But Lynch was never the only great stock-picker, as is evident from other all-stars whose work has inspired us and others to create models based upon their ideas. Numbers aside, when it comes to just-plain lovability, it's always seemed to be a neck-and-neck race between Warren Buffett and Peter Lynch, with affection for the latter springing from the backyard investing with which he's most readily associated.

Q3 2009 Earnings Call

October 22, 2009; 9:30 am ET

• U.S. AAA rating not guaranteed. The U.S. could lose its AAA rating if it fails to reduce its deficit over the next 3-4 years, Moody's says. Steven Hess, Moody's lead analyst for the U.S., acknowledges reducing the gap won't be easy: "Raising taxes is never popular and difficult politically, so we have to see if the government can do that or cut expenditures." Earlier this year, markets were spooked after S&P cut its outlook on Britain to Negative from Stable. Meanwhile, Moody's said today European countries' rising debt won't trigger across-the-board downgrades.
• Deep pay cuts coming to TARP recipients. In a plan to be made public within the next few days, the government will order deep pay cuts at the biggest bailout recipients - Citigroup (C), Bank of America (BAC), AIG (AIG), GM, Chrysler, GMAC and Chrysler Financial. The plan targets the 25 top earners at each company, who will see their compensation decline this year by about 50%, while bonus payments will be slashed by up to 90%, to be replaced by stock that they'll be restricted from immediately selling. The plan does not address firms that didn't receive bailout funds, or that have already repaid their loans.
• South Korea's $3.9B oil buy. State-owned Korea National Oil Corp. agreed to buy Canada's Harvest Energy (HTE) for $3.9B - $1.7B for its outstanding shares and the assumption of $2.2B in debt. Shareholders will receive $9.52/share - a 37% premium to Wednesday's close. The deal is South Korea's biggest outbound cross-border deal ever in the Oil & Gas sector, and ranks seventh in global Oil & Gas sector M&A transactions in 2009. Harvest produced 53K b/d in Q2, 70% of which was crude oil and 30% was natural gas. Shares +29.1% premarket to $9.05.
• Bove drops a bomb. Rochdale Securities analyst Richard Bove sent stocks into a tailspin late Wednesday after he downgraded shares of Wells Fargo (WFC) to Sell, despite a consensus-beating Q3. Bove is concerned by the positive impact mortgage hedges have had on Wells' recent results, which "keep coming through for the company whenever it needs to bolster earnings," but are a nightmare for investors who shouldn't look at such activity as generating predictable or repeatable profits. Bove also called the portfolio Wells acquired from Wachovia 'cancerous.' WFC -5.1% yesterday.
• eBay falters on gloomy outlook. eBay (EBAY) posted Q3 earnings that exceeded expectations, but shares traded lower after-hours after its guidance gave a gloomier vision of the near future than many expected (read eBay's Q3 earnings call transcript). eBay has struggled as online shopping habits have shifted away from auctions to fixed-price purchases on sites such as Amazon.com (AMZN).
• Beige Book sees signs of growth. The Fed said most regional economies are on the mend, as home sales rebound and manufacturers restart idled operations. "Reports of gains in economic activity generally outnumber declines, but virtually every reference to improvement was qualified as either small or scattered," the Fed said in its beige book tally. The report also highlighted how heavily businesses are relying on government spending: "There were several reports that the only 'sure' business will come from government stimulus projects, although funding for such projects has been slow to materialize," it said.
• Microsoft's big day. Microsoft's much-anticipated OS upgrade, Windows 7, goes on sale today. The company hopes Windows 7 will gain more traction among retail and corporate clients than its most predecessor, Vista, which was seen as slow and clunky. Analysts say the new OS isn't likely to cause a sudden spike in PC sales, a point conceded by Microsoft CEO Steve Ballmer, who said recently IT budgets "aren't going to rise just because we shipped a new version."
• Twin deals for Twitter. Twitter inked deals to sell the rights to mine its pipeline of 'tweets' with both Google (GOOG) and Microsoft (MSFT) Wednesday, underscoring the growing importance of real time search. Neither would say how much it's paying for the rights to index the millions of daily tweets, considered to be Twitter's most valuable asset. The deals could be the first meaningful revenue for Twitter since its 2006 inception, and begin to answer the much-explored question of "where's the beef?"
• A strong Q3 for China. China's Q3 GDP came in at 8.9%, just below the 9% economists forecast. Separate reports showed industrial production and retail sales also accelerated. China's return to robust growth continues to raise the question of when policy makers will withdraw record fiscal and monetary stimulus in order to avoid another bubble.
• Galleon wind down begins. Managers of Galleon Group's $500M Asia fund are considering buying the unit, sources say. On Wednesday, Galleon told employees and investors it would wind down the firm after its founder was charged with insider trading. Unless the government intervenes, investors likely won't get their money back until Jan. 1, 2010.

