A Look at Five Stocks in Spotlight Following Earnings Reports

The markets are relatively calm this morning, although the major indexes are slightly in the red.

In this article, we examine five companies that just reported earnings, American Campus Communities, Inc. (NYSE:ACC), AvalonBay Communities Inc (NYSE:AVB), Cadence Design Systems Inc (NASDAQ:CDNS), Texas Instruments Incorporated (NASDAQ:TXN), and Express Scripts Holding Company (NASDAQ:ESRX). In addition, we are going to take a look at the data from the previous round of 13F filings to get an idea what smart money investors think about the companies in question.

Hedge fund sentiment is an important metric for assessing the long-term profitability. At Insider Monkey, we track over 700 hedge funds, whose quarterly 13F filings we analyze and determine their collective sentiment towards several thousand stocks. However, our research has shown that the best strategy is to follow hedge funds into their small-cap picks. This approach can allow monthly returns of nearly 95 basis points above the market, as we determined through extensive backtests covering the period between 1999 and 2012 (see the details here).

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FFO Beat at American

American Campus Communities, Inc. (NYSE:ACC) is in the spotlight after the company reported a solid second quarter, with funds from operation (FFO) of $0.54 per share and revenue of $174.68 million. Analysts were expecting FFO of $0.52 per share and revenue of $174.92 million, respectively, for the same time period. Same store wholly-owned NOI rose by 2.5% year-over-year, while occupancy inched lower by 40 basis points to 92.6%. For full 2016, American Campus Communities’ management anticipates FFO to be in the range of $2.25 to $2.36 per fully diluted share, and FFOM to be in the range of $2.19 to $2.31 per fully diluted share. During the first quarter, Jim Simons’ Renaissance Technologies raised its stake by 48% in American Campus Communities, Inc. (NYSE:ACC) to almost 800,000 shares.

AvalonBay Reports Results

AvalonBay Communities Inc (NYSE:AVB) reported diluted FFO of $1.99 per share for the three months ended in June 30, down 8.7% year-over-year from last year’s $2.18 per share and below management’s previous guidance of $2.10 per share. Core FFO per share went up by 8.6% year-over-year to $2.03 per share. The core FFO results were ahead of previous guidance of $2 per share in April. Part of the reason for the core FFO beat was because NOI increased by 5% year-over-year, powered by a 5.2% rise in average rent. In terms of guidance, management anticipates between $8.26 and $8.46 in FFO per share for 2016 and $8.13 to $8.33 in core FFO. The number of funds from our database with holdings in AvalonBay Communities Inc (NYSE:AVB) fell by two quarter-over-quarter to 18 at the end of the first quarter.

On the next page, we examine Cadence Design Systems, Texas Instruments, and Express Scripts Holding Company.

Cadence EPS Ahead of Expectations

Cadence Design Systems Inc (NASDAQ:CDNS) earned $0.29 per share on revenue of $453.02 million in the second quarter, beating the consensus estimates by $0.01 per share and $3.48 million, respectively. Sales advanced by 8.9% year-over-year as demand for the company’s Palladium Z1 emulation platform led to a record quarter for hardware revenue. For full 2016, management sees adjusted EPS coming in at $1.17 to $1.23 and revenue of $1.8 billion to $1.83 billion. Shares of Cadence are up over 25% year-to-date so far. A total of 31 investors tracked by Insider Monkey owned shares of Cadence Design Systems Inc (NASDAQ:CDNS) at the end of the first quarter, down by one from the previous quarter.

Texas Reports a Strong Quarter

Texas Instruments Incorporated (NASDAQ:TXN) shares have surged by more than 6% after the semiconductor-maker beat both top and bottom line expectations with second-quarter EPS of $0.76 on sales of $3.27 billion for its second quarter. Analysts were expecting EPS of $0.73 and revenue of $3.2 billio. Gross margin came in at 61.2%, while free cash flow for the trailing 12 months rose by 7% year-over-year to $3.9 billion. Management also returned $4.1 billion to shareholders through stock repurchases and dividends in the same time period. Management sees third-quarter EPS in the range of $0.81 to $0.91 and revenue coming in at $3.34 billion to $3.62 billion. A total of 32 funds owned $844.36 million worth of Texas Instruments Incorporated (NASDAQ:TXN)’s stock, which accounted for 1.50% of the float on March 31, versus 38 funds and $864.71 million, respectively, a quarter earlier.

Express Scripts Earnings In-Line

Express Scripts Holding Company (NASDAQ:ESRX)’s second-quarter results were largely in-line with estimates, with net income coming in as expected at $1.57 per share and revenue of $22.25 billion missing the estimates by just $200 million. Total revenues fell by 1% year-over-year as claims volume retreated by 3%. Management sees full-year adjusted EPS of $6.33 to $6.43, up from the previous range of $6.31 to $6.43. At the end of March, 57 investors followed by Insider Monkey owned shares of Express Scripts Holding Company (NASDAQ:ESRX).

Disclosure: none