Stock markets closed the week marginally down from record highs as talk of lofty valuations and financial bubbles continued. With indices up 100% over the past five years the worry is that investors are becoming complacent about risks and that second quarter earnings seasons will fail to meet sky high expectations. However earnings season got off to a good start with several companies reporting strong results.
Alcoa reported surging profits on Tuesday that smashed consensus forecasts. Excluding the impact of special items, net income was $216 million, or $0.18 per share, more than double sequentially and nearly triple year-over-year and smashed consensus forecasts of $0.12 per share. The company reported strength in its value added aircraft and automotive business and reported productivity gains across all segments totalling $556 million. Additionally the company reported a bullish outlook. Based on rising truck orders and backlogs, Alcoa increased its 2014 estimated growth for the North America commercial transportation market to a range of 10 to 14 percent while the company continues to project 2014 global aerospace growth of 8 to 9 percent driven by robust demand for both large commercial aircraft and regional jets.
- Warning! GuruFocus has detected 9 Warning Signs with CVX. Click here to check it out.
- CVX 15-Year Financial Data
- The intrinsic value of CVX
- Peter Lynch Chart of CVX
Wells Fargo met expectations with earnings and beat on revenue. It was the first big bank to report earnings with the others reporting next week. The bank reported earnings of $1.01 a share, up 4% on the previous year, with core lending up 7%, deposits up 9% and non performing assets down 14%. CEO John Stumpf also painted a positive picture reporting, "Our results also reflected strong credit quality driven by an improved economy, especially the housing market, and our continued risk discipline. We are committed to both maintaining strong capital levels and returning more capital to our shareholders."
In an interim update Chevron reported that it expected second quarter earnings to be higher than first quarter as a result of gains on asset sales and an absence of impairments in the prior quarter.
Finally, Fastenal Co. reported second-quarter earnings increasing almost 8% as revenue improved 12%. Fastenal, which sells nuts, screws, tools and other industrial and construction supplies, has faced slowing sales-growth momentum in recent quarters. However the company reported improvements in both sectors with manufacturing sales up 11.2% and construction up 7.5%. Fastenal said it still plans to open roughly 35 to 40 stores in total this year.
The author is a blogger for SurgingEarnings.Com
Risk Disclaimer: This article does not constitute a recommendation to buy or sell. Investing in stocks or other securities and derivatives is a high risk activity and not suitable for everyone. It is strongly recommended that individuals should consult with a SEC registered investment adviser prior to making any investment decisions.
Disclosure: The author holds no positions in any of the stocks mentioned nor has any intentions to initiate any in the next 72 hours.