Earnings: Thur. Before Open

• 3M Company (MMM): Q3 EPS of $1.37 beats by $0.20. Revenue of $6.19B (-5.6%) vs. $5.77B. Shares +1.2% premarket. (PR)
• AT&T (T): Q3 EPS of $0.54 beats by $0.04. Revenue of $30.9B (-1.3%) in-line. Wireless subscribers +2M to 81.6M. Shares +2% premarket. (PR)
• AU Optronics (AUO): Q3 EPS of $0.26 beats by $0.01. Revenue of $3.5B (+8.4%) vs. $3.21B. Operating margin 6.8%. Shares -2.3% in Taiwan. (PR)
• Black & Decker (BDK): Q3 EPS of $0.91 beats by $0.09. Revenue of $1.21B (-23%) in-line. Sees Q4 EPS of $0.68-0.78 vs. $0.50 consensus. Shares +2.2% premarket. (PR)
• Bristol-Myers (BMY): Q3 EPS of $0.52 beats by $0.01. Revenue of $5.49B (+4.4%) in-line. (PR)
• Bunge (BG): Q3 EPS of $1.62 beats by $0.15. Revenue of $11.3B (-23.6%) vs. $12B. Sees full-year EPS of $3.10-$3.50 vs. consensus of $4.69. Says fertilizer business continues to be pressured by high-cost inventory and a weak pricing environment. (PR)
• Celgene (CELG): Q3 EPS of $0.56 beats by $0.02. Revenue of $692M (+16.8%) vs. $671M. Shares +5.4% premarket. (PR)
• Check Point Software (CHKP): Q3 EPS of $0.52 beats by $0.03. Revenue of $234M (+17%) vs. $231M. (PR)
• CONSOL Energy (CNX): Q3 EPS of $0.48 misses by $0.18. Revenue of $1.09B (-6.7%) in-line. Shares -3.1% premarket. (PR)
• Cooper Industries (CBE): Q3 EPS of $0.70 beats by $0.06. Revenue of $1.29B (-25.6%) in-line. "Revenue and orders for maintenance and repair items and product lines that declined rapidly at the beginning of the economic downturn are beginning to improve, while the longer cycle products appear to have now bottomed." Shares -0.3% premarket. (PR)
• Danaher (DHR): Q3 EPS of $0.89 beats by $0.03. Revenue of $2.75B (-14.2%) in-line. (PR)
• Delta Air Lines (DAL): Q3 EPS of $0.06 beats by $0.11. Revenue of $7.57B (+32.4%) in-line. (PR)
• Diamond Offshore Drilling (DO): Q3 EPS of $2.62 beats by $0.32. Revenue of $908M (+0.9%) vs. $874M. Declares special dividend of $1.875/share. (PR)
• Dow Chemical (DOW): Q3 EPS of $0.24 beats by $0.14. Revenue of $12.05B (+6.4%) vs. $11.85B. "The economic outlook for the rest of 2009 appears to be stabilizing with strong growth in Asia Pacific, especially China, and other emerging geographies. The global economy is now on firmer footing, and, in our view, the U.S. economy is beginning a slow and tenuous recovery, with unemployment continuing to be a drag on consumer spending." (PR)
• EMC (EMC): Q3 EPS of $0.23 beats by $0.02. Revenue of $3.52B (-5.3%) vs. $3.45B. Says customers are signaling more comfort spending their IT budgets. Shares +1.5% premarket. (PR)
• Ensco International (ESV): Q3 EPS of $1.05 beats by $0.01. Revenue of $425M (-31.3%) vs. $439M. (PR)
• Entergy (ETR): Q3 EPS of $2.40 misses by $0.08. Revenue of $2.94B (-25.9%) vs. $3.9B. "We continue to experience the negative effects of the slowed economic recovery." (PR)
• Ericsson (ERIC): Q3 EPS of 0.25kr misses by 0.61kr. Revenue of 46.4Bkr (-5.7%) vs. 49.46Bkr. "Sales of network equipment declined due to lower demand in the current tougher market environment. Despite lower volumes, Network margins remain stable." Shares -8.9% premarket. (PR)
• Fifth Third Bancorp (FITB): Q3 EPS of -$0.20 beats by $0.03. Revenue of $M in-line. "The credit environment remains challenging, and we continue to aggressively work to manage risk in the portfolio." Shares -2.1% premarket. (PR)
