Earnings Season Highlights

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A collection of noteworthy post-earnings reactions
Published on Oct 13, 2020 at 8:43 AM
Updated on Oct 25, 2020 at 6:56 PM
  • Buzz Stocks

Today's Stock Market News & Events: 10/13/2020

by Schaeffer's Digital Content Team

Fresh off their best week in months, the major benchmarks closed higher again yesterday, with the Dow posting a triple-digit win for the fourth-straight session. We are so excited, along with most investors, for another earnings season set to hit high gear this week along with the previously-delayed annual Prime Day, concurrent with ongoing stimulus talks in Washington D.C.

The Dow Jones Industrial Average (DJI - 28,837.52) gained 250.6 points on Monday. The S&P 500 Index (SPX - 3,534.22) added 57.1 points during yesterday's trading session, while the Nasdaq Composite (IXIC - 11,876.26) tacked on an 296.3 points yesterday. Lastly, the Cboe Volatility Index (VIX - 25.07) added 0.7 point on Monday.

Here's a quick list of must-reads before the opening bell rings today:

There were no notable earnings announcements yesterday, but today is chock full of before-the-bell earnings report announcements marking a real kick-off for earnings season. Investors will also be looking at the core consumer price index (CPI) released today, amid the earnings releases. The major product news to keep an eye out for today is Apple's release of their latest batch of iPhones, which analysts are projecting will be the most impactful launch in over 3 years!

For your convenience, we have rounded up the companies slated to release their earnings today, October 13:

We have rounded up all the companies slated to release their quarterly earnings today.

  • AZZ, Inc. (NYSE:AZZ -- $37.34) provides galvanizing and metal coating solutions, welding solutions, specialty electrical equipment, and highly engineered services.

    - AZZ will report its fiscal first-quarter earnings of 2021 before the bell today.

  • BlackRock, Inc. (NYSE:BLK -- $614.89) is a publicly owned investment manager. BLK is risen up 18.3% year-to-date. Click here for more on how options got priced following Blackrock's blowout earnings last quarter.

    - BlackRock will report its fiscal second-quarter earnings before the bell today.

  • Citigroup, Inc. (NYSE:C -- $45.88) provides various financial products and services to consumers, corporations, governments, and institutions. In September, this bank named consumer banking head Jane Fraser as its next chief executive officer in a historical move, making her the first woman to lead a major Wall Street bank. 

    - Citigroup will report its fiscal second-quarter earnings before the bell today 

  • Delta Air Lines, Inc. (NYSE: DAL -- $32.64) provides scheduled air transportation for passengers and cargo in the United States and internationally.

    - Delta Air Lines will report its fiscal second-quarter earnings before the bell today.

  • Fastenal Company (NASDAQ: FAST -- $47.64) engages in the wholesale distribution of industrial and construction supplies

    - Fastenal will report its fiscal second-quarter earnings before the bell today.

  • First Republic Bank (NYSE:FRC -- $125.61) provides private banking, private business banking, real estate lending, and wealth management services.

    - First Republic Bank will report its fiscal second-quarter earnings before the bell today.

  • Johnson & Johnson (NYSE:JNJ -- $151.84) researches and develops, manufactures, and sells various products in the health care field worldwide. JNJ is currently 1.7% higher year-to-date.

    -  Johnson & Johnson will report its fiscal second-quarter earnings before the bell today.

  • JPMorgan Chase & Co. (NYSE:JPM -- $102.44) researches and develops, manufactures, and sells various products in the health care field worldwide. JPM is essentially flat year-over-year. This bank stock also popped earlier this month after announcing new long-term commitments to advance racial equity and close the wealth gap.

    -  JPMorgan will report its fiscal second-quarter earnings before the bell today. 

  • New Oriental Education & Technology Inc. (NYSE:EDU -- $170.93) provides private educational services under the New Oriental brand in the People's Republic of China. EDU has decreased 8% year-over-year.

    - New Oriental Education & Technology will report its fiscal fourth-quarter earnings before the bell today.


Looking ahead to tomorrow, the producer price index (PPI) is on the schedule, along with a slew of bank-centric company financial reports. Earnings season is picking up momentum each day! Stay tuned, traders!

All earnings and economic dates listed below are tentative and subject to change. Please check with each company's respective website for official reporting dates.

