Earnings: The Good, the Bad and the Ugly

 |  Includes: AFL, FIC, FISV, GGG, RESP, SEIC, VAR
by: Eddy Elfenbein

Eddy Elfenbein submits: This has been a very busy week for earnings. Let's run down some of the recent reports from the stocks on our Buy List.

• Graco Inc. (NYSE:GGG) reported yucky earnings after the bell on Tuesday. The company made 50 cents a share, which was seven cents below Wall Street’s estimate and a penny less than last year. Not good! Revenue rose just 3% to $197.5 million. The stock dropped 5% to $40 a share on Wednesday.

• Right after I mentioned that SEI Investments (NASDAQ:SEIC) was at a new high, the company reported blah earnings. For the first quarter, SEIC earned 62 cents a share, one penny shy of expectations. Of course, that’s still good growth over last year’s 54 cents a share, but Wall Street wanted better. Me too. The stock fell 3.6% on Wednesday.

• At least, AFLAC Inc.’s (NYSE:AFL) earnings were a bright spot. The company reported operating earnings of 82 cents a share, three cents more than estimates. Revenue rose 5% to $3.75 billion. The stock rose 4.5% on Wednesday. That helped ease some of the pain.

• Fair Isaac Corp. (FIC) already announced that it would have bad earnings. Well, they were right. Analysts had been looking for 59 cents a share, but the company said it would be 35 cents to 37 cents a share. The results came in at 37 cents a share. The stock dropped last week when the earnings shortfall was announced, so the shares didn’t do much on Wednesday. I'm not encouraged by this.

• Fiserv, Inc. (NASDAQ:FISV) had a bit of a mixed picture:

Fiserv first-quarter earnings rise

Fiserv 1Q profit slips

Actually, they're both right. Net income fell, but earnings-per-share rose from 64 cents to 66 cents. Analysts, on average, were expecting 67 cents. I'm not worried about FISV. This is a solid company.

• Varian Medical Systems, Inc. (NYSE:VAR) is yesterday's problem child. The company made 46 cents a share for the first quarter, which was in line with expectations. But VAR's EPS outlook for next quarter is for 35 to 36 cents, which is well below the Street’s forecast of 45 cents. VAR sees full-year EPS of $1.79 to $1.81 compared with the Street's forecast of $1.85. The stock was down about 7% yesterday.

• Finally, Respironics, Inc. (RESP) had good news yesterday. The company reported earnings of 46 cents a share, one penny better than expectations. RESP also said this quarter’s earnings will be 50 cents to 52 cents a share compared with the Street’s forecast of 48 cents a share. Full year EPS is expected to be $1.74 to $1.76 compared with the Street’s outlook for $1.63.

Unfortunately, our Buy List hasn’t benefited as much as I hoped from this recent up move in the market. For the year, the Buy List (red line) now trails the S&P 500 (black line), 5.44% to 3.55%. It all turned recently. Since April 5, the S&P 500 is up 3.58%, while the Buy List is up just 1.15%.

Buy List Vs. S&P 500