IBM, United Continental, Del Taco, and More: Here’s How These Companies Performed During Their Latest Quarters

Given that earnings reports can sometimes be a good indicator of the future direction of stocks and seeing as how earnings season is in full gear, let’s analyze the quarterly reports just issued by United Continental Holdings Inc (NYSE:UAL), International Business Machines Corp. (NYSE:IBM), Del Taco Restaurants Inc (NASDAQ:TACO), Badger Meter, Inc. (NYSE:BMI), and Wintrust Financial Corp (NASDAQ:WTFC).

In addition to the latest earnings reports, we’ll also use 13F data to determine how the world’s top hedge funds and institutions are positioned in each of the five stocks.

At Insider Monkey, we track over 750 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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Traders are watching United Continental Holdings Inc (NYSE:UAL) after the airline reported better-than-expected results for its third quarter. For the three months, the airline earned $3.11 per share on sales of $9.9 billion, beating the consensus estimates by $0.23 and $10 million respectively. Revenue inched lower by 4% year-over-year as PRASM decreased by 5.8% and consolidated yield fell by 5.7%. Consolidated CASM, excluding certain items, inched up by 3.4% year-over-year, largely due to a recently approved labor agreement. For the period, United Continental generated $1.1 billion in operating cash flow, $459 million in free cash flow, and the company repurchased $255 million of its common shares, representing 1.5% of all shares outstanding. In terms of guidance for the fourth quarter, the company expects consolidated PRASM to fall between 6% and 4%, and for consolidated capacity to rise by 1%-to-2%. Leon Cooperman‘s Omega Advisors raised its United Continental Holdings Inc (NYSE:UAL) stake by 20% in the second quarter to over 2.36 million shares.

International Business Machines Corp. (NYSE:IBM) shares are down by 3% in extended market trading despite the company reporting solid third quarter earnings. For the period, IBM earned $3.29 per share, beating the Street’s estimate by $0.06. Sales from continuing operations came in at $19.2 billion, $200 million ahead of the consensus top-line expectation and down by just 0.4% year-over-year. Cloud revenue jumped by 44% year-over-year, while the company’s security sales also increased by 11%. IBM expects its 2016 earnings to clock in at $13.50 per share. Of the 749 hedge funds that we track which filed 13Fs for the June quarter, 53 funds owned $14.06 billion worth of International Business Machines Corp. (NYSE:IBM) holdings on June 30, which accounted for 9.60% of the float.

On the next page we’ll examine the results out of Del Taco Restaurants, Badger Meter, and Wintrust Financial Corp.

Del Taco Restaurants Inc (NASDAQ:TACO) earned $0.13 per share on sales of $104.4 million for its third quarter, beating the bottom-line estimate by $0.01 and the top-line estimate by $2.79 million. Overall sales rose by 5.9% year-over-year, as system-wide comparable-restaurant sales jumped by 6.7%. Restaurant contribution margin came in at 20.9%, an improvement of 120 basis points from the same period of last year. Adjusted EBITDA rose by 11% year-over-year to $17 million. As for guidance, Del Taco expects its fiscal 2016 system-wide same-store sales growth to be at the high end of its previous 2.5%-to-4.5% range, while diluted EPS is expected to be in the range of $0.53-to-$0.56. Needless to say, Del Taco shareholders are pretty happy with the guidance and earnings beat, as its shares are over 8% in the green. 14 funds were long Del Taco Restaurants Inc (NASDAQ:TACO) at the end of the second quarter, down by six funds from the end of the first quarter.

Badger Meter, Inc. (NYSE:BMI) disappointed its shareholders with EPS of $0.30 on sales of $96.27 million for its third quarter, missing the consensus marks by $0.03 per share and $9.39 million, respectively. Sales fell by 3.1% year-over-year, reflecting a softening of order input early in the period, while gross margin improved to 40.1% from 36.3% due to lower costs and margin contributions from Badger Meter’s company-owned distribution network. Badger Meter also said that it anticipates a fourth quarter that will be consistent with previous years, which would result in a strong year for the company should that be the case. Shares of Badger Meter are 8.3% lower in extended-market trading. The number of funds in our system with holdings in Badger Meter, Inc. (NYSE:BMI) rose by three during the second quarter to ten at the end of June.

Wintrust Financial Corp (NASDAQ:WTFC) is in the spotlight after reporting third quarter EPS of $0.92, which was $0.02 better than estimates, and sales of $271.2 million, a number that was $7.09 million ahead of expectations. For the period, sales rose by 17.7% year-over-year. as total assets increased by 15% on an annualized basis to exceed $25 billion. Total loans, excluding covered loans and mortgage loans held-for-sale rose by 20% on an annualized basis to $19.1 billion. Tangible common book value came in at $37.06 per share, up from $32.83 per share a year earlier. 19 funds that we track were long Wintrust Financial Corp (NASDAQ:WTFC) at the end of June, up by seven quarter-over-quarter.

Disclosure: None