No question, it's been an underwhelming Q3 company earnings season. On the S&P 500, collective third-quarter earnings per share were down 4.1%, worse than the estimated 3.1% decline.
And with over 97% of the market having posted results, time has run out for a flurry of positive updates.
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Taking the brunt of this disappointing earnings season were energy and commodity share prices. The S&P 500 energy sector's collective EPS was down 31.58% from a year earlier, while the commodity stocks sector was down 20.65%. Earnings per share for tech stocks dropped 8.56%.
But there were some stand out performances, turnarounds and unexpected results. So, post-earnings season, who are the winners and who are the losers?
Who did well
Netflix
What was the market expecting?
Going into Q3 earnings, Netflix [NFLX] has faced a slowdown in subscriber growth and increasing competition from rival streamers. Expectations were for the stock’s earnings to grow 16.9% year-on-year, coming in at $1.04 per share for the third quarter.
What happened?
Netflix's share price jumped 2.5% as earnings per share of $1.47 smashed analyst expectations. Revenue came in at $5.24 billion, a 31% jump from the same quarter last year. International subscriber growth topped expectations, coming in at 6.26 million, compared to the forecasted 6 million.
General Electric
What was the market expecting?
GE [GE] shareholders were hoping that CEO Larry Culp’s cost-cutting strategy would pay dividends for the struggling conglomerate in its quarterly results. Wall Street had forecast earnings per share to come in at $0.12, while revenue was forecast at $28.77 billion.
What happened?
GE's share price gained 14% as Q3 numbers validated Culp’s strategic direction. Earnings per share came in at $0.15, beating expectations. Promisingly GE upped its guidance for industrial free cash flows to be between $0 and $2 billion, compared to the previous -$1 billion to $1 billion.
Tesla
What was the market expecting?
Analysts weren’t expecting much from Tesla's [TSLA] Q3 earnings. Forecasts were for earnings per share of -$0.24, against revenue of $6.45 billion. However, an upset was always on the cards when early numbers showed a record 97,000 vehicles delivered in the third quarter.
What happened?
Tesla delivered this earnings season’s biggest shock by actually making a profit. Earnings per share came in at $1.86, topping analysts’ negative forecasts. Revenue, however, missed expectations, coming in at $6.30 billion. Tesla's share price surged nearly 30% in the three days following the announcement.
Who didn't do well
McDonald’s
What was the market expecting?
Analysts were expecting to chow down on $2.21 earnings per share, against $5.5 billion in revenue during McDonald's [MCD] quarterly market update.
What happened?
Earnings per share of $2.11 were well below analyst expectations, while net income of $5.4 billion in revenue missed forecasts. In fact, this was McDonald’s first earnings miss in two years as the company pinned the blame on promotions that failed to lure US customers away from rivals. McDonald's share price fell 4% following the results.
Uber
What was the market expecting?
After its past two quarterly reports revealed Uber [UBER] was burning through cash, hopes were the ride-sharing company could start to reverse spending. Free cash flow, which has been in the negative, was the number to watch with speculation that it would start to move in the right direction.
What happened?
Uber's earnings came in at -$0.68 a share, while net income was in line with expectations of -$1billion. Despite losses coming in lower than expected against higher revenues, investors were unimpressed with just how much the company is spending to fuel growth. Uber’s share price tanked 5% following the results.
Shake Shack
What was the market expecting?
The growing fast food outlet was expected to post earnings per share of $0.20. Revenue expectations were $157.9 million, with store growth up 2.9%.
What happened?
Shake Shack’s [SHAK] share price dropped 13% as store growth missed expectations, coming in at 2%. Adjusted earnings per share topped analyst expectations at $0.26, while revenue expectations were $157.8 million, slightly below Wall Street forecasts. Shake Shack could be in for more of the same in Q4. On the earnings call, Chief Financial Officer Tara Comonte highlighted that a transition from four to one delivery partners would see more ‘inherent risk’ in fourth-quarter numbers.
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