Earnings Season Highlights

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A collection of noteworthy post-earnings reactions
Published on Jun 16, 2022 at 10:31 AM
  • Analyst Update

Warner Bros Discovery Inc (NASDAQ:WBD) is down 7.6% at $13.72 this morning, after J.P. Morgan Securities resumed coverage of the equity with a "neutral" rating, as well as a $22 price target, noting the macroeconomic environment could pressure ad spending. The brokerage also highlighted waning direct-to-consumer enthusiasm, casting doubt over the company's ability to scale services internationally.

Coming into today, analysts were split on Warner Bros Discovery stock, with seven rating it a "strong buy," against six at a "hold" or worse. What's more, the 12-month consensus price target of $33.85 is a staggering 147% premium to current levels, meaning more bear notes could be on the horizon. 

The security is today pacing for its sixth loss in seven sessions, as well as its lowest close since August 2009. The 30-day moving average has been pressuring shares lower since April, with yesterday's rally losing rally at the $15 mark.  Year-over-year, Warner Bros Discovery stock is down roughly 55%.

 

Published on Jun 16, 2022 at 10:16 AM
  • Analyst Update
 
Published on Jun 16, 2022 at 9:35 AM
  • Buzz Stocks

Kroger Co (NYSE:KR) stepped into the earnings confessional this morning, posting first-quarter earnings of $1.45 per share on revenue of $44.6 billion, topping analysts' estimates. The company also lifted its full-year guidance, citing steady demand for essentials like groceries and household goods, even as inflation rises. However, another broad-market breakdown, plus a drop in its quarterly gross sales margin, are weighing on the equity. KR was last seen down 3.3% at $49.18.

Despite today's dip, Kroger stock has shown incredible staying power, all things considered. The security boasts a 12.4% year-to-date lead, and has added 34.4% year-over-year. Several moving averages still sit below as potential support, including the 200-day trendline, which captured a a sharp pullback late last month. 

Analysts have yet to chime in, though there's plenty of room for bull notes down the line. Of the 18 in coverage, just four consider it a "strong buy," compared to 10 "hold" and four "strong sell" ratings. Plus, the 12-month consensus price target of $55.46 is a mere 9% premium to last night's close. 

An unwinding of pessimism in the options pits could also put some wind at Kroger stock's back. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), 2.93 puts have been picked up for every call during the past two weeks. This ratio sits in the 97th percentile of its 12-month range, implying a much healthier-than-usual appetite for puts of late. 

The stock's Schaeffer's put/call open interest ratio (SOIR) reflects this. Sitting a 2.36, this ratio stands higher than all other annual readings, meaning short-term options players haven't been more put-biased during this time period. 

Published on Jun 16, 2022 at 9:00 AM
  • Opening View

Stock futures are signaling an end to yesterday's post-Fed rally, which followed the central bank's sharpest interest rate hike since 1994. Dow Jones Industrial Average (DJIA) futures are around 470 points lower, as the 10-year Treasury yield resumes its surge -- last seen around 3.44%. Elsewhere, futures on the S&P 500 Index (SPX) and Nasdaq-100 Index (NDX) are firmly in the red as well. Looking ahead, Wall Street is awaiting some key economic data in the form of jobs data.

Continue reading for more on today's market, including:

  • Check out the newest Schaeffer's Market Mashup, featuring OCC Principal and OIC Instructor Mark Benzaquen.
  • Oil stock could continue to move higher.  
  • Plus, unpacking Jabil's earnings results; Elon Musk to reiterate Twitter buyout hopes; and cosmetics company files for bankruptcy protection. 

Futures Chart June 16

5 Things You Need to Know Today

  1. The Cboe Options Exchange (CBOE) saw more than 1 million call contracts and 730,735 put contracts traded on Wednesday. The single-session equity put/call ratio fell to 0.70, and the 21-day moving average stayed at 0.63.
  2. Jabil Inc (NYSE:JBL) stock is 0.7% lower in premarket trading, with the security brushing off a fiscal third-quarter earnings and revenue beat, spurred by solid demand. Coming into today, JBL was already down 16.4% year-to-date.   
  3. According to a report from the Wall Street Journal, Elon Musk plans to reiterate his desire to own Twitter Inc (NYSE:TWTR) at an all-hands meeting later today. The news comes after the Tesla (TSLA) CEO threatened to pull out of his buyout bid due to information discrepancies concerning Twitter's spam accounts. Last seen down 2.2% before the bell, TWTR has shed nearly 37% in the last 12 months.
  4. Cosmetic maker Revlon Inc (NYSE:REV) is down 4.4% in electronic trading, after news that the company filed for Chapter 11 bankruptcy protection in the face of a roughly $3.3 billion debt load. On track to add to significant year-to-date losses, REV already sported an 80.2% deficit for 2022. 
  5. Today will bring building permits and housing starts data, as well as the Philadelphia Fed manufacturing index.

buzzjune16

International Markets React to Rate Hikes in U.S.

