The past week was the peak of earnings season for the Dow Jones Industrials (INDEX: ^DJI). All in all, 12 members of the Dow released quarterly reports this week. So, which ones beat the Street, and which crashed and burned? Let's take a closer look at the results:
|
Stock |
Consensus EPS Estimate |
Actual EPS |
Surprise |
|---|---|---|---|
| DuPont | $0.33 | $0.35 | 7% |
| Johnson & Johnson | $1.09 | $1.13 | 4% |
| McDonald's | $1.30 | $1.33 | 2% |
| Travelers | $1.53 | $1.48 | (3%) |
| Verizon | $0.53 | $0.52 | (2%) |
| Boeing (NYSE: BA) | $1.01 | $1.31 | 30% |
| United Technologies | $1.46 | $1.47 | 1% |
| Caterpillar (NYSE: CAT) | $1.73 | $2.32 | 34% |
| 3M | $1.31 | $1.35 | 3% |
| AT&T | $0.43 | $0.42 | (2%) |
| Chevron (NYSE: CVX) | $2.84 | $2.58 | (9%) |
| Procter & Gamble | $1.08 | $1.10 | 2% |
Source: Yahoo! Finance.
As you can see, it was a pretty favorable week on the earnings front. Eight stocks beat estimates, while only four fell short. Most stocks came fairly close to analyst expectations, beating or missing by only a few percentage points in most cases.
Caterpillar posted the biggest earnings surprise, as it saw per-share earnings vault 58% higher from year-ago levels. The company has had positive momentum since last September, when optimism about an improving global economy pulled the shares out of a tailspin. Since then, the company has continued to boost its global presence, using its buyout of mining equipment maker Bucyrus as an opportunity to gain an even bigger foothold in emerging markets. That's a strategy that several industrial players, including rival Joy Global and crane maker Manitowoc (NYSE: MTW), have executed to near-perfection recently. As Fool analyst Brendan Byrnes explained, looking forward, Caterpillar sees further sales growth in 2012. Even though increased spending on research and development -- as well as capital expenditures -- could hurt earnings and cash flow, it should pay long-term dividends.
Boeing also beat estimates soundly, but the reception its stock got wasn't as positive. The aircraft maker and defense contractor announced a huge airplane order, but investors are concerned about the company's future. Not only did Boeing say that its earnings would take a hit during 2012 due to pension-related expenses, but the State of the Union address strongly hinted at further defense spending cuts that could hit Boeing hard in the years ahead.
Looking at negative surprises, Chevron topped the list. The oil giant fell well short on both revenue and earnings for the quarter, despite slightly higher production. For the longer term, however, perhaps the biggest concern comes from legal problems it's facing abroad. As Fool energy analyst Dan Dzombak detailed earlier today, the Brazilian government is seeking $11 billion in civil damages and is considering criminal charges in connection with an oil spill off Brazil's coast in November -- a spill which (at 2,400 barrels) is tiny compared with the Gulf oil spill. Also, Ecuadorian courts ordered an $18 billion judgment against the company for environmental damages, which the company is fighting.
Keep your eyes open
Earnings season is an important time to pay attention to the companies whose stocks you own. In the Fool's "Fourth-Quarter Earnings Report: 7 Stocks You'll Want to Watch," you'll find information on this quarter's possible big performers. It's completely free for our readers, so click here to access your free report today.
