Ebay's latest earning report

I didn’t expect Ebay performing so well. 6% on the ER day and 10% after 5 days of ER, good momentum. Apparently, investors like what they hear despite lukewarm analyst reaction. Some information for you on Reuters: http://www.reuters.com/finance/stocks/keyDevelopments?rpc=66&symbol=EBAY.O&timestamp=20101020201500 (eBay Inc. Issues Q4 2010 Guidance; EPS Guidance Above Analysts' Estimates; Raises FY 2010 Guidance)

Remember, outlook is always the most important factor on ER stock price action. Revenue beat is the second, EPS beat is the third in my opinion. (it may depends on the firm characteristic or pre-ER expectations, etc)

 As I look through the quarterly financial performance of Ebay as a whole I really didn’t see anything that upbeat (hope you can agree with me after viewing the table) Although, investors definitely like the growth in Paypal and I agree with them. It’s indeed convenient. As far as online commerce, I actually prefer Amazon. And I’m afraid there are many people just like me. However, one shining point is enough for the stock to run for a while. In addition, probably the weaken dollar is also helping too since more than 50% of revenue is from international (the reporting currency is in US dollar and the number will be bigger as dollar depreciates). Short term bullish at least. If Ebay manages Paypal well, I’ll be long term bullish. As you might notice that some credit card companies start to have concerns on Paypal as competition, good sign for Ebay. 

Ebay's annual finanical performance does show a good trend on profitabilities. Let's see how they do when next annual report gets out (based on the guidance it will do well as I guess.)

Analysts' opinion stay lukewarm till now.

Financial Ratio Analysis (efficiency ratios)

What does efficiency mean? Plain simple: how effective the company has utilized its assets, how fast can the company collect its revenue, how quickly can the company sell its inventory, etc. The following table lists the important ratios which address above basic questions.

Asset turnover                           Sales / average total assets

A/R turnover                             Sales / average accounts receivable

Inventory turnover                    Cost of goods sold / average inventory

Fixed asset turnover                  Sales / average fixed assets

Working capital                    A/R turnover (days) + inventory turnover (days) – A/P turnover (days)

Let’s put these ratios into work for Amazon. 

If you look at the times of the turnover ratio you want larger number which means higher efficiency. On the other hand, if you look at the number by days you want smaller number, the shorter the better. Amazon has great seasonality so you have to compare YOY. Again 2009 is a dramatic year for recovery so the comparison needs to take that into consideration. Look at Amazon’s numbers I can still say it’s performing great. How does that compare with peers? Who are its peers first? There are just too many. Based on Amazon’s retail concept I’d compare it with Walmart since they both are low margin high efficiency firms. And when I do you’ll see how similar they might look alike. (I will post that for another post in the near future)

I’m just trying to give you guys a short intro and hopefully it can make some sense quickly and easy for you to evaluate a company. For more detail you gotta read a book . Jamie Pratt’s book is good. (I probably should let him know I’m advertising for himJ.

Microsoft latest ER

Today MSFT has released a good quarterly results and it trades up 3% after hour. The release is here: http://www.microsoft.com/presspass/press/2010/oct10/10-28fy11Q1earnings.mspx. People watching it are really having hard time to decide if they want to have microsoft in their portoflio. What is the problem? the future growth. Miscrosoft apparently doesn't want to label itself as a low growth stock which should have given out tons of dividends by now based on its cash level. However, the growth opportunity just doesn't seem so bright unfortunately.

Let's think about what's hot for Microsoft. It has Office, Window 7, Win 7 mobile, Xbox, and Bing. What I really like is its office since it's really powerful and it's also trying online version. As to rest of it, I sort of like win 7 mobile but I have to see what's the consumer's response to it when it is out in November (North america). Microsoft has to face it: it was never a really innovation driven company. Instead it had a good strategy and implementation on copying others' good stuff or buying them. Watch "Pirate in silicon valley" if you don't know what I mean.