Asian markets were mixed on Thursday following the Federal Reserve’s aggressive rate hike yesterday, and renewed weakness in Chinese tech stocks. In response, the Shanghai Composite in China dropped 0.6%, the Hong Kong Hang Seng shed 2.2%, the South Korean Kospi eked out a 0.2% win, and the Nikkei in Japan rose 0.4%.

In Europe, markets are tumbling as investors also kept an eye on yesterday’s Fed decision, as well as the Bank of England’s (BoE) plan to once again hike interest rates – marking the central bank’s 10th-straight hike – in an effort to combat inflation. In response, The London FTSE 100 is 2.9% lower at last check, while the German DAX is down 3.1%, and the French CAC 40 is off 2.4%.

Published on Jun 16, 2022 at 7:47 AM
  • Buzz Stocks

Today's Stock Market News & Events: 6/16/2022

by Schaeffer's Digital Content Team

Today initial and continuing jobless claims are on deck once again. Additionally, building permits and housing starts data are on tap, as well as the Philadelphia Fed manufacturing index.

The following public companies slated to release corporate earnings today, June 16:

Commercial Metals Co. (NYSE:CMC -- $37.27) manufactures, recycles, and fabricates steel and metal products, and related materials and services in the United States, Poland, China, and internationally. Commercial Metals will report its Q2 earnings of 2022 before the bell today.

Jabil Inc. (NYSE:JBL -- $58.81) provides manufacturing services and solutions worldwide. Jabil will report its Q2 earnings of 2022 before the bell today.

The Kroger Co. (NYSE:KR -- $50.88) operates as a retailer in the United States. Kroger will report its Q2 earnings of 2022 before the bell today.

Adobe Inc. (NASDAQ:ADBE -- $376.92) operates as a diversified software company worldwide. Adobe will report its Q2 earnings of 2022 after the close today.

Looking ahead to tomorrow, Friday will feature capacity utilization, leading economic indicators, and the industrial production index.

**REMINDER: THE STOCK MARKET WILL BE CLOSED FOR THE FULL SESSION ON MONDAY, JUNE 20, IN OBSERVANCE OF THE JUNETEENTH HOLIDAY. PLEASE MANAGE YOUR OPEN POSITIONS ACCORDINGLY.**

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

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Published on Jun 15, 2022 at 4:26 PM
  • Market Recap

Stocks were able to break out of their rut today, rising after the Federal Reserve's somewhat surprising decision to hike interest rates by 75 basis points, the sharpest rise since 1994. Fed Chair Jerome Powell noted in his press conference that a similar hike could be coming in July, and reiterated the central bank's aggressive commitment to curbing inflation.

The Dow added 303 points for its first win in six sessions. Both the S&P 500 and Nasdaq also snapped five-day losing streaks, with Big Tech staging a bounce as Treasury yields cooled. Meanwhile, the Cboe Volatility Index (VIX) had its worst day since May 3.

Continue reading for more on today's market, including:

  • What's next for stocks after this rare losing streak.
  • Time to buy this healthcare stock on the dip.
  • Plus, Hertz's big day; HOOD downgraded; and SNOW bounces off record lows.

The Dow Jones Average (DJI -  30,668.53) added 303.7 points, or 1%, for the day. Boeing (BA) led the gainers, adding 9.5%. Chevron (CVX), meanwhile, paced the laggards with a 2% drop.

The S&P 500 Index (SPX - 3,789.99) rose 54.5 points, or 1.5% for the day. Meanwhile, the Nasdaq Composite (IXIC - 11,099.15 ) gained 270.8 points, or 2.5% for the session.

Lastly, the Cboe Market Volatility Index (VIX - 29.62) shed 3.1 points, or 9.4% for the day.

indexes june 15

nyse and nasdaq jun 15

5 Things to Know Today

  1. Spotify Technology (SPOT) CEO Daniel Ek said in an email to employees the company is slowing hiring by 25%, as economic uncertainty hits the tech sector. (CNBC)
  2. U.S. President Joe Biden called on U.S. oil refiners to increase gasoline supplies, adding higher-than-usual refinery profit margins are unacceptable. (MarketWatch)
  3. A $2 billion buyback program gave Hertz stock a boost earlier.
  4. Robinhood stock hit a record low after this analyst downgrade.
  5. Today's bull note helped Snowflake stock off its recent bottom.

