Earnings Roundup: Alcoa (AA), Google (GOOG), And Wells Fargo (WFC)

| April 16, 2012 | 0 Comments

earnings roundupEarnings season is here… It’s time for companies to put up or shut up.

Let’s take a closer look at Alcoa (AA), Google (GOOG), and Wells Fargo (WFC).

Alcoa (AA) reported earnings of 10 cents per share.  Far better than the 4 cent per share loss analysts had been expecting.  Simply put, they hit it out of the park.

It was a nice surprise from a company that struggled to a 3 cent per share loss last quarter.

How did they get things turned around?

The aluminum maker cut costs and sold more aluminum to companies in the automobile and aerospace industries.

However, management was cautious with their earnings guidance because there’s a glut of aluminum and prices are depressed.

That could be a blessing for investors.  AA should have little trouble beating estimates next quarter.

Google (GOOG) reported earnings of $10.08 per share.  And they announced an unusual stock split.

The tech giant led off with a better than expected 14.5% first quarter earnings growth.  However, revenue growth of 22% came up just short.

It’s a solid start for a highly anticipated tech earnings season.  Now, other tech companies need to follow Google’s lead if the sector is going to hold onto its impressive gains so far this year.

On the other hand, Google’s stock split is a bit confusing.

They’re splitting the stock 2-for-1.  Investors will receive one share of the new Class C stock for every share of Class A or Class B stock they own.

I don’t understand why they need an entirely new class of stock.  One thing’s for sure, the split is going to play havoc with the stock options on GOOG.

Wells Fargo (WFC) reported earnings $0.75 per share.  A 13% jump from the first quarter of last year.

Their results were fueled by a rebound in mortgage lending and fewer delinquent loans.

At this point, Wells is the largest mortgage lender and servicer in the US.  So it’s not surprising to see the bank turn in a solid quarter.

Remember, we had record low mortgage interest rates last quarter.  And home buying activity accelerated as bargain hunters bought homes at depressed prices.

The fact is WFC is one of the strongest banks around.  And they’re leveraged to a rebound in housing.  They could end up being the big winner in the aftermath of the 2008 financial crisis.

Clearly, first quarter earnings season got off to a fast start.  And it’s sure to get better as we move into the heart of earnings this week.

Keep an eye on Goldman Sachs (GS), IBM (IBM), Intel (INTC), YUM! Brands (YUM), Microsoft (MSFT), Verizon (VZ), and McDonald’s (MCD) when they report earnings this week.  The performance of these bellwethers will likely determine the fate of the markets this week.

Good Investing,

Corey Williams

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Category: Earnings Roundup

About the Author ()

A former banking executive, Corey Williams is the Chief Options Strategist and co-editor of our well-known daily newsletter, Options Trading Research. Corey’s extensive experience with options goes all the way back to his days in corporate finance. It was this decade in banking where Corey discovered the most important skill an options trader can have– the ability to analyze a company or sector to determine its likely future direction. And now he’s brought this background, experience and love of options to Options Trading Research, the unique daily e-letter devoted exclusively to helping individual investors profit from the very lucrative options market.