Now it's getting too big and the management seems just don't know how to allocate capital anymore. They are late in almost all the revolutions going on such as cloud computing and mobile etc. How can you catch up if you are always two steps behind? Acquisition is the only way, I think. Well, who should it buy? I don't know but I do think cloud computing and mobile security will have good future.

Alright, enough of bashing MSFT. Let's see how it trumps this quarter.

Revenue and EPS both beat as always. Analysts are somehow bullish and I guess tomorrow there will be upgrade showing up. Well the main reason is that the stock were just at a low price level, nothing fundamentally changes.

This is yearly summary for Microsoft. The business is definitely sound. 2009 is bad year just like any other company. 2010 starts the recovery.

what's good about this quarter? Gross margin, profit margin are all good and part of reason is from decreasing SG&A. Efficiency is not the best level but at a good level still. No need to worry about the liquidities since it has tons of cash/short term investment. ROA is pretty good: 6.1% next to the best 8.1% of the quarter in the end of 2009.

So investors should be short term bullish on Microsoft. Again, as I mentioned in other posts, the market is at a high uncertainty stage I would wait after Feds' decision on QE2 and midterm election to build long position. If you consider a long term position on Microsoft, I would say wait to see how people like their mobile platform and how they plan to use their cash.

S&P 500 Candlesticks and MACD

I'm not a technical analysis (TA) guy although I sometimes do try to read the chart a bit. When I look at S&P500's daily candlesticks today I can't help notice the MACD indicator which recent pattern has great similarity to that of end of April.

Considering next week's Fed's decision on QE2, it is tricky for traders, I think. As quite some commentators put it, if the money amount is not "enough" market will sell off and if the QE money is too much market will view economy pessimistically it may still sell off. Well it's likely Feds will step up again. But as I see it it's better to stay sideline for now, I guess. I will pay close attention to tomorrow's job report and Friday's GDP estimate and first couple of days next week.

Of course, nobody can really predict the market so always think on your own:)

Equinix, Inc (EQIX)'s latest earning release

Previously I mentioned the big price drop of EQIX (-33%) at http://mzexcel.blogspot.com/2010/10/eqix.html
I believed it will bounce back up and it did. Today EQIX just released Q3's results and in the after-hour trading price goes as high as $82 (8% increase). As I'm writing this post 5% is gain. If tomorrow it can stablize around $80 then the return for 20 calendar days will be (80-70)/70= 14%. Stock market is a game of expectations. After the bad guidance was out, investors will sell first then calculate. This is why we always have overreactions. Sometimes it's large enough to be used sometimes it's not.EQIX's 30+% is definitely large enough for contrarian to make money.

Revenue is in line with estimate but EPS missed by 2 cents. Market still reacts positively though.

Financial ratio analysis gives rather not ideal scenario. Costs are getting higher and higher for past two quarters while efficiency ratios are trending downwards. Be careful if you are considering it as investment opportunity. I will rather look at other stocks for cloud computing industry.

Buffalo wild wings ER stats

Buffalo Wild Wings, Inc. (Buffalo Wild Wings) is an owner, operator, and franchisor of restaurants featuring a variety of menu items, including its Buffalo, New York-style chicken wings spun in any of its 14 signature sauces. Its restaurants includes a multi-media system, a full bar and an open layout. The Company’s guests have the option of watching sporting events or other programs on its projection screens and approximately 40 additional televisions, playing Buzztime Trivia or video games. The open layout of its restaurants offers dining and bar areas that provide seating choices for sports fans and families. Its menu features traditional chicken wings, boneless wings, and other items, including chicken tenders, Wild Flatbreads, popcorn shrimp, specialty hamburgers and sandwiches, wraps, Buffalito soft tacos, appetizers and salads. (Google finance)

Even though I don't like their wings very much the atmosphere seems attractive. The company is expanding for more growth.  So I'd like to take a look at its performance after today's earning release.

