As we dive headfirst into the meat-and-potatoes of fourth-quarter earnings reports, and with three-quarters of the year already in the books, I can't help but point out that the majority of reports up until now have been better than expected. With so many companies reporting during the weeks that comprise earnings season, it's easy for some earnings reports to fall through the cracks.
Each week this year, I've taken a look at three companies that could be worth further research after either beating or missing their profit expectations. Today, we'll take a gander at three more companies that reported earnings last week. They may have slid under your radar, but they deserve a look.
Hess (NYS: HES)
RealNetworks (NAS: RNWK)
Source: Yahoo! Finance.
First off, on my behalf and that of The Motley Fool, we extend our best wishes to those suffering in the aftermath of Hurricane Sandy. With that said, Hess, which operates both upstream and downstream operations (as well as gas stations in the tri-state area), reported a solid earnings report on Friday, which has generally fallen under the radar due to the cleanup efforts surrounding Sandy.
Many refining companies have been hammered in recent days, especially those with heavy Northeast exposure like Hess and Philips 66 (NYS: PSX) , which shuttered refineries as Sandy approached. The aftermath of the storm, however, has been far kinder to Hess than to many of its peers. According to a report from Hess on Friday, 177 of its 186 New York gas stations were open for business. The same can't be said for its peers, who are struggling to pump gas not because of demand or supply so much as a lack of electricity.
I see Sandy being less of an earnings-impacting event for Hess relative to its peers and feel that its earnings outperformance could continue well into 2013. Oil prices appear to be stabilizing, which is good news for both its exploration and production as well as refining operations, and production abroad as well as in the Bakken shale looks promising. Consider Hess an oil company worth keeping a close eye on.
Back in late January, I highlighted Acorda as one of my top three biotech takeover candidates for 2012. Needless to say, neither Acorda, nor the other two companies profiled, have been bought out this year. But this doesn't mean Acorda shouldn't be on your Watchlist after another solid earnings report, which saw it crush Wall Street's expectations by 140%!
For the quarter, Acorda reported a 49% decline in net income over the previous year largely due to the absence of a $25 million milestone payment from its marketing partner Biogen Idec (NAS: BIIB) . However, Acorda and Biogen are reaping steady rewards from Ampyra, the only FDA-approved drug to treat walking impairment associated with multiple sclerosis. Biogen markets the drug for Acorda outside the U.S. (under the name Fampyra), with Acorda maintaining all rights within the United States. Sales of the drug rose by 28% over last year and show little signs of slowing given the lack of competition.
I feel investors are set up for a win-win, as either Ampyra sales will continue to flourish and shareholders will be rewarded, or Biogen Idec will do what it should have done months ago and scoop up Acorda.
Things certainly got "real" for digital media products company RealNetworks this week... real bad.
Things continue to go from bad to worse for RealNetworks, which reported a much wider-than-expected loss this week of $22 million. RealNetworks blamed the quadrupling in losses on severance packages for 160 employees, as well as overall business weakness. The company did bank a hefty $120 million earlier this year from selling patents and patent applications to Intel (NAS: INTC) ; however, that cash pile is quickly dwindling and is down to just $274 million again as losses mount and future contracts dry up.
Simply put, RealNetworks has done little to update its software or monetize its brand, and it's unlikely to be able to reverse its losses anytime soon. It's taken the necessary steps to reduce costs by laying off 160 people, but that's only softened its cash burn. Until the company addresses its innovation problem and cements strong leadership at the top, there's really no limit to its downside.
Sometimes an earnings beat or miss isn't as cut-and-dried as it appears. I've given my two cents on what's next for each of these companies -- now it's your turn to sound off. Share your thoughts in the comments section below and consider adding these stocks to your free and personalized Watchlist.
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The article 3 Earnings Reports That Caught My Attention Last Week originally appeared on Fool.com.
Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.The Motley Fool owns shares of InterDigital Communications and Intel. Motley Fool newsletter services recommend Biogen Idec, InterDigital Communications, and Intel. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.