• Goodrich (GR): Q3 EPS of $1.12 beats by $0.09. Revenue of $1.65B (-7%) in-line. (PR)
• Hershey Foods (HSY): Q3 EPS of $0.73 beats by $0.06. Revenue of $1.48B (-0.3%) vs. $1.54B. "As we look to 2010, we assume the economic environment for consumers in the U.S. and international markets will continue to be challenging." Shares +2.5% premarket. (PR)
• Huntington Bancshares (HBAN): Q3 EPS of -$0.33 misses by $0.05. Revenue of $M in-line. Shares -2.1% premarket. (PR)
• IMS Health (RX): Q3 EPS of $0.40 beats by $0.04. Revenue of $541M (-5.7%) vs. $522M. (PR)
• Janus Capital Group (JNS): Q3 EPS of $0.05 misses by $0.10. Revenue of $228M (-17.4%) vs. $225M. (PR)
• JetBlue Airways (JBLU): Q3 EPS of $0.04 misses by $0.01. Revenue of $854M (-5.3%) vs. $847M. Shares +1.2% premarket. (PR)
• Kimberly-Clark (KMB): Q3 EPS of $1.40 beats by $0.27. Revenue of $4.91B (-1.7%) in-line. Sees full-year EPS of $4.50-$4.60 vs. consensus of $4.26, citing increased cost savings, better organic sales growth and a further recovery in currency exchange rates. Shares +5.5% premarket. (PR)
• Laboratory Corp. (LH): Q3 EPS of $1.22 beats by $0.07. Revenue of $1.19B (+4.4%) in-line. (PR)
• Legg Mason (LM): FQ2 EPS of $0.30 beats by $0.11. Revenue of $660M (-31.7%) vs. $652M. (PR)
• Logitech (LOGI): FQ2 EPS of $0.11 beats by $0.06. Revenue of $498M (-25.1%) vs. $474M. Sees FQ3 revenue of $575-595M vs. $623M. Shares +7.2% in Zurich. (PR)
• McDonald's (MCD): Q3 EPS of $1.15 beats by $0.04. Revenue of $6.05B (-3.5%) in-line. Comps +3.8%, with U.S. +2.5%, Europe +5.8% and the rest +2.2%. Shares +1.3% premarket. (PR)
• Mead Johnson (MJN): Q3 EPS of $0.53 misses by $0.02. Revenue of $700M (-5.8%) vs. $737M. Shares -8.4% premarket. (PR)
• Merck (MRK): Q3 EPS of $0.90 beats by $0.08. Revenue of $6.05B (+1.8%) in-line. (PR)
• NCR (NCR): Q3 EPS of $0.19 misses by $0.05. Revenue of $1.14B (-17.7%) vs. $1.22B. Sees full-year EPS of $0.45-0.55 vs. $0.67. "The willingness of customers to invest in Q2... did not spill over into Q3. That said, we were more encouraged by the conversations we were having with our customers about Q4 and 2010." Shares -5.9% premarket. (PR)
• New York Times (NYT): Q3 EPS of $0.16 beats by $0.17. Revenue of $571M (-16.9%) vs. $562M. Shares +2.7% premarket. (PR)
• NII Holdings (NIHD): Q3 EPS of $0.69 beats by $0.14. Revenue of $1.14B (-3.5%) in-line. (PR)
• Nucor (NUE): Q3 EPS of -$0.10 beats by $0.05. Revenue of $3.12B (-58.1%) vs. $2.98B. "Our view remains that there has been little improvement in real demand and the uncertainty in our economy is still very high. We also continue to believe that real demand is in for a long, slow recovery." Shares -0.6% premarket. (PR)
• Occidental Petroleum (OXY): Q3 EPS of $1.14 beats by $0.06. Revenue of $4.1B (-41.9%) in-line. Shares +1.2% premarket. (PR)
• Old Republic International (ORI): Q3 EPS of -$0.283 misses by $0.11. Revenue of $959M (+2.4%) vs. $910M. (PR)
• Philip Morris (PM): Q3 EPS of $0.93 beats by $0.02. Revenue of $6.59B (-5.3%) vs. $6.71B. "While we experienced lower organic volume in the quarter, this was largely anticipated given our pricing actions and the on-going impact of the economic crisis on total consumption levels." Shares +0.75% premarket. (PR)
• PNC Financial Services (PNC): Q3 EPS of $1.00 beats by $0.69. Revenue of $4.05B (+144.7%) vs. $3.8B. (PR)
