Earnings Season Highlights

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A collection of noteworthy post-earnings reactions
Published on Mar 19, 2021 at 2:06 PM
Updated on Mar 19, 2021 at 2:20 PM
  • 5-Minute Market Rundown

It was a week of highs and lows for Wall Street, with stimulus, the Federal Reserve's economic policy decision, and rising bond yields taking investors on a rollercoaster ride. The week kicked off on a positive note, with the Dow clawing back to seven-straight wins, as well as a closing high. Lifting investor sentiment was news that the Internal Revenue Service (IRS) had started processing the $1,400 stimulus payments. However, a number of European countries suspended AstraZeneca's (AZN) Covid-19 vaccine, keeping gains in check. Tuesday brought on headwinds, as investors held their breath over the Fed's decision, fearing interest rates would rise. In response, both the Dow and S&P fell from grace, despite the latter's intraday record.

Those fears eased on Wednesday, after the Fed confirmed there would be no interest rate hikes until at least 2023, with Fed Chair Jerome Powell noting that it would take a sustained move from inflation rates above 2% to alter the current dovish policy stance. The three major benchmarks soared, with the Dow and S&P 500 notching new record closes. However, surging bond yields re-stoked traders' fears on Thursday, forcing them out of growth-focused stocks. At its peak, the 10-year Treasury yield was above 1.75% -- its highest level since January 2020. In turn, the tech-heavy Nasdaq snapped a three-day win streak, and the Dow tumbled from yet another intraday high. Finally on Friday, stocks were mixed after the Fed's move not to extend the supplementary leverage ratio for banks. At last check, all three major indexes were headed for weekly losses.

Tech Segment Continues to Draw Attention

The tech sector was once again in the spotlight this week. Right off the bat, Micron Technology (MU) was struggling for direction, after it announced plans to sell its Utah factory that manufactures its 3D Xpoint memory chip. Meanwhile, cybersecurity name Crowdstrike (CRWD) was higher after its fourth-quarter earnings and revenue beat, which drew six price-target hikes. PayPal (PYPL) was also higher, though a recent dip placed it near a historically bullish trendline, which could soon push it closer to all-time highs. Electric vehicle name Nikola (NKLA) fell, however, after its strategic partner Hanwha said it would to sell up to half of a 5.65% stake in the company.

Reopening Stocks Making Headlines

With the Covid-19 vaccine rollout well underway, investors are eyeing stocks related to an economic reopening. Dollar General (DG) reeled in an upgrade to "overweight" from "neutral," with the analyst in coverage foreseeing a sales boost after another round of stimulus checks. Carnival (CCL) enjoyed a nice pop as well, when CEO Arnold Donald told the Financial Times the cruise company's full fleet could be sailing by the end of 2021. Similarly, AMC Entertainment (AMC) moved higher after reopening California locations this week. 

Gambling name Penn National Gaming (PENN) pulled back, though this dip may have positioned the equity for even more record highs in the near future. Lastly, MSG Networks (MSG) was higher after Bloomberg reported the company could merge with Madison Square Garden Entertainment (MSGE), reversing last year's split.

Final Full Week of March Brings Slew of Indicators

One year into the Covid-19 pandemic, the market has come a long way, with investors using economic indicators as a guidebook to assess progress since the lockdowns. Next week will be no different, with the latest round of jobless claims on tap, in addition to new and existing home sales, goods orders, and inflation data. The earnings confessional will be relatively quiet, though investors will still expect to hear from Adobe (ADBE), Carnival (CCL) and GameStop (GME), among others. While you wait, here is what to anticipate after a huge Russell 2000 Index (RUT) and S&P 500 Index (SPX) advance. Then, you can test the performance of stocks that gained while the SPX fell.    

Published on Mar 19, 2021 at 1:52 PM
  • Earnings Preview

Taking Another Look at Movado Stock As Earnings Loom

by Schaeffer's Digital Content Team
 
Published on Mar 19, 2021 at 9:50 AM
Updated on Mar 19, 2021 at 12:29 PM
  • Buzz Stocks
The shares of Nike Inc (NYSE:NKE) are down 2.1% at $140.12 ahead of the opening bell, despite the blue-chip retail giant announced fiscal third-quarter earnings that came in well above Wall Street's estimates. 
Published on Mar 19, 2021 at 10:55 AM
  • Buzz Stocks
Drilling down to today's options activity, 656 calls and 625 puts have crossed the tape so far -- six times the intraday average. The March 80 put and the 100 call in the same monthly series are the most popular, both of which expire later today. 
Published on Mar 19, 2021 at 10:02 AM
  • Buzz Stocks