There were no notable earnings reports today.

uvol jun 15

Rate Hike, Rising Supplies Weigh on Oil

Oil prices settled lower on Wednesday, after the Energy Information Administration (EIA) said U.S. crude inventories rose for a second consecutive week. Also weighing on black gold was the Fed's aggressive interest rate hike. July-dated crude shed $3.62, or 3%, to settle at $115.31 per barrel.

Meanwhile, gold prices settled higher, despite struggling for direction most of the day. The Fed decision is already weighing on the precious metal in electronic trading. Still, August-dated added $6.10, or 0.3%, to close at $1,819.60 an ounce.

Published on Jun 15, 2022 at 2:09 PM
  • Buzz Stocks

Is Estee Lauder Companies Stock Overvalued?

by Schaeffer's Digital Content Team
 
Published on Jun 15, 2022 at 2:03 PM
  • Indicator of the Week
    
Published on Jun 15, 2022 at 1:43 PM
  • Quantitative Analysis
 
Published on Jun 15, 2022 at 11:59 AM
  • Midday Market Check

Stocks are extending their premarket gains this afternoon, with traders already eyeing a 75 basis-point interest rate hike from the Federal Reserve by the conclusion of its two-day meeting. Wall Street is speculating on a more than 95% chance the Fed will enact such a hike, which would mark the largest since 1994. The announcement is expected to come this afternoon, during Fed Chair Jerome Powell's press conference. Still, the Dow Jones Industrial Average (DJI) was last seen up 172 points, while the Nasdaq Composite (IXIC) and S&P 500 Index (SPX) are both sitting firmly in the black as well.

Continue reading for more on today's market, including: 

  • What's sending Zendesk stock off its 2-year lows.
  • Analyst sees silver lining for struggling Snowflake stock. 
  • Plus, SJT bounces off key trendline; SIDU soars on NASA contract; and TUYA's post-earnings plummet.

midday stats june 15

San Juan Basin Royalty Trust (NYSE:SJT) is seeing an unusual amount of bullish options activity today, with the 3,044 calls exchanged so far, which is double the intraday average. This is compared to only 76 puts exchanged in the same time period. The most popular position by far is the October 7.50 call, followed by the July 15 call. SJT was last seen up 7% to trade at $10.56, as it attempts to rebound off yesterday's 16.5% pullback, which was mostly captured by the the 80-day moving average. The equity still sports a 72.7% year-to-date lead, though.

Sidus Space Inc (NASDAQ:SIDU) is one of the best performing stocks on the Nasdaq today. The security is up 84.3% to trade at $2.65 at last check, following news the space exploration name will be a teammate on NASA's $3.5 billion Exploration Extravehicular Activity (xEVAS) services contract. The stock is still off 73.6% this year, but looks ready to topple the 50-day moving average for the first time since the trendline formed in February. 

sidu jun 15

One of the worst stocks on the New York Stock Exchange (NYSE) is Tuya Inc (NYSE:TUYA), which is off 21.7% at $2.33 at last check. The software company just stepped into the earnings confessional, posting losses of 7 cents per share for the first quarter, on $55.32 million in revenue, missing Wall Street's estimates. TUYA sports a nearly 90% year-over-year deficit, with overhead pressure emerging at the 80-day moving average. 

Published on Jun 15, 2022 at 11:59 AM
  • Quantitative Analysis
  • Buzz Stocks

Oil Stock Bulls Need to Keep an Eye On

by Schaeffer's Digital Content Team

This commentary first appeared on Forbes Great Speculations, where Schaeffer's Investment Research is a regular contributor.

Oil concern Diamondback Energy (FANG) has been swept up in the sector surge, adding over 25% in the past month, and more than 117% in the past nine months. The equity today hit a record high of $162.24, and according to a study from Schaeffer’s Senior Quantitative Analyst Rocky White, even more fresh peaks could be on the way.

Per White’s study, these highs come amid historically low implied volatility (IV). The security sports a Schaeffer’s Volatility Index (SVI) of 46%, which sits in the 5th percentile of its 12-month range. There have been five other peaks in the past five years where Diamondback was trading within 2% of a 52-week high, while its SVI sat in the 20th annual percentile or lower.

fang june 15

One month after 80% of these signals, FANG was higher, averaging a 5.9% return in that time period. A similar move would mean even more highs for the security, putting it just shy of the $172 mark.

Despite this recent surge, short interest has also been on the rise, up 10.3% in the last reporting period. It would take nearly three days to buy back these bearish bets, at FANG’s average daily pace of trading.

