The Daily Dow
Tuesday, October 14, 1997
by Robert Sheard
LEXINGTON, KY. (Oct. 14, 1997) -- It's earnings season again and ten percent of the Dow stocks posted results this morning. While the reports aren't earth-shattering blowouts, it's not been a bad day on Blue-Chip Mountain.
First, the bad news. Although it's not really news at all, EASTMAN KODAK <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: EK)") else Response.Write("(NYSE: EK)") end if %> is having a tough go of it. A hat trick of reasons caused a slide of 43% in Kodak's net income over last year's levels. Losses in Kodak's digital-photo division, increasingly tough competition from the likes of Fuji Photo Film in the consumer film business, and a very strong U.S. dollar (a problem that held back several Dow stocks in the quarter) combined to check Kodak's efforts at cost cutting and restructuring. Is this the typical Dogs of the Dow case?
For the quarter, Kodak posted earnings of 71 cents per share versus $1.22 last year. If you take out unusual items, Kodak actually posted earnings of 80 cents per share, which is nine cents better than the recently lowered consensus estimate of 71 cents.
In another case where the strong dollar capped an otherwise good result, JOHNSON & JOHNSON <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: JNJ)") else Response.Write("(NYSE: JNJ)") end if %> posted earnings of 64 cents per share, compared with 56 cents last year. This was right in line with Wall Street's expectations, but Johnson & Johnson believes the earnings were reduced by as much as five percent because of the strength of the dollar. (Fifty percent of Johnson & Johnson's sales are generated outside the United States.)
Easily the best earnings report of the day for Dow stocks was recorded by GENERAL MOTORS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GM)") else Response.Write("(NYSE: GM)") end if %>, one of the
According to Smith Barney analyst David Garrity, GM's strength in North America should continue in the immediate future.
In response to J.P. MORGAN's <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: JPM)") else Response.Write("(NYSE: JPM)") end if %> earnings earlier this week, two brokerage rankings changes were announced today. Interestingly, they moved in opposite directions. Bear Stearns cut its rating on Morgan from "Attractive" to "Neutral," but Gerard Klauer Mattison bumped the stock up from "Hold" to "Buy." Accompanying the upgrade was a revision of next year's earnings estimate from $8.50 per share to $8.80 and a hike in their twelve-month price target of $145. Guess such "consensus" is what makes a market, eh?
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1997 Foolish Four
Model
Stock Change Last -------------------- T + 3/8 45.94 GM -1 1/16 70.38 CHV --- 85.50 MMM +2 3/16 98.63
Day Month Year
Day Month Year
FOOL-4 +0.42% 4.48% 21.37%
DJIA +0.30% 1.90% 25.56%
S&P 500 +0.23% 2.43% 30.99%
NASDAQ -0.54% 2.80% 34.22%
Rec'd # Security In At Now Change
1/2/97 153 Chevron 65.00 85.50 31.54%
1/2/97 179 Gen. Motor 55.75 70.38 26.23%
1/2/97 120 3M 83.00 98.63 18.83%
1/2/97 479 AT&T 41.75 45.94 10.03%
Rec'd # Security In At Value Change
1/2/97 153 Chevron 9945.00 13081.50 $3136.50
1/2/97 179 Gen. Motor 9979.25 12597.13 $2617.88
1/2/97 479 AT&T 19998.25 22004.06 $2005.81
1/2/97 120 3M 9960.00 11835.00 $1875.00
CASH $1167.51
TOTAL $60685.20