Just How Solid Are Vulcan Materials' Fundamentals?

by Schaeffer's Digital Content Team
 
Published on Mar 19, 2021 at 9:52 AM
  • Analyst Update
 
Published on Mar 19, 2021 at 8:05 AM
  • Editor's Pick
  • Bernie's Content

Over the past few weeks here at Schaeffer’s, we have covered a lengthy list of stocks enjoying a boost as vaccine rollouts pick up and Covid-19 cases fall by the wayside in many states. However, I thought it would be worth looking into the likes of Costco Wholesale Corporation (NASDAQ:COST), a popular stay-at-home staple, and Walmart Inc (NYSE:WMT), which were both pre-pandemic outperformers but of late have been struggling with hopes of a reopening economy. Schaeffer’s Senior Market Strategist Chris Prybal and Senior Quantitative Analyst Rocky White flagged and gathered interesting data that shows us when we may see a rebound from the now lackluster retailers. In fact, both have recently pulled back within a close proximity to the 500-day moving average -- Costco stock as recently as Friday, March 5.

Starting with COST, over the past 10 years the equity has seen seven pullbacks to its 500-day moving average, of which boasted plenty of notable gains, in both the one- and three-month time frames. Three-month returns garnered the highest gains, averaging 12.2%, while positive 86% of the time. The median return came in at 15.7% for the same period, suggesting that by early June, Costco stock has a decent chance of being well on its way back into record-high territory. For the one-week, one-month, and three-month returns anytime during the past decade, the latter-most time frame only produced a 71% positivity rate.

From a more technical standpoint, COST has struggled to take hold of any positive ground since hitting a record high near $388.07 back in December. The equity also sports a grim 13% year-to-date deficit, indicating the stock’s underwhelming price performance is far from surprising news to up-to-date options traders.

COST500DayPullbacks

COSTw500Day

Next we are channeling WMT, and over the past 10 years the equity has seen 10 pullbacks to its 500-day moving average, of which, also garnered upbeat returns. However, the post-signal returns for Walmart stock came in significantly lower than those for COST. One-month returns posted the highest gains, averaging 4.2%, with a 60% win rate. The median return came in at a measly 0.12% for the same period, suggesting that by this time next month, the Target (TGT) rival may be sporting marginal gains at best. Looking from a wider scope, for the three-month returns anytime during the past decade, only a 61% positivity rate was produced.

In terms of Walmart stock’s chart performance, the blue-chip mogul also hit a record peak this past December, climbing to just above the $153 level. Since then, per Thursday’s close of $132.13, the security has shed about 14% and now sports an 8.1% year-to-date deficit.

WMT500DayPullbacks

WMTwith500DayMAChart

So what does this mean moving forward for these retail giants? This data and its noteworthy signals are unable to take into account is the Covid-19 pandemic. Specifically, how stay-at-home stocks will recover in the wake of U.S. President Joe Biden’s freshly passed $1.9 trillion relief bill, or the surge in vaccine rollouts that have left many investors more hopeful and eager to invest in sectors that will thrive when more of the economy opens up. On the other hand, if past is precedent, these retailers -- especially Costco stock -- are bound to see some type of resurgence within the next few months.

Subscribers to Bernie Schaeffer's Chart of the Week received this commentary on Sunday, March 14.

Published on Mar 19, 2021 at 7:23 AM
  • Buzz Stocks

Today's Stock Market News & Events: 3/19/2021

by Schaeffer's Digital Content Team

The trading week will close out with a barren economic data schedule today. 

The following company is slated to release its quarterly earnings report today, March 19:

Embraer S.A. (NYSE:ERJ -- $10.00) designs, develops, manufactures, and sells aircrafts and systems. Embraer will report its Q4 earnings of 2020 before the bell today.

Here is a quick recap of how Thursday's earnings reports played out compared to Wall Street's expectations:

Accenture plc. (NYSE:ACN -- $264.27) provides strategy and consulting, interactive, and technology and operations services. Earnings per share were up 6.28% over the past year to $2.03, which beat the estimate of $1.90. Revenue of $12,088,000,000 higher by 8.49% year over year, which beat the estimate of $11,830,000,000.

Canadian Solar Inc. (NASDAQ:CSIQ -- $41.40) designs, develops, manufactures, and sells solar ingots, wafers, cells, modules, and other solar power products. Earnings per share fell 90.18% over the past year to $0.11, which beat the estimate of ($0.55). Revenue of $1,040,000,000 higher by 13.08% year over year, which beat the estimate of $997,880,000.

