "earnings gambling" is not for me; not only do you have to guess the results but then you have to guess the knee jerk reaction to the results. As for CSX I have to say its splendid it is able to remain profitable in such a crummy environment; when world trade resumes at a more normalized pace, this should bode very well for profitability.
CSX (
)
Via
TheStreet.com
- CSX( ), the railroader, surpassed Wall Street targets with its second-quarter earnings Monday, and said that it sees indications of a bottom developing in some of the markets it services. (of course the last phrasing is all that matters to the stock market)
- The company said it earned $308 million, or 78 cents a share, down from $385 million, or 93 cents, in the year-earlier period. To account for the sale in March of the tony but bankrupt Greenbrier resort in West Virginia, CSX said its profit from continuing operations in the second quarter was 72 cents, compared with 95 cents a year ago. Either way you look at it, CSX beat expectations by a large margin. Analysts were looking for EPS of 62 cents.
