3 Earnings Reports That Caught My Attention Last Week
As we enter the heart of second-quarter earnings reports, I can't help but point out that the majority we've covered over the past year 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 for the past 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.
Investors certainly haven't been giving NVIDIA much credit lately, as its legacy graphics business has been hurt by weakening PC demand and its entry into the mobile and tablet chip market is bound to be difficult with plenty of established competition. Yet, NVIDIA proved the doubters wrong yet again with its first-quarter results last week.
For the quarter, revenue rose 3% to nearly $955 million as EPS expanded to $0.13 from $0.10 in the year-ago period. What's really to note was that its Tegra chip sales for tablets and smartphones dropped 22% as the company transitions from Tegra 3 to its all-new Tegra 4 chips. Despite the drop-off in sales, NVIDIA still managed to expand gross margin by 4 percentage points to 54% and delivered a nice boost in graphic chip sales despite weakness in the PC industry.
Furthermore, Project Shield, the company's handheld gaming device, is poised to ship in the upcoming fiscal quarter. Although gaming hasn't exactly been a top performer over the past couple of years due to the commoditization and digitization of the industry, combining NVIDIA's graphics and processing capabilities should allow it to set itself apart from the field. The other interesting aspect of this expected launch is that it comes on the heels of the expected debut of Microsoft's new Xbox and Sony's PlayStation in the second half of the year.
As I stated last month, there's nothing graphic about NVIDIA's potential, and you'd be foolish not to have this company firmly planted on your Watchlist.
In September of last year I exclaimed that biopharmaceutical company Onyx would be heading to $100. It appears that its first-quarter report, while still in the red, could help this rapidly growing and innovative company hurdle that mark.
For its most recent quarter, Onyx delivered a doubling in revenue to $145.5 million from $72 million in the previous year, with practically all of the gains coming from multiple myeloma drug Kyprolis. Sales of Kyprolis totaled $64 million this quarter, which is phenomenal for a drug that was only approved in July. Nexavar sales were a bit disappointing, falling 2% from the previous year to $70.3 million. However, Nexavar, which is already approved to treat the most common form of kidney and liver cancer, looks poised to gain the additional indication of metastatic thyroid cancer if trial data keeps working in its favor.
Kyprolis won't have a completely clear path to success in spite of its rapid sales ascent due to the accelerated approval of Celgene's Pomalyst in February. Kyprolis delivered a slightly better median duration of response at 7.8 months versus 7.4 months, yet Pomalyst combined with a low-dose dexamethasone produced a higher overall response rate of 29.2% as compared to 23% for Kyprolis. I feel that the multiple myeloma market is certainly big enough, and in need of any help it can get, that both drugs will be accommodated.
With a loss that was significantly narrower than expected and $739 million in cash and cash equivalents, Onyx still represents an intriguing buyout candidate for a big pharmaceutical company itching for a growing pipeline of products.
Whether or not you want to believe it, the time has probably come to sound the alarm of concern if you're a shareholder in energy-drink maker Monster Beverage. Things are an absolute mess despite the company reporting a 6.5% increase in quarterly revenue to $484.2 million, with multiple other metrics headed in the wrong direction.
To begin with, every imaginable expense rose from the year-ago period. Distribution costs as a percentage of sales jumped to 4.6% from 4.3%. General and administrative expenses saw an even bigger jump, from 8.7% of sales to 11.8% of sales. Selling expenses also rose to 13.5% of sales from 12.3% last year.
If rising costs aren't worrisome enough, unfavorable currency translation took $4.7 million off profits, distributor-terminated contracts lopped off another $8.3 million, and the company spent $3 million on what are bound to be ongoing legal fees associated with defending its Monster Energy drinks against allegations that they aren't safe. You don't have to be a math major to see that this is a Monster-size problem!
The allure of energy drink companies is their rapid growth prospects relative to existing sparkling and still beverages. With Monster's sales growth sinking rapidly and a cloud hanging over its operations with regard to the safety of its drinks, I feel you'd be wise to keep a very safe distance from this company.
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.
- Add NVIDIA to My Watchlist.
- Add Onyx Pharmaceuticals to My Watchlist.
- Add Monster Beverage to My Watchlist.
Is this "high-energy" stock still worth the risk?
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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 Microsoft and Monster Beverage and recommends Celgene, Monster Beverage, and NVIDIA. 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.