Tesla will present their first quarter earnings report today after the market closes, and there are some key things that investors should keep an eye on, besides just the revenue growth and cash burn figures that will surely be talked about by analysts after the report.
Advanced Micro Devices, Inc. (AMD) announced their first quarter earnings report on April 16th, and missed estimates for revenue and EPS. To be honest, the earnings report was rather depressing, as it also projected that revenues for the current quarter would fall another 3%, plus or minus 3%, sequentially. With revenue falling 26% this quarter, there does not look like there is much to be optimistic about when considering this stock. The poor earnings report, along with unfavorable market conditions, has caused the stock price to fall precipitously in the last year. However, some comments made by CEO Lisa Su offer some hope that the company will eventually be able to turn things around.
LinkedIn Corp. (NYSE: LNKD) operates a social networking website that is focused on professional networking. The company released its most recent earnings report on April 30th, where forward guidance severely disappointed investors. The stock price fell significantly the next day, as it was the first time that the company’s earnings had disappointed investors in the four years it has been traded publicly. While the stock price was valued extremely high before the earnings report, the resulting sell-off has been overblown, and the company’s long-term outlook remains strong and intact. Therefore, the current dip in the stock price represents a great opportunity to buy into this position.
Apple Inc. (AAPL) had another incredibly strong quarter following its record breaking first quarter, when the company had profits of $18 billion. Profits this quarter weren’t nearly as high, as the first quarter includes holiday sales causes it to always be the best performing quarter. But profits did increase 33% when compared year-over-year, an astonishing amount, as the company had its best ever March quarter results. Revenue was up 27% and earnings per share were up 40%, which indicate that the company’s margins improved while it repurchased shares. Taken altogether, CEO Tim Cook put it best when he declared that it was hard to find anything not to like in the numbers. Algorithmic Predictions For 2Q Compared To Results I Know First has written numerous bullish articles during the second quarter, arguing that the company would continue to perform well and the stock price would climb even higher. The first article was written after the first quarter earnings report. In it, I argued that the stock price had more room to increase, especially because of the success Apple was having in China. Another article, written on February 25th, focused on how demand for the iPhone would remain high even though Apple sold a record 74.5 million units in the first quarter. A third article was a preview for the earnings report, and reiterated that iPhone sales would perform better in the second quarter compared to previous years because most of the sales so far had been converting users of other devices, and that Apple would continue this trend in the coming quarter. The stock price has continuously climbed during the previous quarter as the articles predicted, increasing over 15%.
Tesla Motors Inc. (TSLA) is known as an electric car company. Its stock price had suffered since reaching an all time high in September 2014, falling more than 34% just a month ago. Concerns over the company’s success in China, along with the affordability and marketability of the car, made investors unsure whether the innovative company deserved the high valuation it had at the time. I Know First Algorithmic Prediction Since then, the stock price has recovered, as I Know First predicted it would in an article that you can read here. The article argued that the stock price would climb in 2015, as the poor results in China were overblown and would be addressed. Further, demand for the Model S still outweighed supply, which Tesla was addressing with its “gigafactory” being built in Nevada. An announcement coming up on Thursday, where Tesla will introduce a new product that will add value to the company, and the prospect of improved operations in China mean the stock price will continue to climb higher.
For the 12th straight quarter, International Business Machines Corp. saw its revenue drop compared to the year-earlier period. Total revenue from the quarter fell to $19.6 billion from $22.2 billion, while net income fell slightly to $2.33 billion from $2.38 billion. The consistently diminishing revenues have partially been a result of efforts by CEO Ginny Rometty to transform the business. The company has maintained for years that it would struggle while transforming the business, but actual results have still not occurred. This could change later this year, as the signs are finally there for IBM to start organically growing its revenue after the transformation.
General Electric Company (GE) has been strategically spinning off assets in recent years in order to streamline the business, with the sale of GE Capital the latest step. Although this move hurt the company’s bottom line in its most recent earnings report, it is a smart move in the long run. GE’s revenue declined by 12% in the most recent quarter, and the spinoff of the banking business caused profits to fall 6%. But by selling off its financial business, worth up to $500 billion, the company can become more focused on its industrial business. While this will help the company in the long run, difficult times are ahead during this transition, meaning investors should wait before initiating a position in this stock.
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