• Potash (POT): Q3 EPS of $0.82 beats by $0.01. Revenue of $1.1B (-64.1%) in-line. Sees Q4 EPS of $0.65-0.85 vs. consensus of $1.18. "The uncertainty among fertilizer buyers has lasted far longer than we anticipated, but cannot continue indefinitely." Shares -2.9% premarket. (PR)
• ProLogis (PLD): Q3 EPS of $0.21 beats by $0.02. Revenue of $274M (-72.3%) vs. $228M. Shares +2.4% premarket. (PR)
• Raytheon (RTN): Q3 EPS of $1.25 beats by $0.09. Revenue of $6.21B (+5.8%) in-line. Shares +0.7% premarket. (PR)
• Reliance Steel & Aluminum (RS): Q3 EPS of $0.57 beats by $0.11. Revenue of $1.24B (-57.1%) vs. $1.34B. Declines Q4 guidance. "We believe that demand is fairly stable at low levels." (PR)
• Reynolds American (RAI): Q3 EPS of $1.24 beats by $0.07. Revenue of $2.15B (-5.3%) in-line. Shares -0.1% premarket. (PR)
• Ryder System (R): Q3 EPS of $0.50 beats by $0.05. Revenue of $1.26B (-20.3%) in-line. Anticipates the weak overall economic environment and protracted freight recession will continue to impact its performance. (PR)
• Schering-Plough (SGP): Q3 EPS of $0.40 in-line. Revenue of $4.5B (-1.7%) in-line. (PR)
• Starwood Hotels (HOT): Q3 EPS of $0.14 beats by $0.04. Revenue of $1.22B (-20.7%) vs. $1.16B. "It is very difficult at this time to provide any definitive point of view on 2010. While business conditions have clearly stabilized, it is very hard to forecast the pace of recovery, especially rate." (PR)
• SunTrust Banks (STI): Q3 EPS of -$0.60 misses by $0.05. Revenue of $1.94B (-21%) vs. $2.11B. Earnings include $131M writedown on debt. Allowance for loan losses +128M to $3.02B. (PR)
• Sybase (SY): Q3 EPS of $0.63 beats by $0.06. Revenue of $293M (+3.3%) vs. $281M. Shares +2.2% premarket. (PR)
• TASER International (TASR): Q3 EPS of -$0.05 misses by $0.02. Revenue of $26.8M vs. $20.9M. Shares -1.2% premarket. (PR)
• Temple-Inland (TIN): Q3 EPS of $0.24 beats by $0.06. Revenue of $885M (-9.3%) vs. $876M. "As we look forward, economic conditions, while still uncertain, have stabilized and appear to be on a slow path to recovery." (PR)
• Terra Industries (TRA): Q3 EPS of $0.45 misses by $0.07. Revenue of $347M (-56.1%) vs. $356M. Shares +0.8% premarket. (PR)
• Thermo Fisher (TMO): Q3 EPS of $0.78 beats by $0.02. Revenue of $2.53B (-2%) in-line. (PR)
• Travellers (TRV): Q3 EPS of $1.61 beats by $0.30. Revenue of $6.3B vs. $6B. Sees full-year EPS of $5.30-5.50 vs. consensus of $5.28. Raises quarterly dividend to $0.33 from $0.30. Authorizes an additional $6B share buyback. "We remain cautious about the magnitude of rate gains that are achievable in the near term given general economic conditions." (PR)
• Union Pacific (UNP): Q3 EPS of $1.02 beats by $0.02. Revenue of $3.67B (-24.2%) in-line. "Business volumes seem to have stabilized, but at very low levels." (PR)
• UPS (UPS): Q3 EPS of $0.55 beats by $0.03. Revenue of $11.15B in-line. Volume of 927M packages, -2.4%. "I'm encouraged by the signs of economic recovery that are becoming apparent, although we still have a long way to go," CEO Scott Davis said. Shares -1% premarket. (PR)
• US Airways (LCC): Q3 EPS of -$0.83 beats by $0.11. Revenue of $2.72B, including $110 from a la carte revenue initiatives, in-line. Shares +3.4% premarket. (PR)
• Xerox (XRX): Q3 EPS of $0.14 beats by $0.02. Revenue of $3.67B (-15.9%) in-line. Sees full-year EPS of $0.55-0.57 vs. consensus of $0.53. (8-K)
• Zimmer (ZMH): Q3 EPS of $0.88 beats by $0.02. Revenue of $976M (+2.5%) vs. $954M. Shares +1.8% premarket. (PR)