Analysts, on the other hand, are eyeing even more upside for FANG. The stock’s 12-month consensus price target of $180.07 is a 12.4 % premium to current levels. Plus, all but one of the 14 firms in coverage call the equity a “strong buy.”

Published on Jun 14, 2022 at 8:00 AM
Updated on Jun 15, 2022 at 10:58 AM
  • Strategies and Concepts
  • Stock Market News

The talk of the town today -- and for the foreseeable future, unfortunately -- will be the Fed's steps to curb inflation. With stocks selling off like crazy in the last week and hitting levels not seen since early 2021, it has many investors wondering how reactive the Fed will be to the recent price action. To help grapple with it all, we posed this question to several industry experts:

What can we expect from the Fed?

"The stock market is under downward pressure as it prices in the risk of a recession and uncertainty over the number of rate hikes needed to cool our red hot inflationary environment. As a Mom, I know firsthand that the supply chain shocks exacerbating things like baby formula are creating extremely negative consumer sentiment. Indeed, as we saw last Friday, consumer sentiment came at a record low, driven by inflation. Powell is now savvy with the press (after an initial bumpy start) and likes to soothe the stock market. While he was late to begin acting on inflation, I believe he will be reassuring in his comments and look to calm our current fear based environment." -- Elle Kaplan, CEO of LexION Capital

"I don’t think that the last two days change anything action wise in what the Fed does at this meeting. However, I do think it may change their wording to be open to more tightening in a faster fashion if needed. I think the most interesting part of their comments will be in how they think the recent market action affects employment.  As we have seen over the last few weeks, there has been small weakness in employment. But does that continue to spread, and if it does, how can they help to steady it?  The two areas of the economy that have yet to be hit and both seem very vulnerable right now are employment and housing." -- JJ Kinahan, Chief Market Strategist and VP at tastytrade

"I’m still anticipating a 50 basis-point increase, especially given Monday's sell-off, but I do think the stage is set for larger and faster rate hikes in the near future. I think we could also see a more aggressive tone in Wednesday’s comments, after the May report was less-hawkish sounding than investors were expecting." -- Christine Short, VP of Research at Wall Street Horizon

"There is no question that the Fed will increase the target Fed funds rate by a minimum of 50 basis points to send a strong message that it is serious about fighting inflation. The problem is that if that message is too strong, the cure could be worse than the malady. Specifically, the Fed has a dual mandate to seek 1) full employment and 2) stable prices. The unprecedented quantitative easing was in response to the Coronavirus pandemic and was targeted at helping keep the economy moving forward. It worked!
 
Now, the Fed has pivoted to the second goal in its mandate -- stable prices -- and if it acts too swiftly, that could cause problems in the underlying economy and we could see a decrease in employment levels. In essence, the Fed is trying to thread the economic needle and achieve a soft landing. Pundits who say that the Fed should act boldly and enact a 100-basis point increase immediately are simply focused on the stable prices goal and dismiss the full employment goal. -- Robert R. Johnson, PhD, CFA, CAIA, Professor of Finance at Creighton University
 
"While a future 75- or 100-basis-point is possible, the FOMC appears to prefer adding more 50 basis-point hikes to tighten more aggressively instead. Given the hawkish shift in market pricing over the last couple of days, a 50 basis-point hike may be taken quite dovishly. To offset that, I expect the FOMC to respond with a strong hawkish message through its statement, economic projections, dot plot, and press conference. Specifically, I think they'll revise the policy guidance in its statement to say that the Committee “anticipates that raising the target range expeditiously will be appropriate until it sees clear and convincing evidence that inflation is moderating".
 
The GDP growth projections are likely to be a touch below the longer-run or potential growth estimate in 2022 and 2023, implying an intention to restrain demand growth so that supply has time to catch up. The June meeting will also bring large changes to the dot plot, with 50 basis-points through the end of 2022. -- Harry Turner, Founder of The Sovereign Investor
 

"As a technical analyst, our focus is more on the market's lead up and reaction, more than what the FOMC does or does not do. Judging from the past three  days, markets appear set to decline into the statement, which could very well setup the "sell on the rumor, buy on the news" outcome." -- Christian Tharp, CMT, at The Chartist Academy

Analysts' attention will be drawn to the trend in yields -- which have seen remarkable fluctuation -- and leading indicators to assess the efficiency of the implemented policy. As such, the Leading Economic Indicator (LEI) will be another indicator to be closely watched.  -- Toni Nasr, CFA, FRM, Fintech Analyst at Investing in the Web

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