Gaining Despite Fundamental Loss
Guess?, Inc. (NYSE:GES) is trading higher by 10.5% after the company reported a mixed earnings report. In the quarter, Guess?, Inc. (NYSE:GES) missed revenue expectations as total sales declined 5.2% year-over-year, yet its EPS was far better than the consensus.
Guess?, Inc. (NYSE:GES) has seen its stock increase 32% in 2013, therefore it’s hard to argue that expectations were low. When you look at the fundamental performance of this company – including a 9.8% year-over-year decline in comparable store sales and a 53.3% decline in earnings per share – it is hard to find a reason that the stock is trading higher.
While the company issued soft full-year guidance, it appears as though the market is responding to better-than-expected FQ2 guidance. The market may also be responding to the company’s announcement to integrate online order fulfillment at its stores, which has boosted margins for Macy’s.
Overall, I don’t see any significant improvements, nor do I see a reason to be optimistic. Thus, I would not buy after this pop.
Speculation of New Products Boosts This Stocks
OmniVision Technologies, Inc. (NASDAQ:OVTI) exploded higher with gains of 20% after the company blew past earning expectations. The beat came as a result of a 21% year-over-year decline in total sales.
OmniVision Technologies, Inc. (NASDAQ:OVTI) is a semiconductor company whose products are used in Apple Inc. (NASDAQ:AAPL) products. Thus, investors expected the FQ4 revenue drop – but what investors didn’t expect was bullish guidance – and that’s exactly what they got.
The company issued FQ1 revenue guidance of $355 million-$390 million, which is far greater than the $347 million that was expected. The company’s products are already designed into the iPhone 5, fourth-generation iPad, and the iPad mini, and this guidance is indicating to many that a low-cost iPhone – and possibly other products – are already being developed.
The company is currently trading at 0.60 times sales, and with new products on the horizon, I definitely think that OmniVision Technologies, Inc. (NASDAQ:OVTI) is an interesting stock.
That’s a Lot of Doughnuts
Krispy Kreme Doughnuts (NYSE:KKD) is the post-earnings performance leader with its 23% gain. The company is seeing these gains after revenue rose 11.2% year-over-year to revenue of $120.6 million – which is a lot of doughnuts!
Personally, I listened to the company’s conference call, and management was very upbeat in discussing “great” and “exceptional” traffic. Not to mention the company is becoming more efficient, as operating income and adjustable net income rose 40% and 37%, respectively, in FQ1.
Overall, it was a home run in every metric, as doughnut sales were “doggone strong,” according to management. The company is also benefiting from high-priced coffee drinks, including k cups, and higher same store sales. As a result, Krispy Kreme Doughnuts (NYSE:KKD) is looking very attractive.
Final Thoughts
Obviously, I am not buying the Guess? rally. However, both OmniVision Technologies, Inc. (NASDAQ:OVTI) and Krispy Kreme Doughnuts (NYSE:KKD) are showing many signs of improved long-term performance trends.
While OmniVision Technologies, Inc. (NASDAQ:OVTI)’s guidance is strong, I don’t like the idea that it’s 100% speculative, and is based upon future releases. In fact, with declining year-over-year revenue, I think all expectations might be priced into the stock. With that said, it is a good speculative play, but is not a home run by any means.
Krispy Kreme Doughnuts (NYSE:KKD) is the last company that I’d expect to be posting double-digit growth, and it’s that growth that separates it from OmniVision Technologies, Inc. (NASDAQ:OVTI). I’ve always been skeptical of its integration of coffee, but with results being so effective, I do wonder what product offerings the company may offer next. Thus, I am buying the doughnut rush, and believe Krispy Kreme Doughnuts (NYSE:KKD) is a definite “buy” on top of market-leading gains.
The article Which Double-Digit Friday Mover Is a Buy? originally appeared on Fool.com and is written by Brian Nichols.
Brian Nichols has no position in any stocks mentioned. The Motley Fool recommends Guess?. The Motley Fool owns shares of Guess?. Brian is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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