Published on Oct 19, 2020 at 10:48 AM
Updated on Oct 25, 2020 at 6:55 PM
  • Analyst Update
 
Published on Oct 23, 2020 at 2:29 PM
  • Buzz Stocks

Welcome back to our weekly series,  Schaeffer's Cannabis Stock News Update, where we recap what happened in the world of marijuana stocks this week and we will look ahead at the pot stocks to watch in the upcoming week.

Investor interest in the cannabis industry continues to grow and the leading players continue to break through legal barrier after legal barrier. Right now, nine states and D.C. have legalized recreational marijuana and 29 states have legalized medicinal marijuana. Normally, when we talk "cannabis stocks," we are talking about companies that sell both recreational and medicinal cannabis. More and more companies, though, are starting to see the opportunity presenting in this quickly growing industry and we are continuing to see more marijuana initial public offerings (IPOs) on the calendar.

Here's a quick roundup of the major cannabis sector news this week (October 19 through October 23):

Arena Pharmaceuticals, Inc. (NASDAQ:ARNA), a biotech company located in San Diego, announced on October 20 that the Compensation Committee of its Board of Directors granted to seven new employees inducement stock options to purchase an aggregate of 66,475 shares of its common stock and 11,760 inducements restricted stock units ("RSUs") last week.

FSD Pharma Inc. (NASDAQ:HUGE), a biotech pharmaceutical company, announced on October 21 that the company would be closing agreements with investors for the purchase and sale of $4.3 million Class B Subordinate Voting Shares as well as warrants to purchase 3.5 million shares at a purchase price of $2.20 per share in a registered direct offering. The warrants have an exercise price of $2.60 per share and are immediately exercisable, expiring five years from the date of issuance. The total purchase value will be $10 million.

G.W. Pharmaceuticals plc (NASDAQ:GWPH), a U.K.-based cannabis company, announced on October 21 that the company would be launching unspoken symphony, a web-based, image-recognition technology that gives individuals with epilepsy who struggle to express themselves verbally a new way to communicate and connect like never before by translating artwork into a melody.

Sundial Growers Inc. (NASDAQ:SNDL), an American company well-known for cultivating a specific range of cannabis strains, announced on October 20 that the company will expand its Palmetto brand presence throughout the country of Canada. 

Amazon Inc. (NASDAQ:AMZN), one of the biggest e-commerce companies in the world, announced on October 20 that Amazon will be launching an exclusive cannabis product platform by early 2021 in the U.K.

In less stock-specific news, both Mexico and the U.S. are looking toward major changes in the business of marijuana in the near future. In Mexico, the Mexican Senate is likely to vote on a bill to legalize cannabis within the next two weeks which could significantly impact the cannabis market worldwide. As for the U.S., if Presidential Candidate, Joe Biden wins the U.S election, then the potential legalization of cannabis nationwide could be a huge boost for the CBD and cannabis industry all over the world. The biggest impact, by far, will be seen in American and Canadian cannabis markets.

We are right in the middle of earnings season, but out of the roster of companies reporting quarterly earnings next week, t
here are currently no notable earnings announcements expected from the cannabis sector at this time. However, all earnings dates listed here are tentative and subject to change. Please check with each company's respective website for official reporting dates.

Published on Oct 23, 2020 at 2:27 PM
  • Technical Analysis
  • Earnings Preview

Heavy machinery concern Caterpillar Inc. (NYSE:CAT) is down 0.8% at $168.50, though still just shy of its two-time high, as the company prepares to release earnings next week. Specifically, Caterpillar is slated to report third-quarter earnings before the open on Tuesday, Oct. 27. Below, we will take a look at how CAT stock has been faring on the charts ahead of the release, as well as its earnings history ahead of the event.

Caterpillar stock has thrived since bottoming out to a nearly four-year low of $87.50. In fact, the equity has tacked on 47.2% over the last six months, leading right up to its Oct. 20multi-year high of $171.26. Meanwhile, CAT's 50-day moving average has acted as a layer of support that's captured pullbacks since mid-May. Longer term, the security boasts a 13.5% lead for 2020.

