Strong Earnings Are Driving These Stocks Higher This Morning

It’s Thursday and another slate of companies have released their latest quarterly earnings reports, some of which have beaten consensus, while others have missed the mark. In this article, we will take a closer look at the latest financial results reported by five particular companies, Southwest Airlines Co (NYSE:LUV), General Motors Company (NYSE:GM), Under Armour Inc (NYSE:UA), D.R. Horton, Inc. (NYSE:DHI), and PulteGroup, Inc. (NYSE:PHM), all of which turned in positive quarters. We will also analyze relevant hedge fund sentiment towards these stocks.

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).

Southwest Rallies in Pre-Market on Beat

Southwest Airlines Co (NYSE:LUV) handily beat estimates for the first quarter, reporting EPS of $0.88 on revenue of $4.83 billion, versus estimates of $0.84 and $4.81 billion respectively. Free cash flow was a record $1.2 billion, powered by low fuel prices and a relatively new jet fleet. The airline also returned $596 million back to shareholders through dividends and share repurchases. CEO Gary C. Kelly gave a little more detail on the results:

“As expected, operating revenues grew in line with our available seat mile growth of 9.2 percent, which is a very strong performance, especially considering the increase in stage length. The sustained strength of Customer demand for our one-of-a-kind service produced a record first quarter load factor of 80.5 percent. Solid bookings and revenue trends have continued, thus far, in April, and we currently expect modest operating unit revenue growth in second quarter 2016, year-over-year.”

Although higher crude prices could lower the un-hedged part of Southwest Airlines Co (NYSE:LUV)’s fuel expenses, 52 top funds that we track owned 9.3% of the company’s float at the end of December.

General Motors Surges on Solid Quarter

General Motors Company (NYSE:GM) is 3.4% higher in pre-market trading after the vehicle manufacturer turned in an excellent quarter. For the first quarter, General Motors beat earnings estimates by $0.25 per share with EPS of $1.26, while it beat revenue expectations by $1.89 billion with sales of $37.3 billion. Profits were more than double those achieved during the first quarter of 2015 and sales rose by 4.5% year-over-year, which is impressive given the strong dollar and weak global macro-economic picture. GM’s EBIT-adjusted margin also moved up by 130 basis points to 7.1%. Warren Buffett‘s Berkshire Hathaway owned 50 million shares of General Motors Company (NYSE:GM) at the end of December.

On the next page, we examine how Under Armour Inc, DR Horton Inc, and PulteGroup Inc. performed in the first quarter.