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3 Earnings Reports That Caught My Attention Last Week

By Sean Williams - Apr 22, 2013 at 11:16AM

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A well-known chip maker, a temperature-sensitive trucking company, and a global tobacco producer caught my eye last week.

As second-quarter earnings reports begin to kick into 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.

Company

Consensus EPS

Reported EPS

Surprise

Advanced Micro Devices
(AMD 1.68%)

($0.18)

($0.13)

28%

Marten Transport
(MRTN 1.53%)

$0.26

$0.32

23%

Philip Morris International
(PM 1.74%)

$1.34

$1.29

(4%)

Source: Yahoo! Finance.

Advanced Micro Devices
It's certainly a gamble, but perhaps the calls for AMD's demise were a bit premature after all. I certainly didn't expect anywhere near the quarter that AMD delivered given that microprocessor giant Intel (INTC 0.84%) missed Wall Street EPS expectations by $0.01 in the first quarter. Overall profit tumbled 25% from the year-ago period because of weak PC sales. Furthermore, research firm IDC noted that PC sales dipped a whopping 14% in the first quarter -- essentially their worst quarterly dip on record. Even with Intel backing its full-year profit forecast, no one was expecting much from AMD.

Yet, for all intents and purposes, AMD's cost-cutting and ongoing restructuring is beginning to show the first signs of a turnaround. AMD's loss and sequential revenue decline was much lower than many had forecast (including AMD), and had a lot to do with its 18% decrease in operating expenses, and its key wins in the gaming sector as the processing core provider for Sony's Playstation 4 and Microsoft's new Xbox console. With a renewed focus on graphics, gaming, and mobile, AMD just might be able to pull off the impossible and return to profitability before the year is out -- even as PC sales continue to slump. I never thought I'd say this, but don't count out AMD just yet!

Marten Transport
Late last year I went out on a limb and predicted that three underperforming sectors were going to see the sunshine in 2013. One of those was the PC sector, and, thus far, I've been dead wrong in that respect. On the other hand, my forecast that trucking stocks would see relief has been pretty much spot-on.

Marten Transport, a provider of temperature-sensitive trucking solutions, reported its first-quarter results last Tuesday and absolutely drove over Wall Street's profit estimates by 23%. Operating revenue increased 8.6% and net income spiked 32.2% as the company managed to efficiently cut costs and boost its fuel surcharges to counteract any shipping weakness that may have been apparent. 

One factor set to work in Marten's favor -- since it does transport food -- is that food inflation is relatively tame across nearly all tradable commodities. With food costs stable, consumers are more apt to buy and demand is unlikely to fall. It also doesn't hurt that diesel fuel prices have been stuck in a tight range for two years now, giving trucking companies like Marten Transport a chance to boost their prices to make up the difference. I'll be looking for trucking companies like Marten to continue to outperform in 2013.

Philip Morris International
Philip Morris International's first-quarter report is proof that even a tobacco company that services nearly every country around the globe can have a snafu arise once in a while.

For the quarter, Philip Morris, known best for its premium Marlboro brand, reported an adjusted profit of $1.29 as revenue inched higher by nearly 2% to $7.58 billion. Unfortunately, underground cigarette trading in parts of southeastern Asia and the Philippines took its toll as cigarette volume declined sharply, by 6.5%. Philip Morris' saving grace is its amazing pricing power, which helped push revenue higher despite the shipping volume retracement. 

Some might see this action as all the more reason to hunker down at home with Altria (MO 2.02%), which commands nearly half of all premium brand market share in the U.S. and has one of the safest-yielding dividends imaginable. However, I contend that the U.S.' antismoking regulations are too strict and poised to get even stricter as the years progress. Furthermore, President Obama's 2014 budget proposes a 93% federal government tax increase per pack to $1.95 from $1.01. In my opinion, the geographic diversification of Philip Morris will trump the domestic concerns Altria will face in the coming decade any day of the week!

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.

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Stocks Mentioned

Advanced Micro Devices, Inc. Stock Quote
Advanced Micro Devices, Inc.
AMD
$95.07 (1.68%) $1.57
Philip Morris International Inc. Stock Quote
Philip Morris International Inc.
PM
$102.91 (1.74%) $1.76
Marten Transport, Ltd. Stock Quote
Marten Transport, Ltd.
MRTN
$17.24 (1.53%) $0.26
Altria Group, Inc. Stock Quote
Altria Group, Inc.
MO
$52.12 (2.02%) $1.03
Intel Corporation Stock Quote
Intel Corporation
INTC
$42.00 (0.84%) $0.35

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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