Earnings: Wed. After Close

• Alliance Data Systems (ADS): Q3 EPS of $0.83 misses by $0.51. Revenue of $483M (-5%) vs. $500M. Expects 2010 EPS of $6.00 vs. $6.10. Shares -6.3% AH. (PR)
• Amgen (AMGN): Q3 EPS of $1.49 beats by $0.22. Revenue of $3.8B (-2%) in-line. Raises full-year EPS guidance to $4.90-5.05 from $4.80-4.95, vs. $4.88. Shares -3% AH. (PR)
• Ameriprise Financial (AMP): Q3 EPS of $1.03 beats by $0.39. Revenue of $2B (+20%) vs. $2.1B. Debt-to-total-capital ratio of 18.7%. Shares +1.6% AH. (PR)
• Citrix Systems (CTXS): Q3 EPS of $0.43 beats by $0.02. Revenue of $401M (+1%) vs. $400M. Sees full-year revenue up 8-9% sequentially to $1.73B. Shares -3.6% AH. (PR)
• Covanta (CVA): Q3 EPS of $0.28 beats by $0.04. Revenue of $409M (-7%) vs. $388M. Shares +0.3% AH. (PR)
• eBay (EBAY): Q3 EPS of $0.38 beats by $0.01. Revenue of $2.2B (+6%) vs. $2.1B. Shares -4.9% AH. (PR)
• Equifax (EFX): Q3 EPS of $0.57 beats by $0.02. Revenue of $452M (-7%) in-line. Shares -3.2% AH. (PR)
• F5 Networks (FFIV): FQ4 EPS of $0.50 beats by $0.09. Revenue of $175M (+2%) vs. $164M. Shares +8.1% AH. (PR)
• Fidelity National Information Services (FIS): Q3 EPS of $0.46 misses by $0.01. Revenue of $851M (-4%) vs. $870M. Shares -0.4% AH. (PR)
• Fidelity National Financial (FNF): Q3 EPS of $0.32 misses by $0.02. Revenue of $1.5B (+52%) in-line. Shares +0.2% AH. (PR)
• Intersil (ISIL): Q3 EPS of $0.10 in-line. Revenue of $168M (-23%) vs. $162M. Sees Q4 EPS of $0.14-0.17 vs. $0.13. Shares -2.8% AH. (PR)
• Knight Transportation (KNX): Q3 EPS of $0.16 in-line. Revenue of $173M (-17%) vs. $165M. Shares +1.2% AH. (PR)
• Lam Research (LRCX): FQ1 EPS of $0.03 beats by $0.11. Revenue of $319M (+46%) vs. $288M. Shares +3.2% AH. (PR)
• Newfield Exploration (NFX): Q3 EPS of $1.58 beats by $0.24. Revenue of $375M (-45%) vs. $536M. Shares -0.1% AH. (PR)
• Noble (NE): Q3 EPS of $1.63 beats by $0.10. Revenue of $906M (+5%) in-line. Shares +1.1% AH. (PR)
• Novellus Systems (NVLS): Q3 EPS of -$0.03 beats by $0.01. Revenue of $177M (-29%) vs. $172M. Shares +0.9% AH. (PR)
• OSI Pharmaceuticals (OSIP): Q3 EPS of $0.81 beats by $0.49. Revenue of $111M (+18%) vs. $106M. Shares -1% AH. (PR)
• Pactiv (PTV): Q3 EPS of $0.54 beats by $0.03. Revenue of $839M (-9%) vs. $858M. Shares -0.2% AH. (PR)
• QLogic (QLGC): FQ2 EPS of $0.21 beats by $0.03. Revenue of $132M (-23%) vs. $126M. Shares -2.6% AH. (PR)
• Range Resources (RRC): Q3 EPS of $0.26 beats by $0.04. Revenue of $204M (-67%) vs. $261M. Shares -0.2% AH. (PR)
• Skechers (SKX): Q3 EPS of $0.52 beats by $0.17. Revenue of $405M (+1%) vs. $385M. Shares +5.2% AH. (PR)
• Terex (TEX): Q3 EPS of -$0.95 misses by $0.61. Revenue of $1.2B (-51%) vs. $1.3B. Shares -10.5% AH. (PR)
• TriQuint Semiconductor (TQNT): Q3 EPS of $0.10 in-line. Revenue of $173M (-7%) vs. $178M. Shares -19.9% AH. (PR)
• VMware (VMW): Q3 EPS of $0.24 beats by $0.04. Revenue of $490M (+4%) vs. $474M. Sees Q4 revenue of v$540M-560M vs. $523M. Shares +1.6% AH. (PR)

Today's Markets

Asian and European markets followed the U.S. into the red Thursday. Stock futures are marginally lower.

(The purpose of this report is not to provide specific recommendations, but instead serve as a time-saving reference tool and starting point for investment ideas as the upcoming trading week unfolds. Of course, the results generated are not always perfect and users are strongly encouraged to perform their own due diligence on these names. Note that overbought and oversold conditions are based upon proprietary algorithms and quantitative models instead of conventional technical analysis indicators. As a supplement to this report, please refer to our ETF Trends Report to determine if market direction trends support a bullish or bearish investment bias over short-term, intermediate, and long-term timeframes.)

Knight Capital (NITE)

Bullish Calls

XTO Energy (XTO): "I don't want to own the minors when it comes to natural gas...stick to the majors like XTO."

Having said that, it is often instructive to take a look at the changes made during Q2 to get a sense of what themes managers are focusing on. Of course, we cannot see their short portfolios so for many of these managers you really only get half the story. But on the long side, having the data from Q4 2008, Q1 2009 and Q2 2009 all together, it is sometimes possible to re-engineer a certain manager’s strategy.

Long-term investors have moved away from asset allocation strategies in recent months, due to increased correlation between assets. During the bull market, analysts debated the merits of small caps versus large caps, growth versus value. Those discussions still take place, but they’ve been drowned by the collapse in equity, commodity and real estate prices. The difference between two market capitalization groups wasn’t as big a concern for investors when their decision was “to invest or not to invest.” Furthermore, industry- and country-specific news has dominated, with commodities, technology, emerging markets and financials grabbing headlines.

Q2 2009 Earnings Call

July 23, 2009 9:30 am ET

With this in mind, we established a small probe position in packaging producer Temple-Inland Inc. (TIN) late last week. Earnings are slated to come out Thursday, July 23^rd. We like this trade for the following reasons:

Bullish Calls:

ON Semiconductor (ONNN), Cadence Systems (CDNS), Brocade Communications (BRCD), Broadcom (BRCM): "I prefer all of these over Taiwan Semiconductor."

Have we come too far, too fast?