Financial Ratio Analysis (Profitability ratios)

First, what are the profitability ratios? ROE, ROA, Gross margin, profit margin, SG&A/sales etc are included here. Most people are familiar with the term return on equity and think it’s the most important ratio. I would say I do prefer ROA (return on asset) since it best captures operations of the firm (not counting financial stocks here). ROE can be viewed simply as ROA multiplied by capital leverage. Therefore if a company can operate well and with a good business model leverage level should not be hard to adjust in order to maximize shareholder’s return. What’s the money that eventually can be allocated to shareholders? The net income, the profit, the bottom line, etc.  Revenue is on top of income statement so it’s called the top line; now you can guess why net income is called bottom line. You see, accounting is really not that hard to understand, is it?:)

How do you calculate these ratios? Well, if you’re not as ‘diligent’ as I am you can just go Morningstar.com to get almost all the ratios you need. Actually I have automated my data collection process so that it will only take me a few minutes to get all the ratios. Of course, the result depends on the accuracy of original data source (yahoo, google). Based on my observations and tests, the data are generally good. There are great benefits for you to calculate these ratios on your own though as the process will familiarize yourself with the company’s statements and get sense of business items involved. Alright, let’s see what is exactly the math for the profitability ratios. 

Hopefully this is where you tell yourself accounting is really just elementary school mathJ. The way to understand the ratios are also intuitive as I see it. For a good company you like to see high return ratios and margins, but want to have small cost/expense ratios. Make sense?

It’s useful to compare across time for one company but it gets complicated when you compare across different companies due to different business operations. For example, companies like Amazon and Walmart are really low margin operators so you shouldn’t compare them with Intel which has rather high margins.  

Now let’s take Amazon as an example to look at ratios listed in the financial ratio analysis framework. The following picture shows the past four years’ profitability ratios.

What do you see there? Gross margin varies just a little bit but you can see significant improvement on profit margin. Since there are not much change on gross margin what is causing the increase of profit margin? As you might know gross margin subtracting operating expense, interest expense, and tax gives you profit margin. Therefore, the expenses I mention here are reduced year by year. SG&A/sales ratios is part of the operating expense and it is trending downward. In summary, considering economic conditions in 2008 and 2009, the company did a great job by increasing profitability. I’ll discuss ROE and ROA later.

BTW, feel free to leave me your feedback and please show your support by click ads on the blog if you don't mind:)

Financial Ratio Analysis - Introduction

Before I analyze other companies’ ER and ratios let me explain more of the framework first. IU folks should recognize the framework as “ROE Analysis” right away as Jamie Pratt introduces it in Kelley. Some people would say it’s just something similar to Dupont analysis which breaks down ROE to other basic ratios. Well, I’ll just call it in general term: financial ratio analysis framework since it’s kinda more than ROE. What I really appreciate about this model is the integrity: it covers all the financial ratios: profitability ratios, liquidity ratios, efficiency ratios, leverage ratios. In addition, it presents the ratios in the clusters of operations, investing and financing. It really acts like an X-ray for a company’s financial performance. Assuming most of the numbers in financial statements are not fraudulent the framework can serve as a wonderful tool to understand a company’s fundamentals. Jamie Pratt’s book has great illustrations. I’ll have it posted in the post.

Here is a look at the framework. 

It may look overwhelming at first but it should get better after we break it down. There are four main groups of ratios: profitability ratios, efficiency ratios, liquidity ratios, and leverage ratios. I’ll elaborate them in following posts.

Holy cow! Netflix

16.9 million subscribers with somehow controlled acquisition cost. way to go! Despite of not very impressive quarterly financial ratios, the growth  is just too fast that nothing else seems to matter. I do think the stock is overvalued based on the financial performance however, growth stock investors probably won't care much of that now. 9% after-hour gain may not be enough for tomorrow's run. We'll see.

ISRG's latest ER

As I promised to a friend, I was going to analyze Johnson and Johnson tonight but find out that there is no updated balance sheet information. I'll have to wait for 10Q then.

