It's finally Friday, and the S&P 500 (^GSPC -0.46%) is trying its hardest to find a reason to be happy. The index has spent all day climbing out of the hole that this morning's underwhelming jobs report dug for it, and finally crawled into positive territory near the close with a gain of 2.8 points, or 0.2%. We're still over 1,700 points, and it's thanks, in part, to the day's best performers. Let's take a look at why the three top-performing S&P 500 stocks of the day put together their gains.
Sealed Air (SEE -1.14%) couldn't compress its gains today -- the hygiene-solutions company was today's top S&P stock, with a 9% pop after reporting better-than-expected earnings. Sealed Air's revenue was a bit light, gaining only 2% year over year, to $1.96 billion, against Wall Street's $1.97 consensus, but adjusted earnings of $0.35 per share trounced the Street's $0.25 consensus. Guidance of $7.7 billion to $7.9 billion for the full fiscal year comes in even with the Street's $7.8 billion projection, and EPS guidance in the $1.10 to $1.20 range also hits the $1.16 consensus at the middle of its range.
Sealed Air's earnings beat today prompted Morningstar's analysts to put the stock "under review," which is expected to raise their price target from $23 per share. Today's buyers had better hope that it's a significant increase, because that target is about 25% below today's closing price.
Mylan (MYL) was the silver medalist in today's S&P race, finishing with a 7.1% gain as investors continue to digest the generic drugmaker's Thursday-morning earnings report. Mylan took the unusual step of detailing five-year guidance yesterday afternoon, projecting 13% revenue growth per year until 2018, by which point it expects to be earning $6.00 per share. Mylan is just as bullish on shorter time lines, projecting an EPS range of $2.75 to $2.95 for 2013, and a 19% improvement (from the low end of that range) in 2014, to $3.39 in EPS.
This is a gutsy prediction, as Mylan is telling investors that they should expect EPS to grow by nearly 120% over the next five years. That might not be as gutsy as you think, though -- out of a grab bag of major drugmakers, Mylan comes in second in its trailing five-year EPS growth (and that might well improve to first place once we get updated data):
PFE EPS Diluted TTM data by YCharts
A number of hugely profitable drugs are set to go generic over the next five years, which Mylan is doubtless counting on to push this prophecy toward fulfillment. It's definitely worth keeping your eye on, even if the company doesn't pay dividends at the moment.
Dell (DELL.DL) was another top S&P performer today, as the computer maker's stock gained 5.6% on the Michael Dell-led buyout group's "final offer" of $13.75 per share, which will now be paired with a $0.13-per-share special dividend should shareholders accept the buyout. The effective price of $13.88 is slightly above today's close, indicating just a little bit of reservation on the part of major shareholders. Some might be holding back in favor of a rival buyout bid from superinvestor Carl Icahn, who has made an offer of $14 per share for 72% of Dell's outstanding shares. Icahn also has a warrant attached to his tender offer that he claims could add another $4 per share to the price of the deal. It will provide existing shareholders the right to buy one Dell share per four shares tendered in the next seven years.
Dell inches ever closer to a buyout, but will Dell or Icahn get their money's worth? The PC manufacturing industry is hardly healthy, and Dell has made no serious inroads into tablets or smartphones. Today's shareholders are smart to play both sides against the middle for a better offer, but after today's bid, it might be time to put the matter to a vote.
