Wednesday, November 4, 2009

Two earnings beats, two different stock reactions (CSCO, WFMI)

Cisco(CSCO) and Whole Foods (WFMI) both beat earnings expectations this afternoon. Cisco shares are up about 3% on the news, while Whole Foods is down almost 9%. What gives?

What gives is the charts leading up to the reports. Yes, Cisco investors did expect the company to come in ahead of the 31cents expected, and they did - earning 36cents. Then on the conference call they guided Q3 revenue about $400million higher than the street was expecting.

Whole Foods beat by 2cents, but guided full year 2010 earnings below the street consensus of 1.10 per share. Whole Foods -->> up 300% off the 12month lows and trading at a forward Price-to-Earnings ratio of 28 -->> They needed much better earnings guidance to justify the big move in their stock.

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