Earnings Reports Out of Kate Spade, Office Depot, Noble Energy, and 2 Others Are Turning Heads

Crude futures are in the green today as traders look forward to today’s EIA inventory numbers. Yesterday’s API report showed a drawdown of around 1.3 million barrels, slightly better than expectations.

Among the stocks trending today on their latest earnings reports are Kate Spade & Co (NYSE:KATE), Office Depot Inc (NASDAQ:ODP), Occidental Petroleum Corporation (NYSE:OXY), Noble Energy, Inc. (NYSE:NBL), and Avista Corp (NYSE:AVA). Let’s find out why each stock has investors buzzing and see how the world’s most successful hedge funds are positioned in each stock.

While there are many metrics that investors can assess in the investment process, the hedge fund sentiment is something that is often overlooked. However, hedge funds and other institutional investors allocate significant resources while making their bets and their long-term focus makes them the perfect investors to emulate. This is supported by our research, which determined that following the small-cap stocks that hedge funds are collectively bullish on can help a smaller investor to beat the S&P 500 by around 95 basis points per month (see the details here).

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Weak Guidance At Kate Spade 

Kate Spade & Co (NYSE:KATE) shares are off by 18% today after the luxury fashion company reported earnings of $0.11 per share on revenue of $319.69 million for the second quarter, missing the bottom-line consensus estimate by $0.03 per share and marginally beating the top-line consensus, by $1.14 million. Due to soft demand, the company’s gross margin fell by 130 basis points to 59.7% and the company also issued disappointing guidance. For the full year, management expects EPS of $0.63-to-$0.70 on revenue of $1.37 billion-to-$1.40 billion, beneath the previous guidance ranges of $0.70-to-$0.80 in EPS and $1.385 billion-to-$1.410 billion in revenue. Of the 766 active hedge funds that Insider Monkey tracks, the number of them with long positions in Kate Spade & Co (NYSE:KATE) fell by four quarter-over-quarter to 32 as of the end of March.

Office Depot’s Results Miss the Mark

Traders are watching Office Depot Inc (NASDAQ:ODP) today after the office supply company missed analysts’ target profit estimate by $0.03 per share with second quarter EPS of $0.03. Revenue came in $20 million higher than estimates at $3.22 billion but was nonetheless down by 6.4% year-over-year. North American same-store sales fell again, this time by 1% during the quarter, while Office Depot’s international division revenue retreated by 4% year-over-year. Office Depot’s management is in turn-around mode, as they are committed to focusing on the OfficeMax merger integration (which should yield annual synergies of $750 million by the end of 2017), and implementing a new $250 million cost savings program which should be realized by the end of 2018. Given the company’s strong liquidity, Office Depot’s Board initiated a $0.025 quarterly dividend payment. In terms of guidance, management expects free cash flow to be in excess of $200 million for 2016 and over $300 million for 2017.  58 funds in our database owned shares of Office Depot Inc (NASDAQ:ODP) on March 31, up by 12 funds from the end of 2015.

On the next page we’ll run through the results issued by Occidental Petroleum Corporation, Noble Energy, and Avista Corp.

Occidental in the Spotlight

Occidental Petroleum Corporation (NYSE:OXY) lost $0.18 per share on sales of $2.56 billion in the second quarter, meeting net income estimates but missing sales expectations by $170 million. Although the company’s Permian Resources production rose by 16% year-over-year to 126,000 BOE per day, sales for the three months ended June 30 fell by 27.1% year-over-year due to lower crude prices. Total company production for on-going operations rose to 609,000 BOE per day from around 590,000 BOE per day for the first quarter. Occidental remains one of the strongest companies in the sector, with the company ending the second quarter with a liquidity position of $3.8 billion in cash. 50 funds that we track were long Occidental Petroleum Corporation (NYSE:OXY) at the end of March.

Noble Energy Sliding on Mixed Results

Noble Energy, Inc. (NYSE:NBL) is down by 3% this morning after having lost $0.24 per share during the second quarter, beating net income estimates by $0.05 per share. Due to the lower crude prices however, Noble’s revenue missed by $62.36 million at $847 million. Sales volumes for the time period were 427 MBoe/d, an increase of 18% year-over-year. Profits beat estimates in part because management reduced LOE on a BOE basis by 30% year-over-year to $3.07. Noble Energy ended the quarter with $5.3 billion in liquidity, comprised of $4 billion in credit and $1.3 billion in cash. 46 funds in our system were long Noble Energy, Inc. (NYSE:NBL) at the end of the first quarter, up by 14 funds from the close of the previous quarter.

Mixed Results at Avista 

Avista Corp (NYSE:AVA) reported earnings of $0.43 per share on revenue of $318.8 million for its second quarter, narrowly missing analysts’ consensus EPS estimate of $0.45, but narrowly topping their revenue target of $316.24 million. Based on the company’s earnings for the first half of the year, the company’s management reiterated its previous earnings guidance range for the full year of $1.96-to-$2.16 per diluted share. Those numbers are generally in-line with market estimates, seeing as Avista shares are down only modestly today, by a little over 1%. 12 funds that we follow owned a combined $56.25 million worth of Avista Corp (NYSE:AVA) shares on March 31, which accounted for 2.20% of the float.

Disclosure: None