Instead, I'll take a look at the ISRG (a robotic medical device firm) . Intuitive Surgical, Inc. (Intuitive Surgical) is engaged in the designing, manufacturing and marketing of da Vinci Surgical Systems, EndoWrist instruments, and surgical accessories. The da Vinci Surgical System translates the surgeon’s natural hand movements performed on instrument controls at a surgeon’s console into corresponding micro-movements of instruments positioned inside the patient through small incisions, or ports.

The latest quarter seems to show a downward trend for margins and efficiency so I feel the sell-off in after-hours (-5%) is understandable especially after some of the management's remarks on the uncertainty of Japan and Europe during the conference call. You can read some comments here: http://www.reuters.com/article/idUSN195199120101019?pageNumber=1

The sales  decreased from previous quarter and missed consensus. ISRG has a pretty high P/E ratio at 35. So it's easy for me to be at the sides of the analysts: not buy rating. But since I like its technology I'd like to own it after it has great earnings and better business environment. 

I definitely enjoyed reading "The Big Short..." which is about few fundamental focused guys shorting the housing bubble. Pick it up at your spare time. You won't regret it.

Amazon ER stats

Last ER Amazon had a great reversal as a big sell-off  triggered by earning miss was corrected after investors realized that the miss was due to investment in fulfillment center and marketing for Kindle. It's that kind of strategy question: long term or short term? Investors finally took the long term view.

It's important for Amazon to beat earnings this quarter otherwise another round of selloff will be there. We'll see how it develops. If you look at the ER day return graph Amazon definitely has better results in general.

Note: be careful these statistics are not enough for you to bet ERs. My view on trading ERs is not to gamble before the release rather to understand the release afterwards and trade/invest correspondingly. 

AAPL's latest ER

Apple dropped 6% after hours as the anticipated earning release is out. (http://www.apple.com/pr/library/2010/10/18results.html) Great earnings and sales although it did guide down next quarter's EPS to 4.8 while previous consensus is around 5. That could be part of reason for after-hour selloff. In addition, due to supply issue the Ipad sale of 4.1 million is lower than estimation and gross margin reaches a low level for Apple.

After I crunch the new quarter's data I don't see anything detrimental to its fundamentals. Rather it should be a good time to load some shares after the pullback.

If you compare year over year quarter results there is no doubt it's a good quarter. How about comparing this quarter to all previous five quarters? Most of the ratios are comparable if not better. Indeed the gross margin is the lowest. However, I assume it's natural for Apple to have low gross margin as its product mix shifting to Iphone/Ipad, the low margin products. And even with the low gross margin Apple still manages to have great profit margin. How did Apple do it? 

Certainly Apple controlled operating expense well. SG&A is in the lowest levels among the six quarters. In addition,  R&D expense  is less percentage wise but increases in real amount. Now let's look at the efficiency ratios (those turnover ratios). Asset turnover and AR turnover are good. But inventory turnover slows down in 2010's three quarters. Why is that? Well, as the company released two new products this year it shouldn't be a surprise that the inventory management can be a little "sluggish".  The working capital management is still in great shape and so are the liquidity ratios. 

In summary, a good quarter for AAPL. Product mix is changing investors have to adapt to new cost structure. Again, I feel it's an opportunity to own Apple rather than to sell it. (Pure personal opinion not trading suggestions) Well, after all, the stock has a decent run before the ER it won't hurt to have a temporary pullback. However be aware of the general market condition as it has awesome runs for past two months. There might be an correction due.

Bonds and Equity

Yield curve is a powerful tool but I doubt most people can use it well. I put up a book link at the left of this post I think you really check it out.

I just read Bloomberg's post about 30 year treasury bonds's yield increase recently and I thought you might want to read it too. "U.S. 30-Year Yields Rise Most in 14 Months on Inflation Outlook"
http://noir.bloomberg.com/apps/news?pid=20601010&sid=aq54XNlW_rBg

How do you manage your 401K? Well, most people know they should allocate their assets between bonds and equity. And they know as time pass by the weight of bond and equity should be adjusted for more conservativeness. I do think it's still right for most mutual fund investors and who really don't have time to think about what's happening in the market. However, if you want to be a little more active you have to know more about both bonds and equity market.

