What's Moving These 5 Stocks This Earnings Season?

 |  Includes: BIDU, GCI, HOLX, IDTI, MCK
by: Stock Croc

I have identified five stocks that reported (or were supposed to report) earnings on Monday. While Baidu (NASDAQ:BIDU) is delaying its earnings report until late February, Hologic (NASDAQ:HOLX), Integrated Device Technology (NASDAQ:IDTI), McKesson (NYSE:MCK), and Gannett (NYSE:GCI) all announced interesting results.

Hologic Inc. was up significantly on Tuesday after delivering a terrific earnings report. Net income was up 90% year over year, which handily beat analyst expectations. Revenue too was better than Wall Street was anticipating, and Hologic's outlook for the coming year was optimistic. Hologic has also had a couple of other interesting stories lately. The company was in a court battle with Conceptus, which was trying to prevent Hologic from selling its Adiana product due to possible infringement. The ruling went in Hologic's favor though, and the company will not even need to pay Conceptus royalties. The FDA has also approved Hologic's Cervista High Throughput Automation system. Here's how Rob Cascella described it: "The Cervista HTA system automates our Cervista HPV HR test, providing higher throughput, improved chain of custody and accurate results." Clearly, Hologic has exciting products out right now, and I am fan of this stock provided that investors can buy it at a reasonable price. As described in the earnings transcript, Hologic is making progress with tomosynthesis and receiving support from the American College of Radiology and American Congress of Obstetrics and Gynecologists. Future improvements to this technology should lead to stock appreciation. It is worth noting, however, that many of this company's treatments could see reduced demand if the economy continues to stagnate.

Baidu, Inc. was down on Tuesday after the company announced that it would actually not report its earnings until late February. The Chinese search engine giant was expected to report on January 30th, and the delay could be a move to bring attention to Baidu. Another possibility is that the new earnings date is better positioned in regard to the Chinese New Year. Regardless, analysts are expecting big things in this earnings report. Both revenue and net income should be up enormously over the same quarter one year ago. The company's been boosted by Google's (NASDAQ:GOOG) withdrawal from China as well as improvement in the market for search engine advertising. On the other hand, some investors are concerned about future economic growth in China, which at some point has appeared to be slowing down. The most recent actions from the Chinese government have been to try to stimulate business, however. Personally, I think Baidu is too expensive right now. Sohu.com (NASDAQ:SOHU) offers a comparable business for much lower value metrics - those numbers are price to earnings ratio of 13.62, price/earnings to growth ratio of 0.78, and price to sales ratio of 3.02. As noted here, Sohu.com stands to benefit enormously as more and more Chinese citizens gain access to the Internet.

Integrated Device Technology, Inc. was down significantly on Tuesday. While the company's profits were slightly better than analysts were expecting, revenue was a bit of a disappointment. The company's server chips did well, but other types of hardware suffered a bit. Here's how CEO Ted Tewksbury explained the situation: "While some customer ramps have been delayed by macroeconomic factors, we remain well positioned for multi-year growth driven by the ongoing rollout of cloud computing, 4G wireless infrastructure and mobility platforms." I am inclined to agree with Mr. Tewksbury. For instance, the company's new PLL clock generators should find use in both mobile and traditional settings because they are both small and low-cost. I believe this stock has been beaten down too much by the earnings report, and investors are overreacting. A low price/earnings to growth ratio (0.60) and a low price to sales ratio (1.57) also make this stock attractive. Both of those numbers are lower than similar semiconductor companies like Cypress Semiconductor (NASDAQ:CY), Infineon Technologies (OTCQX:IFNNY), and Texas Instruments (NYSE:TXN). Texas Instruments would be a better choice for dividend investors though - that stock offers a dividend yield of 2.1%. In fact, more of my opinion about the semiconductor industry can be found here.

McKesson Corporation was up on Tuesday after solidly beating analyst expectations for both profit per share and revenue. The company was able to set aside less money for litigation, although it was also limited in its pricing in some cases due to restriction from the Canadian government. McKesson also announced in the earnings report that it would buy two businesses from Katz Group Canada. Specifically, the independent banner business is Drug Trading Co. Ltd., and the franchise business is Medicine Shoppe Canada Inc. For a price of C$920 million, this figures to be a good deal for McKesson. While the dividend yield of 1% may not be enough to lure dividend investors, this stock could be a wise purchase for others. McKesson's price/earnings to growth ratio of 0.88 is lower than that of similar companies like AmerisourceBergen (NYSE:ABC), Cardinal Health (NYSE:CAH), and Owens & Minor (NYSE:OMI). Additionally, I believe that some of McKesson's divisions could keep up the high growth numbers they posted this past quarter. In fact, both the Distribution Solutions and Direct Distribution and Services units figure to be prime beneficiaries of increased healthcare spending. Clearly, McKesson is a key link in the modern healthcare system, and the company's technology solutions may soon see increased demand as well.

Gannett Co., Inc. was flat on Tuesday after reporting adjusted earnings per share that were better than analyst expectations. Those adjusted earnings per share were without Gannett's numerous restructuring charges, and net income was down 33% year-over-year with those things considered. Revenue was about in line with analyst expectations, though, and CEO Gracia Martore had this to say: "We are positioning for growth in print and digital media through new subscription models delivered across platforms, capturing opportunities in adjacent businesses, and continuing to focus on operational efficiencies." As many were expecting, the company's traditional publishing and broadcasting divisions saw their revenue decline, while Gannett's digital offerings actually grew nicely. According to my projections, Gannett may be able to increase dividends soon. The company had over $700 million of free cash flow in 2010 and over $550 million of free cash flow in the first three quarters of 2011. That left the company plenty of money to pay off debt, which is coming down slowly. As debt payments become less of a priority, more money will be distributed to shareholders. The dividend yield is already 2.1%, and I expect that to go up as the company finishes its restructuring plans. While Gannett may be an old-school company, the fact remains that someone still has to deliver the news.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.