Of course we have, this is getting ridiculous! No one was a bigger bull than I was during the March crash, I wore out my BUYBUYBUY button telling people it was an opportunity of a lifetime, you can look up my posts here so I won’t quote myself, but I will say that we have now hit the targets we set at that time for the bounce we expected off that crash - the fabled 40% line, a 33% retracement of the crash from our 2007 highs to our March 9th lows. Had we not hit it in less than 60 days, I’d be thrilled but, right now, I’m just nervous.

As shown, HGSI has had the best earnings report response with a one-day gain of 57.55%. RT comes in a close second with a gain of 56.81%. Other notables on the list of winners include WYN, BGFV, EXPE, TIN, and BBBY.

Bullish Calls:

Staples (SPLS): "...is best of breed."

Below we highlight the 25 best performing S&P 1500 companies since March 9th. Of the top 25, fourteen come from the Consumer Discretionary sector, including the top five. Two "Tuesdays" rank first and second! Ruby Tuesday (RT) is up a whopping 689% since March 9th, while Tuesday Morning (TUES) is up 528%. DIN, SAH, and RUTH round out the top five.

Q1 2009 Earnings Call

April 22, 2009 9:30 am ET

• Geithner: most banks have enough cash. Testifying in Congress, Geithner indicated the 'vast majority' of the 19 banks undergoing stress tests have more than enough capital, and those that need additional aid may get a mix of converted government preference shares and private money. His testimony helped allay investors' concerns about the possibility of political interference and widespread stock dilution, sending financial stocks up. Geithner also pointed to signs of a credit market thaw, but said the banking rescue is showing only 'mixed' signs of success and toxic assets are still 'congesting' the financial system. (Read Geithner's prepared testimony (.pdf))
• Dems consider bank limits. In a closed-door meeting with House Democrats, FDIC's Sheila Bair suggested the size of banks should be limited and their growth regulated in order to prevent lenders from becoming 'too big to fail.' Bair didn't elaborate on her proposal, but the idea was well received by those at the meeting. Bair also endorsed Rep. Nancy Pelosi's efforts to launch a comprehensive inquiry into the causes of the financial crisis.
• Banks lobby to cut TARP exit costs. The banking industry is aggressively lobbying the Treasury to make it less expensive to exit TARP. At issue are warrants that allow the Treasury to buy common stock in bailed out banks at a set price for ten years. Most of the warrants are worthless today, but banks seeking to expunge them after repaying TARP funds must get a third-party valuations of the warrants' worth, negotiate with the Treasury if there is disagreement on the valuation and allow the warrants to be sold to private investors if no compromise is reached. Bank reps say the repurchase terms are onerous, equivalent to 60% annual interest on short-term loans, but those on the other side of the aisle think it's unreasonable for banks that have been bailed out to try and get out of TARP free.
• Chrysler lenders offer debt deal. In a counter-offer to the Treasury, Chrysler's first-lien lenders agreed to take equity in a restructured automaker with a Fiat tie-up in exchange for writing off around 35% of the $7B they are owed. The lenders would retain around $4.5B in debt and take more than a one-third stake in the reinvented Chrysler. The suggested deal is significantly richer than the Treasury's proposal to cut lenders' debt to $1B, and was immediately criticized by a White House official for giving creditors an 'unjustified return' given the circumstances. The Treasury made clear it doesn't plan to accept the lenders' terms.
• Citi's Pandit faces angry shareholders. Speaking at a six-hour long annual meeting, embattled Citigroup (C) CEO Vikram Pandit promised to repay 'every dollar' to the government and fielded questions from furious investors. Despite the anger, shareholders elected every director the board had nominated, including some accused of weak oversight. With his job security a topic of speculation, Pandit told investors "I intend to see this through."
• Yahoo cuts jobs, product cuts to follow. Though "not immune to the ongoing economic downturn," Yahoo (YHOO) posted better-than-expected quarterly earnings (see details below) and plans to cut 5% of its workforce. The job cuts are the first by CEO Carol Bartz, who said the company may also eliminate more products. Bartz mentioned the importance of the search business to Yahoo but declined to comment further on Microsoft (MSFT).
• Roche drug misses goal. In a much anticipated study, Roche Holding's (RHHBY.PK) Avastin cancer drug failed to keep tumors at bay. Roche plans further tests for early-stage use. Shares -8.1% in Zurich (6:45 ET).
• IMF sees rising writedowns. In its Global Financial Stability Report, the IMF noted financial institutions are now facing losses of up to $4.1T on loans and other assets, and urged governments to take 'bolder steps,' including nationalization when necessary, to bolster firms. The IMF sees total writedowns on U.S. assets at $2.7T, up from a $2.1T estimate in January. Efforts to purge toxic assets and replenish capital have been 'piecemeal and reactive.'
• Chain store sales. Retail chain store sales fell 0.4% from a week ago, ICSC reported, and dipped 0.1% Y/Y. After three weeks of increases, "consumers took a pause in the latest week with discounters and specialty stores, such as books and jewelry, which were particularly weaker." According to Redbook, national chain store sales rose 1.5% in the first two weeks of April, and rose 0.5% Y/Y.
• Mortgage apps rise. Mortgage applications rose 5.3% from a week ago, MBA reported. The average interest rate on 30-year fixed-rate mortgages inched up to 4.73% from 4.70%.