What I put together here are few graphs about  T-bonds yield and S&P 500. The first graph shows the five year time period. The second one covers rough recent three months periods. The last one demonstrates the yield curves for the past few months and corresponding S&P 500 value.

Recently before September the 10 year yield has a pretty good positive correlation with S&P500. When you think about people with mutual funds shuffle their money out of equity to bonds it would make sense for you.   However, after the first week of September, when Feds' Biege Book was out (9/8) and further confirmation from FOMC rate decision meeting came out for Quantitative Easing 2 (QE2) you can see both stock market and bond market started booming. Investors are just very happy about the potential of Fed print more money. And for past few days, the bond yield starts to go back up (price falls) and it seems that fear of the inflation risk kicks in, especially after Friday's better than expected retail sales growth and Thursday's higher Producer Price Index (PPI).

Now despite the low yield rate, the yield curve is in its normal shape. To see some crazy yield curves, go to the next link. http://www.stockcharts.com/charts/YieldCurve.html (move the red line on S&P500 to see updated yield curve)

Apple ER Stats

Analysts have been very bullish about AAPL. They have increased the earning estimate and if you listen to them on TV again very positive view about Apple. Ipad's popularity makes it not hard to live up to the expectation, I think. If you look at the ER day return most of those days ends up positive.In addition the average return for 5 days and 30 days after the ER are also positive.

The earning release will be 4PM next Monday (10/18). I don't doubt the "beat" the expectation part rather I'd like to hear more about what's cooking for future growth.

Google's latest ER

Finally, Google has a great quarter after a few disappointing ones. Especially the cost seems under control now which calms down the investors as seen from the after hours' trading (9% up). In addition, there seems no impact of China dispute as the weight of international revenue barely changed.

First let's look at the analyst opinion session. In the analyst action part I noticed that a very recently upgrade was present which makes me wonder if the analyst really knows something before hand. Google beats the earnings and revenue easily this round mainly due to the less expectation derived from last quarter.

The financial performance in this quarter is good in almost all perspective as shown in the following graph. ROA and ROE are good and look at the margins: almost the best level for past six quarters. If you look at last quarter's profit margin you'll understand why the stock drop 7% the day next to ER. Similarly, this time the margin turns back up investors apparently welcome that. 

CSX's ER

Today the market has a good run and it seems mainly due to the good earning reports from Intel, JP Morgan and CSX. These companies provided investors more hope of a good Q3 earnings in general. We all know Intel and JP Morgan. Who is CSX?

“CSX Corporation (CSX) is a transportation company. The Company’s rail and intermodal businesses provide rail-based transportation services including traditional rail service and the transport of intermodal containers and trailers. CSX’s principal operating company, CSX Transportation, Inc. (CSXT), provides an important link to the transportation supply chain through its approximately 21,000 route mile rail network, which serves major population centers in 23 states east of the Mississippi River, the District of Columbia, and the Canadian provinces of Ontario and Quebec. It serves over 70 ocean, river and lake ports along the Atlantic and Gulf Coasts, the Mississippi River, the Great Lakes and the St. Lawrence Seaway. In addition to CSXT, the rail segment includes non-railroad subsidiaries Total Distribution Services, Inc. (TDSI), Transflo Terminal Services, Inc. (Transflo), CSX Technology, Inc. (CSX Technology) and other subsidiaries.” From Google Finance

CSX is important because it ships all kinds of goods all over the place! If it has a good earning, revenue and outlook it’s just natural for investors to be optimistic about the numbers other firms will report. Here is one summary about CSX’s yesterday’s ER report: CSX (CSX) reported robust earnings late last evening, with earnings of $1.08 per share against a $1.04 analyst consensus, with sales rising more than $500 million to $2.7 billion for the quarter. CSX observed a rise in freight volumes in nearly all markets for the third quarter. CEO Michael Ward remarked that “as the economy continued to improve, CSX saw volume growth in nearly all markets”.

http://www.minyanville.com/businessmarkets/articles/burberry-earnings-intel-jp-morgan-vix/10/13/2010/id/30544

Alright, 4% pop on CSX stock price is a pretty decent move here. Was it justifiable? Again, I’ll go through the same drill as I did in Intel’s ER. First, what were the opinions of analysts?

