Wednesday the company anounced quarterly results that stunned the street. They managed to report profit and sales that came in better than expected even though they saw their overall revenue drop once again. Upon closer inspection, analysts have noted that revenue has declined for 22 quarters in a row. This quarter revenue came in at $19.15 billion compared to $19.22 a year ago. Just the fact that they almost met previous goals was one reason investors saw this as a bullish sign. Shares pushed higher by over 8%, breaking through the 200 day moving average for the first time since April. Thursday the stock continued that bullish sentiment, adding another 0.86% by the close.
Profit was one of the areas they beat, coming in at $2.92 a shares versus $2.84 expectations. Looking closer the main reason was their incredible effective tax rate. The company continues to be one of the biggest on the planet with one of the lowest effective tax rate, helping show that profit increase. Their median effective tax rate came in at 10% for the prior 5 quarters. Most large companies reduce their tax burden with a handful of loopholes in the system and corporate restructurings. The question becomes, what are you investing in here? It's not growth, its not future growth, its the bet that these loopholes will remain through the next tax reform bill and the company can continue these games.
For now the games continue and the bulls are happy to play along. The stock is up over 15% since hitting a low back in August. The trend remains higher in the short term, and the bulls could care less about the reasons they are investing. For now their investments are doing well.