Please ensure Javascript is enabled for purposes of website accessibility

Stocks Manage an Epic October Despite Today’s Losses

By Demitri Kalogeropoulos - Oct 30, 2015 at 5:23PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

This was the best month for stocks in four years.

Despite minor losses today, stocks just finished their best month in four years . The S&P 500 (SNPINDEX: ^GSPC) fell 0.48% in this trading session while the Dow Jones Industrial Average (DJINDICES: ^DJI) lost 0.52%.

^INX Chart

^INX data by YCharts

But overall, October brought gains of nearly 9% for both indexes, which helped erase the double-digit losses that occurred in August and September. The S&P 500 is now back in positive territory for the year while the Dow remains just below where it started 2015.

Solar energy giant First Solar (FSLR 0.03%) and craft beer maker Boston Beer (SAM 3.84%) both made large moves today after announcing details on their third-quarter results along with updated guidance on future profits. With First Solar, shareholders liked what they heard from their company. But that wasn't the case for Boston Beer investors.

First Solar attracts record bookings
First Solar was the biggest percentage gainer in the S&P 500 today, rising 12% on almost five times its normal trading volume. The solar energy giant issued preliminary third-quarter results this morning that trounced Wall Street's expectations.

Net income of $3.38 per share -- compared to $0.93 per share last year -- far outpaced analysts' $1.55 per share target even after adjusting for a one-time positive accounting benefit it booked this quarter. Management also raised their gross margin and operating income forecasts by a significant margin, while at the same time lowering their expense plans. As a result, 2015 profit is expected to leap to $4.40 per share, up from the prior target of $3.45 per share. First Solar earned $3.91 per share last year .

Image source: First Solar.

Demand trends also appear to be improving for the company, even though management left its 2015 revenue forecast of $3.6 billion unchanged. First Solar achieved a record level of energy volume bookings both in the quarter and in the year-to-date period. "We had tremendous execution in the third quarter from both a financial and bookings perspective," CEO Jim Hughes said, and "we remain confident in our long term strategy and our ability to execute successfully."

Boston Beer gets stung by competition
Boston Beer's stock suffered a 10% loss today after the craft beer specialist posted third-quarter earnings results. The headline numbers actually beat Wall Street's expectations. Sales grew 9% to $293 million as profit improved by 2% to reach $2.85 per share. Analysts, by contrast, were expecting revenue of $288 million and earnings of $2.69 per share.

Image source: Boston Beer.

But the company's comments on the craft beer industry, which came with a sharply downgraded growth outlook, caught investors' attention. CEO Jim Koch warned that Boston Beer's latest growth pace didn't meet management's expectations due to weakness in its flagship beer brand. "Our Samuel Adams trends appear to represent a very competitive category, where drinkers are seeing greatly increased choices and established brands are being affected." The slowdown led Boston Beer to lower its full-year growth estimate from 7.5% down to 4.5%. It had managed better than 20% growth in each of the last two fiscal years.

Management plans to respond to the competition in the short term by directing more cash to advertising and promotional expenses. That spending category jumped by 20% this quarter, more than double the pace of sales growth. Over the longer term, growth will come primarily from launches of new hit products that can boost results as Angry Orchard has done for the last few years. Yet investors will have to be patient; management's initial reading of 2016 sales growth released today only called for improvement in the "mid to high single digits."

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

The Boston Beer Company, Inc. Stock Quote
The Boston Beer Company, Inc.
$314.59 (3.84%) $11.62
First Solar, Inc. Stock Quote
First Solar, Inc.
$68.15 (0.03%) $0.02
Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
$31,097.26 (1.05%) $321.83
S&P 500 Index - Price Return (USD) Stock Quote
S&P 500 Index - Price Return (USD)
$3,825.33 (1.05%) $39.95

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

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/01/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.