CAT Chart October 23

In the options pits, data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows a 50-day call/put volume ratio of 2.45, ranking in the 84th percentile of its annual range. This suggests long calls have been bought over puts at a faster-than-usual clip during the past two weeks.

Now looks to be an affordable time to jump on the options bandwagon, too. Caterpillar stock's Schaeffer's Volatility Index (SVI) of 38% sits in the 29th percentile of all other readings from the past year -- a boon for premium buyers.

Digging into its earnings history, CAT stock has closed lower the day after six of the company's last eight earnings reports. On average, the shares have seen a post-earnings move of 3.9% over this two-year time frame, regardless of direction. This time around, near-term straddle data per Trade-Alert is suggesting a 4.4% move for Wednesday's trading.

Published on Oct 23, 2020 at 1:58 PM
Updated on Oct 23, 2020 at 2:04 PM
  • 5-Minute Market Rundown

It was a volatile week on Wall Street, as second stimulus sentiment flipped back and forth amid a slew of corporate earnings and economic data. Monday started with a drastic pivot, as the Dow closed 410 points lower after the morning's triple-digit gains due to climbing coronavirus cases worldwide. The next day, stimulus talks progressed as Nancy Pelosi's "deadline" approached, though that was later downplayed, and stocks rose while the Cboe Volatility Index (VIX) logged its seventh-straight win. By mid-week, stocks closed lower once again after a rollercoaster day of trading. Shares continued their roller-coaster run on Thursday, closing higher on big-name earnings and upbeat jobs data, while stimulus and election news carried on. Friday morning, stocks rose and the three benchmarks looked to start their first two-day streak of the week in either direction, however, in cohesion with this week's theme, they reversed course by midday. Now, the indexes are on track for weekly losses -- the S&P and Dow's first in three weeks and the Nasdaq's first in four. 

Earnings Reports Were Big Movers This Week

As earnings season rages on, plenty of these corporate earnings affected the broader market this week. Blue-chip stock Procter & Gamble (PG) rose on a fiscal first-quarter earnings beat and raised full-year forecast. Another Dow stock, Coca-Cola (KO), which had options traders pessimistic ahead of earnings, ended up rising on Thursday alongside 2020 darling Tesla (TSLA) -- which scored its fifth-straight profit beat

On the other end of things, Netflix (NFLX) plummeted after an earnings miss despite better-than-expected revenue, leading to a surge in options. Meanwhile, American Express (AXP) saw options volume on both sides of the tape after its mixed third-quarter report. 

Commodities In Focus

Oil and gold stocks were highlighted this week as well. Oil service stock Halliburton Company (HAL) experienced a post-earnings volatility crush. The same day, ConocoPhillips (COP) announced its acquisition of Concho Resources Inc (CXO) for $9.7 billion, as the two U.S. shale giants consolidate amid a widespread oil sector struggle. Later in the week, gold entered the mix. Newmont Corporation (NYSE:NEM) pulled back to a historically bullish signal, with other technical support in play. 

Busy Pre-Election Week Ahead

Investors have a great deal to look forward to this coming pre-election week, with consumer data, housing data, and gross domestic product (GDP) all due out. Of course, there will be plenty of important earnings to pay attention to, with coronavirus vaccine candidates and Big Tech names all announcing quarterly reports. In the meantime, take a look at which sectors contrarians should be targeting right now, as well as the VIX levels to monitor ahead of the 2020 presidential election. 

Published on Oct 23, 2020 at 11:23 AM
  • Editor's Pick
  • Bernie's Content

It’s no secret that a popular sector to watch as the holiday season approaches is retail. However, in the midst of a pandemic, where many companies still looking down the narrow tunnel of a multi-year recovery from the early-to-mid-2020 economic closures, there are a few noteworthy names that look to be defying the odds of the long-term broader-market lag. In fact, not only are these retail moguls making a plethora of recovery noise, but Nike, Inc (NYSE:NKE), Lululemon Athletica Inc (NASDAQ:LULU), and Under Armour Inc (NYSE:UAA), are all hitting praise-worthy market-cap achievements. Even further, all three look like attractive buys for bull traders in the coming weeks of the tumultuous holiday season.

