Off-season earnings paint a happy picture

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There is chaos spreading in the middle east, the U.S. legislature is polarized and paralyzed like never before in American history, wages are falling, inflation is returning, and the word on the Street, based on recent corporate earnings announcements, is-all's well. It seems that after four years, the most (if not the only ) consistent feature of this bull market remains the mind-boggling inconsistency of the economic data it generates.

While economists and market prognosticators typically weigh in during earnings season about what the trends mean for the market, there seems to be a trend emerging, this time around, in the most important off-season earnings reports: they're good . We may be at the absolute low-water mark in the three-month cycle, in terms of the number of earnings reports being released each week, but there have recently been a few exciting reports from important companies.

Consider H&R Block's ( HRB ) earnings report from last Wednesday. The $9.1 billion tax company's fiscal fourth quarter ends in April, which is, of course, the most important month for the company. The company's earnings for the quarter beat the Street's guess by only a penny, but revenue surged, climbing 16% over the year-ago quarter, and beating the Street's guess handily in the process. The trend which seems to have emerged (over the last 25 years or so) is that tax software continues to improve, but never fast enough to catch up to the increasingly complex tax code. Thus, it seems, the need for professional tax preparation services will always be with us.


Just this morning (Wednesday), Adobe ( ADBE ) reported second quarter earnings of $0.23 per share, beating the Street's guess by a full $0.07, or 43%. The Street has been watching Adobe carefully since last year, when the company decided to forgo traditional software sales for a cloud services / licensing model. Since, in the broader sense, the whole software industry is moving in this direction, Adobe's big earnings win should be seen as very important good news. ADBE stock is currently up 8% on the day.

Finally, there is FedEx ( FDX ), which also reported this Wednesday morning. FDX stock has been flat so far this year, but that may be about to change, as the company's revenue was up, its expenses were down, it raised its dividend by 33%, and beat the Street's Earnings Per Share guess of $2.36 by a full dime. The company's CEO, Fred Smith, had this to say: "An outstanding fourth quarter helped FedEx post solid results for fiscal 2014, and we believe we are well positioned for a strong fiscal 2015." FDX stock is up 4.6% today.

That's just three companies, to be sure, but each, in its own way, speaks not only for itself, but for the overall economy. Of the disparity of economic indicators, I won't try to make any sense of it except to say that these paradoxes have been with us since the bull market began. Perhaps paradox is itself, a bullish indicator.

Is that Silly? Yes. Is it said with tongue in cheek? Yes. But it makes as much sense as any other indicator nowadays.

Julian Close has been a business writer since the first day of the twenty-first century, having written for PRA International and the United Nations Department of Peacekeeping. He graduated from Davidson College in 1993 and received a Master of Arts in Teaching from Mary Baldwin College in 2011. He became a stockbroker in 1993, but now works for Fresh Brewed Media and uses his powers only for good. You can see closing trades for all Julian's long and short positions and track his long term performance via twitter: @JulianClose_MIC .


This article was originally published on MarketIntelligeneCenter.com



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Earnings , Economy

Referenced Stocks: HRB , ADBE , FDX

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