Earnings Season Could Kick Markets Into High Gear (AA, MCHP, NVLS, RADS, NCR, NXG, JVA)

Continued worries about Europe and a pair of poor reports out of techland helped lead the market lower today. However, we think the comments from Alcoa (AA) pointed to a continued economic recovery, as many of its end markets are seeing solid demand growth. All in all, there haven’t been too many earnings warnings and with earnings season kicking into full gear next week, we’re expecting a pretty solid overall showing.

The Canadian Mining Stocks Index was the top performing tickerspy Index on the day, led by Northgate Minerals (NXG) with a 6% gain. The Coffee Stocks Index was the day’s worst performing tickerspy Index, with Coffee Holding Company (JVA) down -24%.

On the economic front, the Fed minutes showed that Central Bank officials were mixed on whether to implement more monetary easing if the economic recovery and jobs market remained sluggish, or whether to start tightening if inflation did not moderate.

In earnings news, Dow component Alcoa, the largest U.S. aluminum producer, said its second-quarter profit rose to $322 million, or 28 cents a share, from $136 million, or 13 cents, a year earlier. On an adjusted basis, Aloca earned $364 million, or 32 cents, missing the 33 cents analysts were forecasting. Revenue climbed 27% to $6.59 billion, topping the $6.31 billion analysts were expecting. Shares of Alcoa fell -1.3%. Twenty-one pros held Alcoa in their portfolios at the end of Q1 and more than 1,800 tickerspy members own the stock in their portfolios.

Shares of Microchip Technology (MCHP) plunged -12.1% after the chipmaker said its fiscal first-quarter profit and revenue will be lower than previously forecast. The company expects to report a profit for the quarter of 47-49 cents, or 53-55 cents on an adjusted basis. Revenue is expected to come in around $374 million. In May, Arizona-based Microchip forecast a profit of 52-55 cents, or 58-62 cents on an adjusted basis. Analysts were expecting an adjusted profit of 60 cents a share for the fiscal first quarter on revenue of $393.9 million. For its fiscal second quarter, Microchip is forecasting a revenue decline in the low- to mid-single digits when compared against the first quarter. Analysts are expecting sales of $406.9 million.

Shares of Novellus Systems (NVLS), the maker of equipment used to produce computer chips, slid -11.2% after the company said it expects softer sales in the second half of this year. Novellus reported a second-quarter profit of $64.7 million, or 79 cents per share, compared with $63.3 million, or 66 cents per share a year earlier as sales jumped to $350.2 million from $321.4 million. Analysts were expecting a profit of 76 cents on revenue of $352.3 million. Novellus forecast a third-quarter profit of 60-75 cents a share on revenue of $300-$340 million. Analysts were expecting a profit of 87 cents on revenue of $359.7 million.

Shares of Radian Systems (RADS) soared 30.4% after NCR Corp. (NCR) said it will acquire the software maker for $1.2 billion. That price represents a 31% premium to where Radiant shares closed on Monday. Fifteen pros held NCR in their portfolios at the end of Q1 and nearly 90 tickerspy members own the stock in their portfolios.

Tags: AA, JVA, MCHP, NCR, NVLS, NXG, RADS