As we head into shopping season, it’s interesting to note that NKE's market cap recently surpassed $200-billion dollars. Meanwhile, LULU had probed $50 billion before a recent rejection, while UAA is back above the $5-billion mark. In the chart below, data from Schaeffer’s Senior Market Strategist Chris Prybal shows from 2016, Nike’s measurement range on the left hand side of the scale, and Lululemon and Under Armour’s on the right hand side of the scale.

Most interesting is that Nike looks to have found support at the $100-billion market cap level during the recent Covid-19 crush, allowing its charge up the charts to continue. On the other hand, Lululemon Athletica’s rejection at the $50-billion mark brought a brief technical respite, though the stock is now making its way through a clear path higher. Lastly, Under Armour has struggled the most in terms of outright value, but similar to Lululemon, is well on its way higher, with notable value landmarks less out of reach with each passing day.

CotWNKEChart1

Something else of interest is the aforementioned drastic differentiation between shoe and clothing retailer Nike, and athleticwear leader Under Armour. Widening the scope, Prybal shared a look at the two from 2006. The largest differentiation worth mentioning is that in recent weeks, Nike’s valuation peaked at 40 times that of Under Armour’s. But again, the steep pullback in Under Armour’s value seems to have been short-lived, with the equity continuing its recovery in a consistent fashion, no pun intended.

CotWNKEChart2

Diving into a more specific technical setup, we are taking a closer look at NKE, LULU, and UAA’s Schaeffer's Volatility Index (SVI) rating. The SVI is the average at-the-money (ATM) implied volatility of a stock's front-month options. The indicator is helpful to determine whether short-term options are currently pricing in high or low volatility expectations, relative to the past year's worth of data.

The higher the SVI percentile, the higher short-term volatility expectations are at the moment. Thus, options traders should ideally target stocks with low SVI percentile rankings, because this means near-term options are pricing in relatively low volatility expectations. In this instance, all three retail giants are boasting attractive options, with LULU, NKE, and UAA boasting SVI’s of 41%, 29%, and 75%, of which, rank in the low 19th, 13th, and 36th percentile of their respective annual ranges. In turn, this boasts an attractive buying opportunity for all three securities -- a welcome reprieve and encouragement amid the chaos of a pandemic stock market.

Subscribers to Bernie Schaeffer's Chart of the Week received this commentary on Sunday, October 18.

Published on Oct 23, 2020 at 10:24 AM
Updated on Oct 23, 2020 at 10:24 AM
  • Intraday Option Activity
  • Buzz Stocks
The options pits today are singing a different tune, however, with calls and puts trading at roughly the same rate. In the first hour of trading, over 11,000 calls and 10,000 puts have exchanged hands -- 13 times the intraday average and volume pacing in the highest percentile of its annual range. 
Published on Oct 23, 2020 at 10:22 AM
  • Analyst Update

Tech store giant Best Buy Co., Inc. (NYSE:BBY) this morning received a downgrade from Oppenheimer to "perform" from "outperform," though the firm also added in a price-target hike to $125 from $120. BBY was trading down 1.7% at $115.50 at last check, falling further from its Oct. 20 record high of $123.67 -- though the 20-day moving average, which caught yesterday's pullback, appears to be moving in as support. Year-to-date, the equity is still up around 32%. 

Coming into today, 12 of the 19 analysts in coverage carry a "strong buy" on BBY, with the remaining seven a "hold." Meanwhile, the 12-month consensus price target of $118.59 is a 2% premium to last night's close. 

Furthermore, for those wanting to weigh in on BBY's next move, options may be the way to go. The stock's Schaeffer's Volatility Index (SVI) of 37% sits higher than just 14% of readings in its annual range, suggesting short-term options are pricing in relatively low volatility expectations.

Published on Oct 23, 2020 at 9:49 AM
Updated on Oct 23, 2020 at 9:54 AM
  • Editor's Pick
  • Intraday Option Activity
  • Analyst Update
 
Published on Oct 7, 2020 at 2:54 PM
Updated on Oct 23, 2020 at 9:33 AM
  • Analyst Update
  • Intraday Option Activity
The shares of Levi Strauss (LEVI) are up 5.4% at $15.54 at last check, after the apparel company reported better-than-expected fiscal third-quarter earnings and revenue.
Published on Oct 23, 2020 at 9:24 AM
  • Buzz Stocks

Betting on UAA Stock: Winner or Loser?

by Schaeffer's Digital Content Team

Under Armour, Inc. (NYSE:UAA) is a major American sports, footwear, and apparel brand. The company operates its business internationally with headquarters in North America, South America, Europe and Asia. UAA had seen massive declines even before the pandemic, but the company has sunken much deeper since the COVID-19 outbreak began earlier this year. Under Armour is down about 32% year-to-date despite doubling off its May 14 multi-year lows of $7.15. Furthermore, on Oct 30 before the open, the company will report quarterly earnings.

