3 Earnings Reports That Caught My Attention Last Week

As first-quarter earnings kick into high gear, I can't help but point out that the majority of earnings reports we've covered over the past year have been better than expected. With so many companies reporting during the weeks that comprise earnings season, it's easy for some earnings reports to fall through the cracks.

Each week for the past year, I've taken a look at three companies that could be worth further research after either beating or missing their profit expectations. Today, we'll take a gander at three more companies that reported earnings last week. They may have slid under your radar, but they deserve a look.

Source: Yahoo! Finance.

Freeport-McMoRan Copper & Gold
One quarter doesn't make a trend, but I'd go out on a limb and say the next quarter most certainly will!

Freeport-McMoRan, a copper and gold miner, reported considerably better-than-expected fourth-quarter results highlighted by an $0.08 earnings beat as copper sales jumped 18% to 972 million pounds from the year-ago period. The two big concerns I had heading into this quarter were the company's rising copper costs and lackluster Chinese demand hampering copper production. As a surprise to me, and probably every other investor, Freeport's copper costs actually fell, to $1.54 from $1.57 a year earlier, as its operations proved to be more efficient, and it was strong demand from North America and South America that spurred copper sales, not China.

The takeaway here is that the housing resurgence in the U.S. is going to create enough demand over the near term to boost copper sales. Also worth noting, China's GDP reversed course to the upside for the first time in the past seven quarters. A $156 billion infrastructure bill passed in China should spur heavy manufacturing, which should play right into Freeport's and other copper producers' hands.

Even more so, Freeport's strong results and forecast that copper production within the company will increase by 37% by 2015 lends credence that smaller companies with heavy copper investments, like Thompson Creek Metals (TCPTF), a personal holding of mine, will be set up for instant success. Thompson Creek's Mt. Milligan copper mine is drastically over its initial budget, but the mine -- which contains 2.1 billion pounds of copper -- is expected to come on-line during the fourth quarter of 2013, right as China and the U.S. are ramping up infrastructure expansion. Copper miners are suddenly hot once again!

Coach
Coach's second-quarter results left a lot to be desired from a shareholder's perspective, especially with regard to sales in North America. North American sales rose just 1%, but were hampered by a 2% same-store sales decline as competition from both brick-and-mortar and Web-based rivals increased, and promotional activity peaked. International sales jumped by 12%, with China really picking up the slack and accounting for sales growth of 40%. 

The question here then becomes: "Is Coach's business model broken?" I don't think so.

Coach is undeniably going through a rough patch; however, its investments in its direct-to-consumer segment, and the fact that it's stuck to its guns on pricing by not stooping to its competitors' level of heavy promotional marketing, should keep the brand's value intact over the long term. In retail, everything revolves around brand image, and Coach is one of the leaders in developing a cult-like brand following. With a big focus on maintaining its margins (which it's done well) and expanding to rapidly growing markets in Asia, I feel Coach shares present an intriguing value here.

Select Comfort
If there's anything we learned from Select Comfort's fourth-quarter report, it's that the good times in mattress sales have definitely come and gone.

Select Comfort's fourth-quarter results actually showed a 17% increase in sales as same-store sales rose 11%, but sales widely missed forecasts as increased marketing expenses ate heavily into its bottom line. This is a trend we've witnessed far and wide within the sector. Tempur-Pedic (TPX -0.66%) actually trounced Wall Street's expectations with a $0.60 EPS profit on Friday, but this was down dramatically from the $0.84 it reported in the prior year. Worse yet, sales in North America fell a whopping 9%.  

For both Select Comfort and Tempur-Pedic, the trend is the same -- mattress sales are only going to take off if discretionary spending takes off. A 2% paycheck haircut from the reemergence of the payroll tax is going to work very much against the sector and force these companies to out-innovate and out-market one another, which, ultimately, eats into their bottom lines and punishes margins.

If I were you, I'd take Select Comfort's 2013 full-year guidance, which was around 10% lower than the consensus at the midpoint, and run kicking and screaming in the opposite direction. This sector is not the path for a good night's sleep this year!

Foolish roundup
Sometimes an earnings beat or miss isn't as cut-and-dried as it appears. I've given my two cents on what's next for each of these companies -- now it's your turn to sound off. Share your thoughts in the comments section below and consider adding these stocks to your free and personalized Watchlist.

• Add Freeport-McMoRan Copper & Gold to My Watchlist.
• Add Coach to My Watchlist.
• Add Select Comfort to My Watchlist.