Morning Earnings Roundup: Alcoa Weak, Costco Strong

Alcoa (NYSE: AA) didn’t exactly kick off third-quarter earnings season with a bang yesterday. But the earnings picture is looking a bit sunnier this morning as two other big-name companies posted healthy profits.

Costco (NASDAQ: COST) and Yum! Brands (NYSE: YUM) both exceeded expectations in their Q3 earnings reports, giving their stocks a nice boost.

Here’s a closer look at how these three companies fared in the third quarter:

  • Alcoa has long been a stock-market bellwether not only because it’s the first major company to report earnings after every quarter but also because, as an aluminum producer, it usually offers a good gauge on how other companies are faring. It’s difficult to get a clear gauge this time, however, as Alcoa’s results were mixed. The company’s third-quarter earnings were rather pedestrian at three cents a share excluding items. However, that was better than the flat quarter most analysts were expecting. Including items, Alcoa’s earnings were much bleaker, as the company swung to a $143 million loss – a steep drop-off from the $172 million the company made in the third quarter last year. That was enough to send Alcoa shares tumbling 3.8% in early trading today.
  • Costco shares have climbed 4.6% after the bulk retailer increased sales by 21% last quarter. Earnings of $1.39 a share outpaced expectations of $1.31 a share.
  • Yum! Brands reported a 23% improvement in third-quarter profits from a year ago. The company that owns KFC, Pizza Hut and Taco Bell posted earnings of 99 cents a share, excluding items – a couple pennies better than the 97 cents a share analysts were projecting. The improved sales, at least at Taco Bell, are in line with a prediction made by renowned hedge funder David Einhorn last week. It was enough to push the stock up nearly 9% to a five-month high of around $71.50 a share.
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