Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Dow Winners and Losers: United Technologies and IBM

Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.

Earnings season continues as stocks opened lower on Wednesday, with the S&P 500 and the narrower Dow Jones Industrial Average (DJINDICES: ^DJI  ) down 0.03% and 0.27%, respectively, at 10:15 a.m. EST. One Dow component, conglomerate United Technologies (NYSE: UTX  ) , announced its fourth-quarter results before the market opened, while streaming video provider Netflix will provide the day's most anticipated report after market close this afternoon.

United Technologies' earnings came in ahead of Wall Street's expectations, with earnings per share from continuing operations of $1.58 versus a consensus estimate of $1.53, according to Thomson Reuters. However, revenue of $16.76 billion (a 1.9% year-on-year increase) was lower than the $17.09 billion Wall Street was looking for.

The earnings "beat" was enough to send the shares of United Technologies up 0.83% at 10:15 a.m. EST, even as the Dow is in the red. The market is forward-looking and United Technologies Chairman and CEO Louis Chenevert gave investors something to look forward to with guidance for fiscal 2014. Chenevert stated that "we are confident in our ability to deliver 2014 earnings per share of $6.55 to $6.85 on sales of approximately $64 billion."

At the midpoint of that range, the company would achieve 8% earnings growth on 2% revenue growth. Nothing earth-shattering, to be sure, but it's an honest figure and I have greater confidence that the company can achieve it than in the S&P 500 achieving its bottom-up earnings target.

Dow component IBM (NYSE: IBM  ) is pulling the index lower this morning after the release yesterday of its fourth-quarter results. While the technology services provider managed to beat expectations on earnings, investors are focusing on the 5% year-on-year revenue decline -- the seventh consecutive quarterly drop. Investors are penalizing the stock for that trend, pushing the shares down 3.33%. IBM carries the second-largest weighting in the Dow, which partially explains the index's drop and divergence with the S&P 500 this morning.

While the market's reaction is not unexpected, it is providing patient investors the opportunity to buy the shares not much above (~+5%) the price Warren Buffett paid in constituting one of Berkshire Hathaway's top equity positions.

Here's your chance to discover the one stock you must own for 2014
There's a huge difference between a good stock and a stock that can make you rich. The Motley Fool's chief investment officer has selected his No. 1 stock for 2014, and it's one of those stocks that could make you rich. You can find out which stock it is in the special free report "The Motley Fool's Top Stock for 2014." Just click here to access the report and find out the name of this under-the-radar company.

Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2804233, ~/Articles/ArticleHandler.aspx, 8/28/2015 1:39:15 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Alex Dumortier

Alex Dumortier covers daily market activity from a contrarian, value-oriented perspective. He has been writing for the Motley Fool since 2006.

Today's Market

updated Moments ago Sponsored by:
DOW 16,617.72 -37.05 -0.22%
S&P 500 1,981.75 -5.91 -0.30%
NASD 4,820.45 7.74 0.16%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

8/28/2015 1:24 PM
^DJI $16616.68 Down -38.09 -0.23%
IBM $148.14 Down -0.40 -0.27%
International Busi… CAPS Rating: ****
UTX $93.09 Down -0.18 -0.19%
United Technologie… CAPS Rating: ****