The Dow Action That Actually Matters Today
Five of the 30 Dow Jones Industrial Average (INDEX: ^DJI) companies reported earnings before market today. So we can discuss Greek stalemates or a here-then-there economic recovery some other time. We have real, company-specific Dow news today. Here's a quick rundown of what happened:
Reported Earnings (adjusted)
DuPont (NYS: DD)
Johnson & Johnson (NYS: JNJ)
McDonald's (NYS: MCD)
Verizon (NYS: VZ)
Source: The Wall Street Journal.
DuPont beat analyst estimates, posting an adjusted $0.35 for the fourth quarter. Sales were slightly below expectations but still up 14% to $8.43 billion. The chemicals behemoth has eight segments. Of the seven with meaningful changes, all increased sales. But only its agriculture and nutrition and health divisions posted positive volume growth. Shares are pretty flat as I write this.
Johnson & Johnson's adjusted fourth-quarter earnings may be $1.13, and it may have technically beaten analyst estimates, but its GAAP earnings were just $0.08 after a slew of one-time charges. The largest hits were $0.44 in product liability-related expenses and $0.37 in litigation-related expenses, as J&J has been dealing with quality control issues and allegations of questionable practices. But it's important to note that it still grew sales by 3.9% and the company estimates 2012 profits ranging from $5.05 to $5.15. That's a reasonable 13 times forward earnings at current prices. Shares are pretty flat today.
McDonald's chalked up a strong quarter and beat Wall Street's earnings and sales estimates today. And it's done this despite 40% of its sales coming from Europe. But shares are still down over 2%. The drop is probably due to increasing expectations due to the multi-year tear McDonald's stock has been on, as well as fears that the company won't be able to keep up with increased supply costs without its consumers trading down. McDonald's was last year's best Dow stock, but it'll have to put in even more remarkable performances to repeat.
Travelers was the Dow's big loser yesterday ahead of earnings, and as I write this it could be headed for another dubious victory, down over 3%. It missed earnings, with its net income down 31% due to underwriting weakness and declining investment income.
Verizon is down almost 2% as GAAP earnings came in negative due to pension charges (adjusted earnings were $0.52, but GAAP earnings were -$0.71). Operationally, Verizon grew its wireless business (co-owned with Vodafone) by 1.2 million net new subscribers, but that growth came at the cost of heavy subsidies to Apple for its iPhone.
There you have it. The earnings releases have definitely given us a few things to discuss at DuPont, J&J, McDonald's, Travelers, and Verizon, but remember to keep things in perspective and stay focused on the long term.
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At the time this article was published Anand Chokkaveluowns shares of Vodafone, Johnson & Johnson, Apple, and McDonald's. The Motley Fool owns shares of Johnson & Johnson and Apple.Motley Fool newsletter serviceshave recommended buying shares of Johnson & Johnson, Vodafone Group, Apple, and McDonald's.Motley Fool newsletter serviceshave also recommended creating a bull call spread position in Apple and a diagonal call position in Johnson & Johnson. Try any of our Foolish newsletter servicesfree for 30 days. We Foolsmay not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.
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