CHICAGO, April 17, 2014 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog includethe Google (Nasdaq:GOOGL-Free Report), IBM (NYSE:IBM-Free Report), Facebook (Nasdaq:FB-Free Report), Intel (Nasdaq:INTC-Free Report) andSinopec (NYSE:SNP-Free Report).
Here are highlights from Wednesday's Analyst Blog:
Google Misses, IBM Meets – Both Stocks Dive
Two more big names in technology reported earnings after the bell Wednesday: Google (Nasdaq:GOOGL-Free Report) andIBM (NYSE:IBM-Free Report) each posted lighter sales than expected in their fiscal 1st quarters. Google reported earnings of $5.33 per share (including traffic acquisition costs), a disappointing 17.6% negative surprise, while IBM came in exactly even at $2.54 per share for the quarter.
Google, in particular, has lots of moving parts these days, and many of these are reflected in what we are seeing in the earnings report. Paid clicks are up 26% (some analysts expected this number to be higher) while cost per click (CPC) fell 9%. Much of this stems from Google's increased business on mobile platforms, which command lower ad rates, though this figure improved sequentially from 11% last quarter.
When considering the big picture about Google, however, no one is too concerned about a modest sales or earnings miss in the near-term (well, not "no one" -- late traders are taking the stock behind the woodshed right now), especially while the company remains in the middle of a huge investment phase where its main consideration is the expansion of its user base. Like Facebook (Nasdaq:FB-Free Report), Google seeks to track consumer habits ubiquitously and accurately; it is this motivation that's behind Google's $3.2 billion acquisition of home safety and thermostat firm Nest, among other things.
Harder to gauge is the long-term impact of other pet projects Google has been tinkering with. Of course we all know about Google Glass -- in fact, we've begun to see extensive usage of this product already -- and the self-driving cars Google is developing. Its latest purchase is drone-maker Titan Aerospace, a deal so new there's not even an official dollar figure attached to it yet. But at least the aim here is to increase connectivity in remote areas; again, we see Facebook pursuing the same type of thing.
IBM's business is, fittingly, a bit more old school than that: restructuring its operations to face modern challenges and selling off non-core businesses. We've seen this recently with the pending deal to move their x86 server business for roughly $1 billion, and jettisoning off its Customer Care biz for around half a billion. Like we saw withIntel (Nasdaq:INTC-Free Report) yesterday, the older, PC-based, enterprise-heavy tech firms of yesteryear are modernizing and streamlining at a recognizable pace, but it's going to take time.
Google shares have sold off more than 5% in the after-market. And while the company is still up around 40% year-over-year, GOOGL is now officially down year-to-date. IBM is also down big in the after-market, and is falling to about break-even since the first of the year.
While neither produced the good news investors hoped for, neither did either company perform abysmally. Perhaps they're simply on the early side of an overall correction after hefty gains in the market overall during regular Wednesday trading.
China Stock Roundup
Chinese stocks swung between gains and losses this week amidst mixed economic signals. Markets moved upwards on Monday, retaining the momentum gained last week following a decision to allow cross-border equity trading between Shanghai and Hong Kong.
However, stocks moved downwards on Tuesday after growth in money supply declined. Markets returned to their winning ways today after GDP numbers declined, but exceeded estimates.
Markets and the Economy This Week
The Shanghai Composite Index gained 0.1% on Monday, extending the largest five day rally in nearly two months. The benchmark index gained 3.5% last week, following a decision by China to allow cross-border equity trading between Shanghai and Hong Kong. China Petroleum and Chemical Corp., also known as Sinopec (NYSE:SNP-Free Report) moved up 2.3% while Chongqing Changan Automobile Co. was the largest gainer among consumer discretionary stocks.
Chongqing Changan Automobile gained 10% after announcing that its net income had increased nearly four times. The Hang Seng China Enterprises Index slipped 0.2% while the CSI 300 Index declined 0.1%. Bank stocks declined, and a measure of financial stocks in the CSI 300 lost 0.6%, the largest among the 10 industry groups.
Markets plunged on Tuesday, with Chinese stocks losing by the widest margin in more than a month. The decline was led by financial companies and commodity producers. Bank shares continued to suffer. Poly Real Estate Group Co. and Industrial Bank Co. lost in excess of 3%. Industrial Bank and Huaxia Bank Co. declined by 3% and 2.7% respectively.
The Shanghai Composite Index lost 1.4% while the Hang Seng Index declined 1.6%. The Hang Seng China Enterprises Index plunged 2.1% while the CSI 300 Index lost 1.7%
Tuesday's losses were primarily a result of the slowest recorded growth in money supply which indicated the possibility of an economic downturn. China's most representative gauge of money supply, M2, increased 12.1% in March compared to the year ago figure. This is lower than the 13.3% growth recorded in February.
According to official figures released today, China's GDP increased 7.4% during the first quarter compared to the year ago figure. This figure beat most estimates, but was still the slowest pace in nearly one and a half years. Industrial production increased 8.8% in the month of March, lower than the 8.6% figure recorded during January-February. At 17.6%, fixed-asset investment in March was also lower than the 17.9% for the January-February period.
Financial companies such as Founder Securities Co. chalked up gains. The Shanghai Composite Index moved up 0.2% while the CSI 300 Index gained 0.1%. The Hang Seng China Enterprises Index slipped 0.3% after gaining nearly 1% earlier during the day. The Shanghai Composite has gained 3.5% over the quarter following speculation that the government will announce additional measures to stimulate growth.
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978. The later formation of the Zacks Rank, a proprietary stock picking system; continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros.
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.