Executive Summary
- U.S. equity markets hit new highs in recent days as another better-than-expected earnings season continues
- We feature a leading vacation destination firm with an off-trend earnings announcement that recently completed a key acquisition
- Two international stocks battling tough macroeconomic conditions are profiled: one with an unusual earnings date and the other with a suspicious earnings date revision
Earnings Outliers
Hilton Grand Vacations, Inc. (NYSE:HGV) owns and operates timeshare resorts and urban destinations. A consumer discretionary stock, the company operates through real estate sales and financing and resort operations and club management segments. It is exposed to both the travel boom and perhaps even a beneficiary from rising interest rates (like a bank). With a market cap just shy of $6 billion, the firm is less than a fifth the size of its parent Hilton Worldwide Holdings (NYSE:HLT).
A 2021 Winner
HGV has been a strong performer in the last year as the “reopening” theme has dominated financial markets. The stock has more than doubled. It was one year ago when good news regarding vaccine developments hit the wires. Since then, stocks exposed to consumers and travel-related firms have soared. Profits have also gone through the roof. While times have been good, earnings volatility can still be difficult to manage.
Figure 1: HGV Stock Price History (1-Year)
Diamond Hands
Hilton Grand Vacations is now the owner of Diamond Resorts. It completed the acquisition on August 2 after announcing plans to purchase the upscale resort company in May. Apollo Global, a private equity group, was the former owner. A $1.4 billion deal², HGV further cemented its position as a leading vacation destination operator. Investors appear pleased thus far, but will strong price action in HGV shares continue?
Outlier Analysis
Hilton Grand Vacations usually reports Q3 earnings from Oct. 29 to Nov. 1 with no-day-of-the week trend.
- July 30 - Wall Street Horizon set an Unconfirmed Q3 earnings date of October 28 based on its reporting history.
- Oct. 26 – HGV announced it would report results on November 9 BMO Confirmed.
The later-than-usual earnings date may be due to an acquisition it completed in September from Apollo Global. The change resulted in an extremely high Z-score of 7.35. Traders should be ready for a potentially volatile period around the release date given the later-than-expected earnings report.
Suzuki Motor Corp. (T:7269) is a Japanese multinational manufacturer of automobiles, four-wheel-drive vehicles, motorcycles, all-terrain vehicles, among other internal combustion engines. With Toyota Motor (NYSE:TM) as a minority owner, the firm embraces lean manufacturing concepts as it pushes to innovate vehicles that have a smaller carbon footprint. Suzuki is a major consumer discretionary company listed on the Nikkei 225 index.
Its stock price has wobbled in the last year—ranging from ¥4,200 to ¥5,700 (the equivalent of $37 to $50). Value investors might be drawn to this ¥2.5 trillion market cap stock considering the 10.9 P/E ratio is paltry compared to many U.S. stocks. Suzuki’s 1.8% dividend yield is larger than the 10-year Treasury rate, too.
Figure 2: Suzuki Motor Stock Price History (1-Year)
Fierce Competition
Within the automotive space, Tesla (NASDAQ:TSLA) commands the headlines as that stock trades with a $1 trillion valuation. In recent days, Ford (NYSE:F) announced hefty profits with a positive outlook. So, the industry has many moving parts and the landscape is shifting. Investors should pay close attention to Suzuki’s earnings report to be released next week.
Outlier Analysis
Suzuki usually reports Q2 results from Nov.1 to Nov. 5 with a Thursday trend.
- August 6 - Wall Street Horizon set an Unconfirmed Q2 earnings date of November 4 based on the historical trend.
- September 29 – Suzuki confirmed via its investor relations calendar that it would report on November 11.
- September 29 – Wall Street Horizon promptly notified clients of the new Confirmed earnings date. The later-than-expected earnings date resulted in a 3.3 Z-score.
The new earnings date could be a sign of negative figures to be released, so investors should mark this date on their calendars for potentially unusual price action in shares of Suzuki. Japan endured a sharp wave of COVID-19 last quarter as the Olympics were held in Tokyo. While its stock price has rebounded, sales were potentially negatively impacted by reduced mobility across the nation.
Earnings Revision
PI Industries Ltd (NS:PIIL) is a ₹460.55 market cap ($6 billion) holding company headquartered in India. A chemical manufacturing materials company, the firm is engaged in the manufacturing and distribution of agrochemicals.
Battling Through
India has experienced its share of tumultuous events this year from sharp bouts of COVID-19 to being the epicenter of the global energy crisis. Many energy, utility, and materials companies have faced unprecedented shortages of commodities. Nevertheless, shares of PI have performed well over the last year—rising from near ₹2,000 to ₹3,500 in September. The latest round of commodity concerns could be casting a dark shadow on PI, however, as the stock has fallen back under ₹3,000.
Figure 3: PI Industries Stock Price History (1-Year)
On October 12, it was announced that PI Industries executed two joint venture agreements with Polymath Holdings.⁵ While the deals did not impact the stock much, there has been a recent uptick in trading volume ahead of next week’s revised earnings date.
Revision Analysis
PI has historically reported Q2 results between October 23 to October 28.
- October 11 - Wall Street Horizon set a confirmed earnings date of Oct. 26 Unspecified per a stock exchange announcement that the company would approve results on that day.
- October 26 – We tracked another company press release from the exchange that announced the Board of Directors meeting would be rescheduled to Nov. 12. We then re-confirmed the earnings date.
The later-than-usual earnings date is a red flag. The 16-day delay marks the largest deviation of any company earnings report we are tracking so far this reporting season. International equity traders should keep this stock on their radar for potential volatility next week.
Conclusion
U.S. corporate earnings continue the trend of positive surprises. Meanwhile, international companies are challenged with a commodity crunch and lingering ramifications from COVID-19. Traders should carefully tread foreign markets as they have underperformed domestic equities sharply in 2021. The second half of earnings season may feature more volatility. Wall Street Horizon’s industry-leading event data coverage provides the tools for global investors to effectively manage risk.