Commercial Metals Co. (NYSE:CMC -- $28.35) manufactures, recycles, and fabricates steel and metal products, and related materials and services. Earnings per share were up 24.53% over the past year to $0.66, which beat the estimate of $0.59. Revenue of $1,462,000,000 up by 9.02% from the same period last year, which beat the estimate of $1,460,000,000.

Dollar General Corp. (NYSE:DG -- $187.51) provides various merchandise products. Earnings per share were up 24.76% year over year to $2.62, which missed the estimate of $2.72. Revenue of $8,415,000,000 higher by 17.56% year over year, which beat the estimate of $8,300,000,000.

G-III Apparel Group Ltd. (NASDAQ:GIII -- $31.38) designs, sources, and markets women's and men's apparel. Earnings per share decreased 60.00% over the past year to $0.30, which beat the estimate of $0.23. Revenue of $526,242,000 declined by 30.26% year over year, which missed the estimate of $533,670,000.

HeadHunter Group plc. (NASDAQ:HHR -- $33.37) operates an online recruitment platform. Earnings per share decreased 25.00% year over year to $0.18, which beat the estimate of $0.17. Revenue of $33,159,000 decreased by 0.66% from the same period last year, which beat the estimate of $33,090,000.

Signet Jewelers Ltd. (NYSE:SIG -- $59.35) engages in the retail sale of diamond jewelry, watches, and other products. Earnings per share increased 13.08% year over year to $4.15, which beat the estimate of $3.54. Revenue of $2,187,000,000 rose by 1.58% from the same period last year, which beat the estimate of $2,100,000,000.

Titan Machinery Inc. (NASDAQ:TITN -- $28.14) owns and operates a network of full-service agricultural and construction equipment stores. Earnings per share were up 1050.00% over the past year to $0.23, which beat the estimate of $0.13. Revenue of $436,678,000 up by 24.42% from the same period last year, which beat the estimate of $369,600,000.

Weibo Corp. (NASDAQ:WB -- $50.44) operates as a social media platform for people to create, distribute, and discover content in the People's Republic of China. Earnings per share rose 19.48% year over year to $0.92, which beat the estimate of $0.74. Revenue of $513,410,000 higher by 9.67% year over year, which beat the estimate of $499,050,000.

FedEx Corp. (NYSE:FDX -- $265.84) engages in the provision of a portfolio of transportation, e-commerce, and business services. Earnings per share were up 146.10% year over year to $3.47, which beat the estimate of $3.24. Revenue of $21,510,000,000 higher by 23.01% year over year, which beat the estimate of $19,960,000,000.

NIKE Inc. (NYSE:NKE -- $144.82) engages in the design, development, marketing, and sale of athletic footwear, apparel, accessories, equipment, and services. Earnings per share rose 15.38% over the past year to $0.90, which beat the estimate of $0.76. Revenue of $10,357,000,000 rose by 2.50% from the same period last year, which missed the estimate of $11,020,000,000.

Ollie's Bargain Outlet Holdings Inc. (NASDAQ:OLLI -- $90.23) operates as a retailer of brand name merchandise. Earnings per share rose 31.08% year over year to $0.97, which beat the estimate of $0.85. Revenue of $515,763,000 up by 22.09% from the same period last year, which beat the estimate of $488,370,000.

Scholastic Corp. (NASDAQ:SCHL -- $30.55) publishes and distributes children's books. Earnings per share increased 58.82% year over year to ($0.14), which beat the estimate of ($0.75). Revenue of $277,500,000 decreased by 25.66% from the same period last year, which missed the estimate of $279,900,000.

Looking ahead to next week, the week will be jam packed with these indicators, including new and existing home sales, data on goods orders, the Markit manufacturing Purchasing Managers Index (PMI), and of course, another round of weekly jobless claims. Inflation data on Friday will also be closely watched, as interest rates and inflation continue to have a strong sway over market movement. On the earnings front, things will be quiet, though several reports will trickle out from Adobe (ADBE), Carnival (CCL), GameStop (GME), Jefferies (JEF), KB Home (KBH), and Tencent Music (TME). 

All economic dates listed here are tentative and subject to change.

Published on Jul 13, 2020 at 12:53 PM
Updated on Mar 19, 2021 at 7:15 AM
  • Earnings Preview
  • Intraday Option Activity

Today is more of the same. Calls are trading at nearly twice times the average intraday amount, but puts are being ordered up at a pretty impressive rate as well.

