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Q3 Earnings Bonanza, Plus Good Durable Goods

Wednesday, October 25, 2017

Before we tick down the list of new Q3 earnings reports released before the opening bell this morning, another metric pointing to a strengthening economy: a positive read on September (preliminary) Durable Goods Orders. Results came out way ahead of expectations at +2.2%; analysts had been looking for +0.8%. Removing the more-volatile transportation goods totals, we still see +0.7%, which is again a healthy number. Ex-capital goods, non-Defense, ex-aircraft came in at +1.3%.

These numbers indicate that factories look to be busier manufacturing hard products, which spells sunny days ahead for industrial and commercial companies, their workforces and their shareholders. Whatever doubt remains about a new Fed hike coming round the bend is even further quashed. The domestic economy is finally living up to its potential, after years of sluggish growth.

Q3 Earnings Bonanza

The Boeing Company BA, speaking of durable goods, topped expectations on both top and bottom lines this morning: $2.72 per share beat the $2.65 Zacks consensus estimate for the Zacks Rank #2 (Buy) company. Revenues reached $24.31 billion versus the $24.06 billion expected. The premier aircraft manufacturer also upped full-year guidance by a dime to $9.90 - 10.10 per share. Lower backlog quarter over quarter — an important metric for a company that makes such huge and expensive items — helped its Q3 results. Shares are up modestly at this hour; bear in mind BA stock has skyrocketed 70% since 2017 began.

Fiscal Q4 2017 results from Visa V also beat earnings and sales estimates, with 90 cents per share up 5 cents over the Zacks consensus and +15.4% from a year ago. Net operational revenues rose 14% year over year to $4.9 billion, higher than the $4.62 billion we were looking for. Visa continues its pristine earnings performance, having averaged an 8.4% positive surprise in its trailing four quarters. Visa shares are up another 1% in the early session, and are up nearly 40% year to date.

Defense major Northrop Grumman NOC posted a huge earnings beat: $3.68 per share was far ahead of the expected $2.92, whereas quarterly sales of $6.53 billion came in higher than the $6.32 billion anticipated. Northrop also cranked up its full-year earnings guidance notably — from $12.10 - 12.40 per share previously to $12.90 - 13.10 this morning. NOC shares are trading up nearly 2.5% in the current pre-market.

Coca Cola KO also beat on top and bottom lines, albeit less impressively by comparison. Earnings of 50 cents per share topped estimates by a penny, whereas revenues for the quarter $9.1 billion from the expected $8.84 billion. Organic growth of 4% and improved results from its Sprite brand were the notable takeaways. Coke has now beaten earnings estimates 4 times in the last 5 quarters.

Walgreens Boots Alliance WBA — the parent company of pharma retailer Walgreen’s — posted an impressive earnings beat of $1.31 per share, compared to the $1.22 expected, up 22.4% year over year. Sales of $30.15 billion outpaced the $30.05 in the Zacks estimate, up 5.3% year over year. Strong retail pharma sales in the U.S. was somewhat offset by weaker International sales. But WBA shares are up markedly in today’s early session, nearly +4%.

Mark Vickery
Senior Editor

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