The Good, the So-So and the Ugly

We’re more than halfway finished with first-quarter earnings, and that means that most big blue chip companies have already released earnings. Although the second act of earnings season is usually reserved for small- and mid-cap companies, we still had a number of large-cap companies announce their quarterly operating results.

Now, as you know, I consider earnings season the ultimate litmus test for whether a company is fundamentally sound, so today I wanted to take a deeper look at three companies that have been the subject of a few recent emails and Facebook messages. (If you’re not already a fan of my Facebook group, you can do so here: http://www.facebook.com/navgrowth).

The Good:

Before the opening bell today, Tyson Foods Inc. (TSN) announced stronger-than-expected bottom-line growth thanks to higher beef and chicken prices. Compared with the same quarter last year, net income climbed 4% to $166 million, or $0.44 per share. Meanwhile, analysts forecast earnings of $0.39 per share, so the company posted a healthy 13% earnings surprise. Over the same period, sales inched up 3% to $8.27 billion; this slightly missed the $8.49 billion consensus estimate. Management was pleased that the company pulled off this growth despite a challenging market environment, so the company expects $34 billion in sales for 2012. This is largely in line with the Street view. Shares of TSN opened up modestly after this solid earnings report.

The So-So:

Dish Network Corp. (DISH) announced lackluster operating results for the first quarter, so shares remained flat today. This time last year, the company benefited from a litigation-related windfall, so the company’s bottom-line declined 34% year-over-year to $360.3 million. Nonetheless the company’s adjusted earnings of $0.80 per share topped the $0.70 consensus estimate by 14%. Over the same period, sales climbed 11% to $3.58 billion; this slightly missed the $3.62 billion consensus estimate. In the first quarter, the company added 104,000 subscribers and also completed its acquisition of Blockbuster Inc.

The Ugly:

Shares of Cognizant Technology Solutions Corp. (CTSH) plunged 20% during trading hours on Monday after the company cut its 2012 forecast. Compared with Q1 2011, net income climbed 17% to $243.7 million. Adjusted earnings weighed in at $0.71 per share, which missed the $0.79 consensus estimate by 11%. Over the same period, sales jumped 24% to $1.71 billion; this came in line with analysts’ estimates. Looking ahead to 2012, management expects adjusted earnings of $3.62 per share on $7.34 billion in sales. Although earnings topped the Street view of $3.45 per share, this revised sales guidance comes in below the $7.54 billion consensus estimate. Even though the company announced a hefty $400 million stock buyback program, investors weren’t pleased with the earnings miss and lackluster forecast, so shares gapped down today.

I cannot stress how important these earnings announcements are for investors, but these aren’t the only news that investors need to stay updated on. So in tomorrow’s blog post, I am going to take a look at election politics—including the U.S. 2012 Presidential election, plus the recent elections in France, Greece and Russia. Please be sure to stay tuned for tomorrow’s blog post.

Sincerely,

Louis Navellier

Louis Navellier

Louis Navellier

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