Becton, Dickinson Beats Earnings, Sells Off

The stock market broke out to yet another multi-year high yesterday. The S&P 500 closed at 1,319.05 which is the highest close since June 25, 2008. That’s more than 31 months ago.

A few of our stocks have missed earnings recently but I’ve been impressed with how well they’ve rebounded. AFLAC (AFL), for example, got as high as $58.99 before its earnings report. After it missed earnings, its shares pulled back to $56.50.

This reaction didn’t make much sense since the company didn’t alter its long-term forecast at all. Yesterday, AFL got as high as $58.72. In other words, by just waiting a few days, the stock gained back nearly everything it lost.

We’ve seen similar action with Ford (F). The stock got as low as $15.10, but it’s now back above $16 per share. I still think Ford is a $20 stock.

The good thing about a well-diversified Buy List is that when some stocks are weak, you can be sure that others will be strong. Just yesterday, Stryker (SYK), Deluxe (DLX), Leucadia (LUK) and Wright Express (WXS) all broke out to new 52-week highs.

This morning’s problem stock is Becton, Dickinson (BDX). The company reported earnings of $1.35 per share for its fiscal Q1 which was six cents more than expectations. However, revenues came in at $1.84 billion which was slightly below Wall Street’s forecast of $1.89 billion.

In response, the shares are down about 4% in today’s trading. Again, this doesn’t make much sense to me. BDX said they expect full-year earnings somewhere between $5.45 and $5.55 per share. This is still an excellent buy.

This is a light week for economic news. Most trading will be dominated by the tail-end of earnings season. Overall, this has been another strong earnings season.

Note: I read the earnings report too quickly. After adjusting for a tax issue, BDX missed earnings by one penny. My apologies for the error.

Posted by on February 8th, 2011 at 10:17 am


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