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Q1 Earnings Keep Markets in the Green: MS, USB, ABT & TXT

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Wednesday, April 18, 2018

Triple-digit gains in regular-day Tuesday trading in both the Dow and Nasdaq were bolstered by a number of different things — strong housing starts and a lack of relative geopolitical tension early this week among them — but nothing so influential as a very strong Q1 earnings season. We are still in the early stages so far (only a week has passed since Delta Air Lines beat estimates on both top and bottom lines), but overall results have been notably better than expected.

While after-the-bell earnings reports yesterday were better than expected across the board, some companies performed more impressively than others. While Intuitive Surgical (ISRG - Free Report) posted a robust earnings beat, IBM (IBM - Free Report) eked out a positive surprise on new corporate tax benefits alone. (IBM’s Watson enterprise has thus far failed to inspire fresh investment in Big Blue.) As a result, IBM has shed more than 5% in today’s pre-market, while ISRG shares are up 5% this morning.

New Q1 earnings reports are following suit, starting with Morgan Stanley (MS - Free Report) , which left estimates in the dust this morning. This investment banking major posted $1.45 per share on $11.1 billion in quarterly revenues, outpacing the $1.28 and $10.5 billion in the Zacks consensus estimates, respectively. Net income grew 38% in Q1, whereas Sales & Trading rose 26%. For more on MS’s earnings, click here.

Fellow financial institution U.S. Bank (USB - Free Report) beat earnings estimates by a penny to 95 cents per share, but missed on revenue expectations, bringing in $5.47 billion as opposed to the $5.53 billion our analysts were looking for. This still represents good year-over-year growth from $5.29 billion in Q1 2017, but pre-market trading shows USB shares slipping half a percentage point at this hour. For more on USB’s earnings, click here.

Based on Chicago’s North Shore, Abbott Labs (ABT - Free Report) also topped earnings consensus by a penny to 59 cents per share. Revenues also slightly surpassed expectations in Q1, reporting $7.39 billion in sales. Guidance for full-year 2018 has been posted at between $2.80 and $2.90 per share, and the Zacks consensus is roughly at the midpoint. Shares are off 1.3% ahead of today’s opening bell. For more on ABT’s earnings, click here.

Defense components major Textron (TXT - Free Report) , however, performed much better this morning — 76 cents per share blew away expectations of 46 cents, and more than double the 37 cents per share a year ago. Sales of $3,296 million also impressed, both above the estimated $3,114 million and the year-ago figure of $3,093 million. Industrial sales perked up 14%, and the company saw gains from its Arctic Cat acquisition. Shares are up 6.7% in today’s pre-market. For more on TXT’s earnings, click here.

Mark Vickery
Senior Editor

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