- Chipotle's tumble;
- IBM's and eBay's quarterly results; and
- why Coca-Cola's earnings report was so sweet.
Don't Dwell on the Disappointments Posted at 3:08 p.m. EDT on Friday, July 20 You can't have Intuitive Surgical ( ISRG) cite European woes and Chipotle Mexican Grill ( CMG) cite economic weakness -- two companies thought to be resistant to the economic headwinds -- and not expect the market to get crushed. Then you add in Spain's bond market going kerflooey and the euro's cratering, and expect that Google ( GOOG) and General Electric ( GE) can make up for the incriminating evidence. > > Bull or Bear? Vote in Our Poll What's amazing is that all of this is happening at once. You can't have two growth stock darlings give up the ghost and think that any growth stock can hold up. They are a cohort, and suddenly you are paying 33 times 2013 earnings for 8% same-store sales growth. And you can't worry that Europe's cutting back on health care without worrying about Whole Foods ( WFM) or Starbucks ( SBUX) or even Darden ( DRI) or McDonald's ( MCD). Chipotle's performance is particularly difficult to fathom because its hallmark had been its countercyclical nature. People will pay up for healthier eating. That had been the prevalent view. Until today. Maybe Panera Bread ( PNRA) can change things when it reports next week. But this is a tough moment for Chipotle. If Panera doesn't have a slowdown like Chipotle's, people are going to start believing that something has gone wrong at CMG. As if the decline today doesn't already indicate that. It is tempting to believe that CMG might be underpromising and overdelivering (UPOD). The problem with extrapolating UPOD, though, is that the CMG guys indicated that this new quarter already is tracking similarly. At times like this, I like to regroup and lick wounds as I have obviously been a CMG supporter since the stock was trading around $50. I thought the decline in gasoline would cut in its favor, even as the raw costs of beef are going to go higher courtesy of the drought.
A Trifecta of Wrong Posted at 7:27 a.m. EDT on Thursday, July 19 Maybe the holders know nothing? Maybe they are spooked at every turn? Maybe they are all micro guys turned macro? Maybe the research out there is so bad that they make decisions based on faulty information? How else can we explain these postmarket moves on OK earnings? The first, IBM ( IBM), is incredible. I heard endless chatter that the quarter would be missed because the revenue would be weak. At the same time there was a relentless downbeat tone about the chart. The chart! Sure enough, sales fell 3%, but the number's $15.10 now, not $15.00, and when you have a stock that's cratered like IBM on what was supposed to be an earnings miss, revenues being the incomplete way of looking at this software and consulting company, you get the kind of ramp we see this morning. How about eBay ( EBAY)? For weeks some research outfit I will not deign to even mention had been peddling a story about really soft merchandise sales. Every time the stock would lift I heard the rumor and it always seemed so rigorous. It was all phony. Although the charitable trust is in it for PayPal, merchandise sales were fabulous. I am blaming a bogus call out of a house that needs commission business for this one. Then there is Mellanox Technologies ( MLNX). This is a tech company that fills a hole in big data/cloud equipment that has been ceded to it by Intel ( INTC), its companion in the data center through Intel's powerful Romley chip. I featured this one on "Mad Money" recently, suggesting that it could be the home run again for the second half of the year after blowing away numbers the previous quarter.
Coca-Cola's Triumphant Quarter Posted at 6:23 a.m. EDT on Wednesday, July 18 Sometimes brands and management can triumph over pretty much everything. That's how I felt when listening to the Coca-Cola ( KO) call last night. Here's a company that's dealing with economic and currency headwinds globally -- a company that, given the circumstances, could have easily delivered a number that was merely fine. It did just the opposite. Coca Cola exceeded plan pretty much everywhere, and it was almost a throwback to the old days -- because the areas that were most exciting, that had the best growth, were none other than Brazil, Russia, India and China. Remember BRIC? Remember when BRIC used to save the day? Plus, the traditionally tough markets, like Germany, Japan and U.S. -- meaning, markets where there is competition and little growth -- were actually exceptionally good vs. expectations, with one believing it came at the expense of Pepsico ( PEP). I don't know that for sure, and I know Pepsi isn't that big in Germany anyway. It would offer more of a challenge in Russia and China. Still, the aggressive nature of this old-line company in these mature markets took my breath away. The most incredible aspect of this multinational company is how it deals with the fleeting, the currency and the commodity. For currencies, while Coca-Cola hedges, there is no doubt you are talking about severe, mid- to high-single-digit hits in the next six months. But even there, the company put a good face on it, saying that it expects the big, bad compares to end by the second half. As for the commodity issue, what about the price of corn? It's simply not important -- not when compared to last year's commodity line, which was bad on every single plane. We tend to forget that oil is the most important line-item for most packaged goods companies. We forget that the retreat of oil, simultaneous to abatement of price-cutting, turns into the kind of margins that surprise, even for a predicable company like Coca-Cola.