Obviously, analysts were not very optimistic about the firm when only 30% analysts issued strong buy or similar ratings. And their estimate of future growth for the company is less than those of industry and sector. Keep in mind these opinions are for at least mid-term or long term view.

Then how has the company manage the EPS expectations? Pretty good---always beat for past few years at least as shown in next graph.

How the stock price vary after its ER? Next graph illustrate a short term (2, 5, 30 day) return if the stock were bought at the close of ER day. Not that you can use this figure to make money right away but it serves as a good reference. One easy thing to pick up is the ER day return: most of them are positive. when I look closer I found the mean is 3% with sigma of 5%. It seems to has better chance betting upside on ERs (a more obvious graph is shown also). 

Now let’s move on to my favorite analysis: ratio analysis. The following two graphs both tell me one story: profitability is good, which I believe is due to cost management. For example, SG&A stays at a low level of 27% while gross margin is the highest for the past 6 quarters. However, if you compare this quarter to previous quarter rather than the quarter a year ago you will find that almost everything stay the same. What that tell me? Well, yes, the economy is recovering but it also tells me that the slowed growth is confirmed. It will be interesting to watch the GDP number for Q3 and see if it can confirm my guess here. Last quarter GDP growth rate is 1.7% and my guess for Q3 would be less than that by just looking at CSX’s number very naively. We’ll see.

Just a side note: you might be wondering what the heck are the Z score and M score. Z score helps to identify bankruptcy risk and M score detects the possibility of account fraud. For CSX Z score is low but I assume it’s the nature of business as CSX has to have large fix asset and need a lot of debt to support it. It will be good to compare with peers to see if it’s the case. When I get a chance I’ll test that and update my results here.

In summary, CSX did have a good quarter but I believe what really move the stock and even the market has something to do with the company boosts spending for future (good confidence to have) and announced additional $646 million share buyback. Well I’ll watch CSX from now on since it’s kind of bellwether of the economy.

Intel's ER

Investors pay great attention to Intel (INTC)'s earnings to understand PC/tech industry and further try to feel the pulse of economy. Today its Q3 results beat in both EPS and revenue. I just picked one short summary online: " The chip giant's Q3 EPS jumped 58% to 52 cents, 2 cents over views, helped by corporate demand and emerging markets growth. Revenue rose 18% to $11.1 bil, above views for $10.99 bil. Revenue from the PC client group rose 14%. Gross margin leapt to 65.9% from 57.6%. Intel (INTC) sees Q4 revenue of $11 bil-$11.8 bil, the midpoint just above views for $11.3 bil. Shares rose."  the quoted info is from : http://www.investors.com/NewsAndAnalysis/Article/550210/201010121909/Intel-Beats-In-Q3-Guides-Q4-Up.aspx

Notice that most people compare the earning results across the same quarters, eg. Q3 here. However, I believe you have to be careful about it since Intel's 2009 financial performance is not at its normal range due to the financial crisis.  So the forementioned 58% increase on EPS might not mean much.

Now I'll post some of my analysis on Intel's ER data,  relevant market reaction, and financial ratio analysis.  First, let's take a look at what analysts have viewed Intel.

The data are extracted from Yahoo Finance and you should be able to tell that I'm a big visual person:). The data in Yahoo Finance are most in table format and scattered so I set up a dashboard in Excel to pull the data in and demonstrate most of the text/tables in graphs. Hope you find them easier to read as well.There are six components for this dashboard: Earning history (estimate and actual EPS), Analyst action (downgraded, upgraded, etc), EPS for current quarter (how analyst's estimate changes), analyst's recommendations (normally I only view Strong buy as a buy suggestion), Sales (actual and estimate for next two quarters), and future growth estimation for the firm, industry, sector, and market (S&P500). 

