3 Stock Winners and 4 Losers So Far in Q2 Earnings Season  

Earnings season for this year’s second quarter is getting into full-swing. As is almost always the case, the quarterly financial results have been a mixed bag. While some companies have knocked the cover off the ball, others have struck out. The hits and misses have led to big swings in the price of these earnings season stocks, contributing to the market volatility we have seen since the start of July.

With 14% of companies listed in the benchmark S&P 500 index having reported Q2 financial results, 80% have reported better-than-expected earnings and 62% have beaten Wall Street forecasts for their revenue, according to FactSet. There’s still a ways to go in the current earnings season, but already clear winners and losers have emerged for investors to consider.

Here are three winners and four losers so far amongst Q2 earnings season stocks.

Winners: Spotify (SPOT)

On the day of this writing, Spotify’s (NYSE:SPOT) stock is up 11% after the audio streaming company announced a record profit for this year’s second quarter. The Swedish company, known for its music and podcasts, reported EPS of 1.33 euros ($1.44 U.S.), which beat Wall Street estimates of 1.06 euros. The profit was a quarterly record. Spotify also announced that its revenue rose to 3.81 billion euros ($4.14 billion U.S.), which was in line with analysts’ estimates.

Despite the record profit, Spotify missed its own target for monthly active users (MAUs) on its streaming platform. The company reported 626 million MAUs for Q2, below its target of 631 million. Management blamed the miss on a decline in marketing. Spotify has cut costs this year through staff layoffs and by reducing its marketing budget. At the same time, the company has tried to grow its user base through promotions and the introduction of new podcasts.

Spotify did report a gross profit margin of 29.2% for Q2, which was up from 27.6% in the previous first quarter. SPOT stock has now doubled (up 100%) in the last 12 months.

GE Aerospace (GE)

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GE Aerospace (NYSE:GE) saw its stock rise 8% after the company that primarily makes aircraft engines reported a strong Q2 profit, improved margins and raised its full-year guidance. It recorded EPS of $1.20 compared to 99 cents forecast on Wall Street. Revenue in the quarter came in at $8.2 billion, which was a little below the $8.4 billion consensus expectation of analysts.

Investors were quick to look past the Q2 sales miss as GE Aerospace announced that its operating profit margin rose to 23.1% in Q2, up six percentage points year over year. Wall Street was looking for a profit margin of 20% for Q2. In terms of guidance, GE Aerospace said it expects 2024 EPS of $3.95 to $4.20. That’s up from previous guidance of $3.80 to $4.05. The midpoint of the new guidance is higher than the $4.08 per share forecast on Wall Street. GE stock has gained 99% over the past year.

Coca-Cola (KO)

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Coca-Cola (NYSE:KO) almost always beats forecasts with its financial results, and Q2 of this year was no exception. The soft drink maker delivered results that beat Wall Street forecasts across the board and raised its full-year guidance. Specifically, Coca-Cola reported EPS of 84 cents compared to 81 cents that was expected on the Street. Revenue totaled $12.36 billion versus $11.76 billion that was the consensus forecast of analysts. Sales were up 3% from a year earlier.

Coca-Cola attributed the stellar results to growing demand for its beverages that also include the Powerade sports drink. The company said that its unit case volume rose 2% for the quarter due largely to international sales. The metric reflects overall demand for Coke’s products. Looking ahead, Coca-Cola now expects revenue growth of 9% to 10% for all of this year, up from a previous forecast of 8% to 9% growth. Earnings are estimated to grow 5% to 6% in 2024 compared to 4% to 5% growth that was previously forecast.

KO stock has gained nearly 10% this year and is trading near its 52-week high.

Losers: United Airlines (UAL)

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United Airlines (NASDAQ:UAL) reported mixed Q2 financial results and weak forward guidance that bumped it down amongst other earnings season stocks. The Chicago-based carrier announced EPS of $4.14 versus $3.93 that had been forecast on Wall Street. Revenue came in at $14.99 billion, which was below estimates of $15.06 billion. Management blamed the sales miss on overcapacity related to summer flights.

The third-quarter guidance offered by United also fell short of estimates, with management saying they expect to earn $2.75 to $3.25 per share. Analysts had third-quarter earnings of $3.44 a share penciled in for the company. United Airlines reiterated its full-year forecast for earnings of $9 to $11 per share. The company has added international flights and premium lounges coming out of the pandemic. Some analysts say they’ve overspent.

UAL stock is down 14% over the past 12 months and is trading nearly 50% lower than where it was in 2019 before Covid-19 hit.

J.B. Hunt Transport Services (JBHT)

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Freight company J.B. Hunt Transport Services (NASDAQ:JBHT) reported Q2 financial results that fell well short of analyst forecasts. The trucking company announced Q2 EPS of $1.32, which missed Wall Street forecasts of $1.53. The profit was down 24% year-over-year. Revenue amounted to $2.93 billion, which also missed consensus expectations of $3.05 billion. Sales declined 6% from a year earlier.

J.B. Hunt blamed the poor results on increased insurance and equipment costs. While final mile service revenues grew 5% to $235 million during Q2, the company’s truckload segment reported a 12% revenue decline from a year ago. Management said they continue to expect rate and volume declines across trucking and domestic intermodal services in the second half of this year. JBHT stock has declined 17% over the past 12 months.

Constellation Brands (STZ)

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Constellation Brands’ (NYSE:STZ) stock fell 3% immediately after the maker of alcoholic drinks reported mixed financial results that showed continued weakness in the company’s sales of wine and hard liquor. The company, which makes beers such as Corona and Modelo Especial, reported EPS of $3.57, which topped Wall Street forecasts of $3.46. But the company’s revenue of $2.66 billion missed estimates of $2.67 billion.

While Constellation’s beer sales increased 8% in the quarter, sales of its wine and spirits declined 7%. Constellation’s beer business has grown steadily over the past decade. So much so that last year, Modelo became the top-selling beer in the U.S. Unfortunately, the company’s success with its beer products has been offset by weak sales of wine and hard liquor. Wine and spirits account for one-fifth of the company’s total sales.

STZ stock is down 10% over the last 12 months, making it one of the earnings season stocks to pass on.

Wells Fargo (WFC)

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Among U.S. banks, Wells Fargo & Co. (NYSE:WFC) was the big loser. The lender’s stock dropped 6% after it reported a steep decline in its net interest income for this year’s second quarter. Wells Fargo announced $11.92 billion in net interest income, which is a key measure of what a bank makes on its loans. The Q2 net interest income figure was down 9% year-over-year and below the $12.12 billion that analysts had forecast.

Executives at Wells Fargo blamed the decline in net interest income on the impact of higher interest rates on funding costs. The disappointing net interest income figure overshadowed what was otherwise a decent print for the bank. Wells Fargo announced Q2 EPS of $1.33, which topped forecasts of $1.29. Revenue in the April through June period totaled $20.69 billion compared to $20.29 billion that was expected on Wall Street.

Unfortunately, investors weren’t in a forgiving mood. Over five years, WFC stock is up only 21%, badly trailing the benchmark S&P 500 index that is up 84% in the same timespan. I’d say that qualifies it as one of the earnings season stocks that investors should pass on.

On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.