Mr. Market has been getting out of the wrong side of the bed lately! Good equals bad and bad equals good.
Applied Materials beat earnings and revenue expectations. And….. it is getting flogged! It also depends if you are looking at GAAP or manufactured earnings (non-GAAP) numbers.
Sales grew 29 %. On a GAAP basis, they increased their gross margin .7% , operating income grew 41%, and earnings per share increased 43% to $1.09.
Again, companies do well and they get punished. Wall mart had 33% increase in sales the other day and they were flogged. How dare they show increases in their fundamentals!
I am not a big supporter of non-GAAP numbers. Why? It allows the companies to tell you a story that is “stacked in their favor”. What happened to independent analysis? That is the securities analysts’ department. Companies want to lead you by the nose.
Non-GAAP numbers are everywhere today. It is legalized lying and deceives those who are uninformed about the game. In fact, in this article by Barron’s, they state the EPS was $1.22, but they didn’t even say it was non-GAAP. Isn’t Barron’s a leading financial news service? Aren't they supposed to provide clarity? Bad Barron’s, real bad!
In this high market (even though it pulled back), non-GAAP earnings have become the norm. That alone is pretty scary.
It is no wonder that Mr. Market is in a foul mood. Would someone push him out of the other side of the bed?