The takeaway for Intel's analyst corner information is that analysts are not very enthusiastic about the stock despite the earnings expectations are always met (mostly from better communication and expectation management of the IR dept, I think). And if you take a look at the future growth estimation part you won't like this industry much if you are trying to find a growth stock as the estimated growth rate is trending down.

Second, let's look at the past ER and market reaction for Intel. Again, Intel has beaten market expectation all the time as they  provide and revise guidance as ER gets closer when they see material difference.The Pre-ER run checks the return before the ER day, such as for past 2 days, 5 days, and 30 days. Similarly, Post-ER run checks the post ER market returns for next 2 days, 5 days, and 30 days. I also put the market price for the stock during the past three month together with the ER-market reaction session to just get a sense of price movement. Another good complementary graph would be S&P500's same period price curve.

Finally let's get to the key parts: how did Intel perform during the last quarter? The financial ratio analyses are listed below. 

Good thing about Intel here is really the profitability and steady growth of the sales despite the well recognized  slow-down growth of PCs. The gross margin is still high which is what investors like to see. Well, let's take a look at other ratios. 

what appears little bit concerning are some of the efficiency ratios and the working capital invested days. 

AR turnover (account receivable) and Inventory turnover are showing signs of slowing down which caused longer period for capital to be stuck with the operations. But is it bad? Not really, it's obviously still in the manageable range.So no need to worry but it's worthwhile keeping an eye on. 

In summary, Intel beats without surprise and keeps good operating results and maintain good financial health. However, even though they raise their guidance for next quarter I won't expect a big rally since investors just got what they expected and the stock is viewed as a mature and dividend stock. (After hour it traded over 2% but fell back to less than 1%)

Earning Release schedule for week 10/11~10/15/2010

I collected the Yahoo's earning release information using VBA in Excel and I made a pivot table to present them in the following graph. This is why I love Excel: collect what I need and present them with my way.:) To make the information more usable I also collected the industry, market cap, PE ratio and PEG ratio (growth adjusted PE ratio, the lower the better in general). Only the companies with greater or equal to a billion market cap is listed here.

Google will be worthwhile to take a look since investors were worrying about its expense increase and dumped the stock for a while. We'll see if the trend continues. JP Morgan is another interesting one as investors are still keen on the impact of the Finreg. Another ones I might take a look are Intel, AMD, Linear technology and Mattel. Semi sector has been downgraded pretty badly and Intel's guidance was also dismal. The three semi companies might give some confirmation on that. Mattel might shed some light on consumer spending. 

New ER season starts

Alcoa (AA) kicked off the new ER season by beating both EPS and revenue. After hours AA traded as high as 4%. It is sending a good signal on economy recovery in the sense of aluminum consumption getting higher. However, keep an close eye on tomorrow's jobs report.

EQIX

EQIX belongs to data center and cloud computing concept and was downgraded badly yesterday after the company released a new negative guidance for Q3. The stock plummeted over 30%. Looks like the investors/traders start to cool off on the cloud computing. It does seem to be an overreaction to me so I did a little research on its financial performance and past earning announcement market reactions. BTW, next ER for EQIX is on 10/26/2010.

Analyst certainly don't think the earnings will be too great comparing with previous year. Note here the analyst recommendation is from Yahoo finance's data which may not be immediately updated. What's interesting here is the earning reversal expectation for Q3. If confirmed during the earning release (ER), I assume the stock can have a good run since yesterday's lowered guidance had already destroyed most of good expectations.

If you look at the market reaction on/after ER, still the positive reactions are more often than negative ones.

 Despite the lowered guidance on revenue, sales are still increasing and I believe it's what matters for the company. I did look at the operating cash flow and it has been positive for past quarters which is somewhat assuring. Cloud computing may sounds too remote for most companies but it is a inevitable trend in my opinion as people get more and more attached with their mobile devices. Hardcore processing capability is no need to be on your tablet all you need is to send in your query and read the results:)

As far as where the stock will go I put my bet on the upside from now. (today the rebounce is around 6% at the moment)