The market has given a very different response to  three companies with results out today.

Online grocer Ocado (LSE: OCDO) is trading over 10% higher,  flooring and beds firm Carpetright (LSE: CPR) has dropped almost 20%, and defence specialist Cohort (LSE: CHRT) has moved broadly in line with the wider market.

So, should you buy, sell or hold these three stocks?

Hope of good news

Ocado reported a 15% rise in half-year revenue, with an 18% increase in earnings per share (EPS). The company said it expects to continue growing ahead of the online market and well-ahead of the broader market.

When I looked at this FTSE 250 firm about a year ago, the shares were trading at 400p and I thought the valuation was ‘nuts’. The shares are currently 230p, so how’s the valuation looking now? Assuming earnings growth continuing at the same rate in the second half as in the first, we get full-year EPS of 2.37p, giving a price-to-earnings (P/E) ratio of 97.

That valuation still looks way too high to tempt me to rate the shares a ‘buy’, but there’s a factor that inhibits me from tagging them as a clear ‘sell’. The company said today that it continues discussions “with many potential international retailers to adopt the Ocado Smart Platform” and that “we expect to sign multiple deals in multiple territories in the medium term”.

Ocado was banging on about this potential two years ago, and this time last year was hoping to sign a first agreement before the end of 2015. Why things have taken so long I’ve no idea, but I can understand long-term shareholders holding on in the hope of good news at some point.

Long journey ahead

I haven’t looked at Carpetright for a good many years. The last time I did, it was in the FTSE 250, facing challenging trading conditions, closing underperforming stores and trying to reinvent itself. Today, it’s in the FTSE SmallCap index… facing challenging trading conditions, closing underperforming stores and trying to reinvent itself.

The board said today that it has a “clear direction” and is confident its plans for repositioning the business “will yield positive results”. However, it also said that trading in the first weeks of the new financial year has been “challenging”, that it’s “cautious” about the impact of the Brexit vote on consumer confidence, and warned “We have a long journey ahead”.

Underlying EPS of 19.3p gives a P/E of 11.7 with the shares at 225p. As near-term earnings look likely to come under pressure and as Carpetright seems to be perpetually in a state of ‘repositioning’ itself, I reckon it remains a stock to avoid.

Good growth expectations

AIM-listed Cohort has a market value of £123m at a share price of 300p, and isn’t a company I’ve looked at closely before. It’s the parent of five “agile and responsive businesses operating in defence and related markets”.

In today’s annual results, Cohort reported a 13% rise in revenue and a 33% increase in underlying EPS to 27.18p, giving a P/E of 11 at the current share price. The company said that the majority of its business in Europe is with NATO and that it doesn’t expect the UK’s exit from the EU to affect this market.

With a reasonable P/E, good earnings growth expectations and a modest dividend (something neither Ocado or Carpetright currently offer), I rate Cohort a ‘buy’.

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G A Chester has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.