Under Armour has a current market cap of $6.04 billion and a book value of $3.13 per share. Its price-to-book ratio stands at 4.15. The company has a trailing price-earnings ratio of 66.25 and a forward price-earnings ratio of 86.96

As far as earnings reports go, Under Armour has beat expectations on two of its four most recent quarterly earnings reports. In its most recent quarter, the company beat the target by $0.10. Under Armour reported a loss -$0.31 instead of the anticipated -$0.41.  As for the company's upcoming earnings report, Under Armour is expected to report an EPS of $0.01 and reverse the company’s downward trajectory.

In the first quarter of 2020, Under Armour reported a miss of $0.16 in EPS. The company reported an EPS of -$0.34 instead of its expected -$0.18. In the fourth quarter of 2019, Under Armour met expectations at $0.10, and in the third quarter of 2019, the company beat expectations by $0.05 with an EPS of $0.23. The company has a trailing 12-month EPS of -$1.51.

Under Armour has grown its revenue annually since 2016. In 2017 and 2018, the company grew its revenue by $200 million and $150 million, respectively. Under Armour's revenue has fallen drastically this year. The company has a trailing 12-month revenue of $4.5 billion, which is more than $700 million short of what it had produced by the end of 2019.

Under Armour’s net income has been largely inconsistent over past four years. In 2016, Under Armour had one of its best years with $257 million in net income, but then had two straight subsequent years of net losses totaling over $46 million each year. In 2019, the company recovered with a net income of $92 million. As for 2020, Under Armour is currently having one of its worst years ever, with $686 million in net losses over the past 12 months. Under Armour has $1.08 billion in cash and $2.28 billion in total debt on its balance sheet.

Overall, the company doesn’t boast a good balance sheet or consistent profits, and is not very fundamentally sound on paper in general. Under Armour's most redeeming factor is its revenue production. However, the drastic shifts between profitability and net losses indicate the possibility of poor management. The pandemic is unlikely to be the primary cause of UAA stock's falling price; instead its only accelerated the process and demonstrated how unprepared Under Armour had been in case of emergency. Serious change needs occur within the company before investors consider UAA stock for their portfolios. At the moment UAA stock is too much of a risk, despite its bargain-basement pricing.

Published on Oct 22, 2020 at 12:52 PM
Updated on Oct 23, 2020 at 9:22 AM
  • Earnings Preview

Blue-chip pharmaceutical concern Pfizer Inc. (NYSE:PFE) is scheduled to report third-quarter earnings before the market opens on Tuesday, Oct. 27. It's purely coincidental that PFE will report a week before one of the most anticipated elections in U.S. history, especially after U.S. President Donald Trump made comments about an effective COVID-19 vaccine being ready before the election -- comments that Pfizer's CEO refuted concerning its own vaccine. Below, we'll take a look at Pfizer stock's technical setup, as well as its earnings history ahead of an important two week slate.

Although its a notable contender in the race to produce an effective coronavirus vaccine, Pfizer has struggled with its year-to-date breakeven point all 2020. There's support emerging at the $36 area, but overhead $39 --which roughly coincides with that aforementioned year-to-date level -- has stymied PFE's most recent breakout attempts in July and October.

PFE Stock Chart

Optimism is growing in the options pits, where calls are popular. This is per the blue chip's 10-day call/put volume ratio of 10.97 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which is two percentage points from an annual high. In other words, calls are being ordered up at a quicker-than-usual rate in the last two weeks.

PFE has a history of mixed responses following earnings, closing higher in four of the past eight quarters. This includes a 3.9% jump last July, but also a 5% drop last January. Over the past two years, shares have swung an average of 2.9% the day after earnings, regardless of direction. This time around, the options market is pricing in a slightly higher swing of 5.8%.

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