Earnings: Wednesday Before Open

• Air Products and Chemicals (APD): FQ2 EPS of $0.89 beats by $0.07. Revenue of $1.95B (-23.1%) vs. $2.1B. (PR)
• AirTran (AAI): Q1 EPS of $0.21 beats by $0.17. Revenue of $542M (-9.1%) vs. $535M. (PR)
• Altria (MO): Q1 EPS of $0.39 beats by $0.01. Revenue of $3.81B (+5.8%) vs. $3.98B. Reaffirms full-year guidance. Believes customers are beginning to rebuild inventories. (PR)
• AT&T (T): Q1 EPS of $0.53 beats by $0.05. Revenue of $30.6B (-0.6%) vs. $31.1B. More than 1.6M iPhone activations in the quarter, more than 40% from first timers. Shares +3.8% premarket. (PR)
• Continental (CAL): Q1 EPS of -$1.07 beats by $0.12. Revenue of $2.96B (-17%) vs. $2.98B. (PR)
• Dover (DOV): Q1 EPS of $0.45 misses by $0.02. Revenue of $1.4B (-24.7%) vs. $1.5B. Sees FY '09 EPS of $2.00-$2.30. (PR)
• Elan (ELN): Q1 EPS of -$0.17 misses by $0.03. Revenue of $245M (+14.2%) vs. $265M. (PR)
• EnCana (ECA): Q1 EPS of $1.26 beats by $0.57. Revenue of $4.6B (-15.2%) vs. $4.0B. (PR)
• Freeport-McMoRan Copper & Gold(FCX): Q1 EPS of $0.11 misses by $0.02. Revenue of $2.6B (-54.1%) vs. $2.69B. Shares -2.4% premarket. (PR)
• Ingersoll-Rand (IR): FQ1 EPS of -$0.04 beats by $0.09. Revenue of $2.93B (+35.6%) in-line. After saying in February that full-year EPS could be as low as $0.95, IR now sees full-year EPS of $1.40-1.90 vs. $1.40 consensus. (PR)
• Kimberly-Clark (KMB): Q1 EPS of $0.98 beats by $0.01. Revenue of $4.49B (-6.6%) in-line. Sees full-year EPS of $4.00-$4.20 vs. $4.14. "While we are encouraged that commodity costs have declined and have begun to positively impact our gross margins, economic weakness is impacting demand for our products." (PR)
• Knight Capital Group (NITE): Q1 EPS of $0.33 beats by $0.04. Revenue of $254M (+31.1%) vs. $253M. (PR)
• Morgan Stanley (MS): Q1 EPS of -$0.57 misses by $0.49. Revenue of $3.04B (-61.6%) vs. $5.01B. Says revenue was impacted by -$1.5B on tightening of credit-spreads, and by -$1B on real-estate writedowns. Tier-1 capital ratio of 16.4%, or 12.9% net of TARP funds. Reduces dividend to $0.05. Shares -6% premarket. (PR)
• Northrop Grumman (NOC): Q1 EPS of $1.17 beats by $0.09. Revenue of $8.32B (+7.7%) vs. $7.98B. Full-year guidance in line. Shares +0.6% premarket. (PR)
• Pepsi Bottling Group (PBG): Q1 EPS of $0.10 beats by $0.05. Revenue of $2.5B (-5.4%) in-line. Raises FY '09 guidance to $2.20-2.30 EPS vs. $2.19 consensus. (PR)
• Precision Drilling (PDS): Q1 EPS of $0.30 misses by $0.06. Revenue of $448M (+30.9%) vs. $458M. (PR)
• Ryder Systems (R): Q1 EPS of $0.25 beats by $0.03. Revenue of $1.2B (-22%) in-line. Sees full-year cash flow of at least $465M vs. $565M consensus. Suspends EPS guidance. "We expect worsened economic conditions and the corresponding prolonged freight recession to continue to broadly impact our customers and our business through the remainder of the year." (PR)
• Temple-Inland (TIN): Q1 EPS of $0.30 beats by $0.25. Revenue of $941M (-0.3%) vs. $913M. Says higher box volumes and lower input and converting costs more than offset lower box prices. Shares +12.8% premarket. (PR)
• WellPoint Health Networks (WLP): Q1 EPS of $1.16 misses by $0.09. Revenue of $15.3B (-0.4%) vs. $15.6B. Issues downside guidance for FY '09, sees EPS of $5.14-5.20 vs. $5.62 consensus. (PR)
• Wells Fargo (WFC): Q1 EPS of $0.56 vs. preannouncement of $0.55. Revenue of $21B vs. preannounce of $20B. Says results "were largely driven by growth in many of our diversified businesses and the new contribution to growth now coming from Wachovia" and by lower net charge-offs due to previous writedowns. Loans more than 90 days overdue $15.1B vs. a previous $9.5B. Net interest margin of 4.16% was "highest among our large bank peers." Shares -1.4% premarket. (PR)