Published on Jul 13, 2020 at 9:54 AM
Updated on Mar 19, 2021 at 7:15 AM
  • Buzz Stocks
  • Intraday Option Activity

The shares of PepsiCo, Inc (NASDAQ:PEP) are up 0.6% at $135.25, after the food and beverage behemoth entered the earnings confessional this morning, reporting fiscal second-quarter earnings that beat Wall Street's estimates. Additionally, revenue came in just above forecasts, and the results can be chalked up to a 4% surge in organic sales of its snack offerings. Still, like many other companies, PepsiCo is withholding future financial guidance as COVID-19 continues to take its toll on the economy. 

PepsiCo stock has spent most of the last three months consolidating between the $127 and $138 area. That upper channel is being firmly contained by the shares' 200- and 160-day moving averages, while PEP also faces off with their year-to-date and 12-month breakeven levels. Nevertheless, the majority of analysts are treating PEP with optimism. Of the 15 in coverage, 10 sport a "buy" or better rating and zero "sells" on the books.

There's a strong preference for calls in the options pits. PEP sports a 50-day call/put volume ratio of 4.22 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio ranks in the 90th percentile of its annual range, and implies a healthier-than-usual appetite for long calls of late.

Today is more of the same. In just the first hour of trading, over 11,000 calls have changed hands -- nine times the average intraday amount and five times the number of puts traded. Most popular so far is the July 140 call, but there are also new positions being opened at the 138 call from the same series. Buyers of this call are banking on an extended push higher from PEP by this Friday, when the options expire.

The good news for options traders is that PEP's Schaeffer's Volatility Index (SVI) of 25% stands higher than just 15% of all other readings from the past year. This implies that near-term option traders are pricing in relatively low volatility expectations. 

Published on Jul 13, 2020 at 10:16 AM
Updated on Mar 19, 2021 at 7:15 AM
  • Analyst Update
  • Buzz Stocks

The shares of Analog Devices, Inc. (NASDAQ: ADIare down 3.1% at $120.70 at last check, after the semiconductor maker said it would buy competitor Maxim Integrated Products (MXIM) for roughly $21 billion -- the largest U.S. deal this year. The purchase will boost ADI's market share in automotive and 5G chip-making, so that it can compete with larger rivals such as Texas Instruments (TXN). Analog Devices also raised its fiscal third-quarter guidance. As a result, the security earned a price-target hike from Raymond James to $140 from $125, this morning.

On the charts, ADI has swiftly recovered from its mid-March lows near the $79 level, hitting an all-time high of $127.39 on June 5. Since then, shares have found overhead pressure at the $125 mark, though the stock's 30-day moving average has served as a backbone since April, and today's drop has the equity pulling back to its level of support.

Analysts were majorly optimistic toward the equity coming into today. Of the 17 in coverage, 14 call it a "buy" or better, while only three carry a tepid "hold" recommendation.

Lastly, it looks as if calls are nearly doubling puts. In the past 10 days, 438 calls were exchanged, as opposed to 262 puts. What's more, albeit amid light absolute volume, Analog Devices' stock Schaeffer's open interest ratio (SOIR) of 0.34 stands higher than just 13% of readings from the past year, implying short-term options traders have been more call-biased than usual as of late.

Published on Jul 13, 2020 at 10:21 AM
Updated on Mar 19, 2021 at 7:15 AM
  • Buzz Stocks

Healthcare concern Quest Diagnostics Inc (NYSE:DGX) is seeing some positive price action this morning. The stock is up nearly 5% at $121.60 right out of the gate, back within reach of its April 28 record high of $125, after this morning's preliminary second-quarter financial announcement. The firm reported revenue that topped analysts' expectations, citing a surge in demand for its coronavirus testing services and stronger-than-expected base testing volumes. The news sparked a price-target hike to $126 from $123 from Credit Suisse. 

While the shares of DGX have cooled since an early June run back towards their aforementioned peak at $125, most of these losses were deftly captured by the 200-day moving average. In fact, this trendline acted as a springboard for the equity, which is now boasting a three-month lead of 41.4%. 

Meanwhile, analyst sentiment is still split. Seven call DGX a "buy" or better, while the remaining seven say "hold." Plus, the consensus 12-month price target of $126.64 is just a 3.8% premium to current levels. 

Short sellers, on the other hand, have been hitting the exits in droves. Short interest dropped almost 30% in the last two reporting periods and now makes up just 2.5% of the stock's available float, or 1.7 days of trading at its average pace.

Drilling down to DGX's options pits, these traders have rarely been more bullish. During the past 10 weeks, 12.82 calls were picked up for every put at the Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio stands higher than every other reading from the past 12 months, suggesting a much heavier-than-usual appetite for long calls of late. 

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