Corporate Earnings

This week was a week of gyrations just before companies start announcing earnings next week. This will discuss how to interpret a corporate earnings report. At the end is some interesting food facts, one of my favorite subjects. I have included the weekly recap from Vanguard.

I did run the 5 mile Bear Run this year up to the top of Grandfather Mountain. My time was 57 minutes which is better than the 60 minute target. In the movie Forrest Gump, Tom Hanks is running up a mountain. This scene was filmed on the road up to Grandfather Mountain. The curve on the road is now called the Forrest Gump curve. Watch this portion of the movie and see what you think about running up an 11% grade.

Vanguard

The second month in a row of much-lower-than-expected job creation dimmed hopes that the economic recovery will soon pick up speed. Manufacturing showed signs of strength—orders picked up and factory employment rose modestly—but consumers, small businesses, and the public sector remained constrained by concerns ranging from the housing market to the debt and deficit struggles of governments at home and abroad. "The extremely weak job numbers are a real concern," said Vanguard economist Roger Aliaga-Díaz. "With so much uncertainty on the labor market front, it'll be difficult for consumers to become an important driver of the economic recovery during the second half of this year, as had been expected." For the week ending July 8, the S&P 500 Index rose 0.3% to 1,344 (for a year-to-date total return—including price change plus dividends—of about 8%). The yield on the 10-year U.S. Treasury note fell 19 basis points to 3.03% (for a year-to-date decrease of 27 basis points).

Earning Announcement

Every quarter has about 6 weeks where most publicly traded report a quarterly earnings report. This starts about the second full week of the first month in a new quarter, such as July. You will see headlines that sound really good and the stock goes down and vice versa so what is going on?

The important section of the announcement is typically not reported, which is guidance for the next quarter. A stock analyst will make a buy or sell recommendation based upon future performance and any positive or negative changes in key metrics that are normal for the company. The information about the current quarter is used to help support the picture for the future.

The bottom line is go to the section on guidance for the next quarter and go beyond the headlines.

Food Facts

• Celery has negative calories — it takes more calories to eat and digest a piece of celery than the celery has in it.
• One of every 11 boxes of cereal sold in the United States is Cheerios.
• In ancient Rome, oysters were so highly prized that they were sold for their weight in gold.
• Herring is the most widely eaten fish in the world.
• Potato chips are the number 1 selling snack in the United States. Potatoes are also the most popular vegetable among Americans.
• White chocolate does not contain caffeine.
• Raw broccoli, cup for cup, has twice as much vitamin C as an orange and almost as much calcium as milk.