Earnings: Tuesday After Close

• Altera (ALTR): Q1 EPS of $0.17 beats by $0.01. Revenue of $265M (-21.3%) vs. $258M. Sees revenue up 2-7% in Q2 vs. Q1. "Q1 business environment was better than we originally anticipated yet overall remains quite challenging." (PR)
• Advanced Micro Devices (AMD): Q1 EPS of -$0.62 beats by $0.04. Revenue of $1.18B (-20.8%) vs. $978M. "Considering current macroeconomic conditions, limited visibility and historical seasonal patterns, AMD expects its Product Company revenue to be down for Q2 2009." (PR)
• Ameriprise Financial (AMP): Q1 EPS of $0.58 beats by $0.09. Revenue of $1.72B (-13.7%) in-line. (PR)
• Capital One (COF): Q1 EPS of -$0.39 misses by $0.31. Revenue of $3.7B (-5.6%) vs. $4.17B. Adds $124.1M to allowance for loan losses in anticipation of higher expected charge-offs; sees 2009 charge-offs higher than the $8.6B it forecast last quarter. (PR)
• Gilead Sciences (GILD): Q1 EPS of $0.66 beats by $0.07. Revenue of $1.53B. (PR)
• Nestle (NSRGY.PK): Q1 sales of 25.2B francs (-2.1%), short of 26B consensus. Organic sales were up 3.8% vs. 4.2% consensus. The shortfall was in part due to customers abandoning premium brands in favor of discount alternatives. Shares -0.2% in Zurich. (Bloomberg)
• Norfolk Southern (NSC): FQ1 EPS of $0.47 misses by $0.07. Revenue of $1.94B (-22.3%) vs. $2.04B. Shares -9.1% AH. (PR)
• SanDisk (SNDK): Q1 EPS of -$0.48 beats by $0.28. Revenue of $660M (-22.4%) vs. $538M. "Industry fundamentals improved in the first quarter. We are encouraged that industry supply and demand balance is becoming better aligned, resulting in higher flash pricing." (PR)
• Seagate Technology (STX): FQ3 EPS of -$0.45 in-line. Revenue of $2.15B (-30.7%) vs. $2.01B. Sees FQ4 EPS of -$0.29 to -$0.39 vs. -$0.30 consensus. "Believes opportunities exist to reduce operating costs in product development, marketing/administrative and manufacturing areas to target a cost structure that generates positive cash flow and earnings within its FY2010." (PR)
• Terex (TEX): FQ1 EPS of -$0.47 vs. consensus of -$0.08. Revenue of $1.3B (-44.9%) vs. $1.55B. "The turmoil from the global credit crisis and economic slowdown has quickly and deeply impacted sales for our industry, with certain sectors down almost 75% from year ago levels. In response, we are aggressively reducing costs... " Shares -7% AH. (PR)
• Tupperware (TUP): Q1 EPS of $0.45 beats by $0.11. Revenue of $463M (-14.8%) vs. $459M. Sees Q2 EPS of $0.57-0.62 vs. $0.50. Shares +11.7% AH. (PR)
• Vornado (VNO): Sees Q1 EPS of $0.77 vs. consensus of $0.83. Sees Q1 FFO of $1.70 vs. consensus of $1.52. Sees Q1 revenue of $682M vs. $651M. Will sell 12.5M shares, resulting in an 8% dilution. Shares -4.8% AH. (DJ)
• Yahoo (YHOO): Q1 EPS of $0.15 beats by $0.07. Revenue of $1.16B (-14.5%) vs. $1.2B after traffic acquisition costs. Expects to reduce headcount by 5%. "Yahoo is not immune to the ongoing economic downturn, but careful cost management in Q1 allowed our operating cash flow to come in near the high end of our outlook range." (PR)

Today's Markets

Asia markets were mostly lower Wednesday despite solid Wall Street gains Tuesday. Europe stocks are positive for the morning. Futures are down.

As it became clear to me from the smell of napalm following the cataclysmic bombing the market endured in Q4, this time really is different. I suggested in December that new metrics are necessary for this new environment and urged any readers to try to shift away from any earnings-based or other traditional valuation methods to ones that incorporate balance-sheet or liquidity risk and asset-based valuation.

This is not an easy process, and, while I know that many market participants have begun to change the way they look at things, we still have lots of work to do collectively. This different way of thinking has clearly helped me to identify high-risk situations. In what I believe was one of my most popular blog postings to Seeking Alpha and which apparently continues to drive traffic to my websites (Dividends on Death Row), I shared a screen (using StockVal) that I constructed using some of the different metrics I have been discussing. The 22 stocks that met the screen's criteria fell an average of 12.5% and a median of 13.9% over the past 4 weeks, while the S&P 500 has declined in price by 8.5% despite some improvement on the huge rally this week.