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The consumer is holding up despite surging inflation. A hot jobs market helps
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An equal-weight basket of retail stocks has plunged 30% this year as a pessimistic outlook permeates market
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Will investors shop for value among some beaten-down names?
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We highlight two non-consumer companies that have yet to confirm an earnings date for next quarter. Is that a bearish sign?
The U.S. corporate earnings season is winding down. There are still key companies that have confirmed earnings dates, though. Retail is in focus. The week of May 15 could be particularly crucial since the economy appears on the downhill considering weakening GDP and stubbornly high inflation. The weight of the world rests on consumers to keep doing what they do best: spend, baby, spend. The outlook could be challenging for well-established stores, as folks transition from product/retail spending to services. It could be a bumpy week ahead.
Retail Therapy
Earlier this month, Costco (NASDAQ:COST) reported strong interim sales data in its April same-store sales update. Moreover, recent card data from Bank of America and JP Morgan Chase indicate folks are swiping away despite being incredibly sour on both stocks and the economy. We’ll get the full spending story from a range of retailers reporting soon.
'Clean Up On Aisle Retail!'
Let’s take a trip down the earnings aisle to know when the biggest earnings hit the tape.
Tuesday before the bell, we will hear from maybe the most important pair of big-box stores: Walmart (NYSE:WMT) and Home Depot (NYSE:HD). It has been a tale of two consumers between these firms. Walmart is the biggest discount store in the consumer staples sector, and its shares are up fractionally year to date. Meanwhile, Home Depot, the third largest consumer discretionary company, behind only Amazon (NASDAQ:AMZN) and Tesla (NASDAQ:TSLA), has seen its stock drop hard in 2022. HD is off by more than 30%, among the worst Dow components this year.
WMT & HD Stock Performance YTD
Source: Stockcharts.com
Wednesday morning will be bustling with Target (NYSE:TGT), Lowe’s (NYSE:LOW) and TJX Companies (NYSE:TJX) all reporting Q1 earnings. The SPDR® S&P Retail ETF (NYSE:XRT) will be in play as all these companies report results. Also important will be any earnings guidance and added color on the consumer.
On Thursday, Kohls Corp (NYSE:KSS) and Ross Stores (NASDAQ:ROST) have confirmed earnings releases. Keep ROST on your radar, as its shareholder meeting takes place the evening before earnings hit the tape. HD’s shareholder meeting happens Thursday morning, too.
Finally, Thursday AMC we’ll hear from VF Corporation (NYSE:VFC) - one of the world's largest apparel, footwear and accessories companies.
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Source: Wall Street Horizon Late Earnings Confirmations You don’t have to look just to the consumer for uncertainty right now. Traders can get clues on a stock’s next big move and volatility spikes by spotting late earnings date confirmation events. A company late to confirm its upcoming earnings date is often a telegraph of unusual and potentially unfavorable news. We highlight two S&P 500 large-caps that have yet to confirm Q2 earnings dates. Intel (NASDAQ:INTC) jumps out to us. The chip-maker usually confirms its Q2 earnings date right after posting Q1 results. Here, we are more than two weeks after the company reported, and there’s still no confirmed earnings date. As of May 15, that is a whopping confirmation date Z-score of 6.06 since its average Q2 earnings confirmation date is April 26 +/- 2.4 days. This outlier is particularly interesting since Intel has never been late in confirming an earnings date, according to Wall Street Horizon data. |
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Confirmation Date Z-score - statistical measurement of how an earnings confirmation date compares to the reporting company's 5-year confirmation date trend for the same quarter. |
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Amid enhanced macro- and micro-economic risks, traders should be particularly wary about what Intel could report over the coming weeks and in its next 10-Q filing. The firm’s CEO, Pat Gelsinger, cast an ominous shadow over the industry in late April when he forecast that the semiconductor chip shortage will extend into 2024. Shares plummeted as the tech giant missed street earnings estimates. First-quarter sales dipped 7%. Intel does have an Unconfirmed Q2 reporting date of July 21 AMC. Shares are down more than 35% from their 2021 peak as the tech wreck persists. The upshot is that shares are arguably cheap considering the $180-billion market cap company trades at just 7x last year’s earnings² with a 12x forward P/E.
Source: Stockcharts.com Anthem Inc (NYSE:ANTM), like Intel, historically confirms its next-quarter earnings date immediately after posting results. The $118-billion market cap stalwart in the health care sector still has not confirmed its Q2 reporting date. The late-confirmation date Z-score is very high at 4.56 as of yesterday considering a mean Q2 confirmation date of April 27, +/- 3.1 days. Perhaps we will get more color on what’s going on with the health insurance provider at its upcoming shareholder meeting on the morning of Wednesday, May 18. At the meeting, shareholders will vote on a proposed name change to Elevance Health Inc. At last week’s Bank of America Global Healthcare Conference, Anthem’s leadership team said Q2 is coming in as expected, according to BofA. Looking ahead, we have an unconfirmed earnings date of July 20 BMO that traders should keep on their radar. The stock has been a relative winner this year as investors seek safety in the somewhat stable health care sector, but ANTM has succumbed to some selling pressure lately, correcting more than 10% from its April high above $500. ANTM Stock Price History
Source: Stockcharts.com Earnings Wave The week of May 15 starts getting a bit calmer as the Q1 reporting season starts to wind down with around 900 companies expected to report. At this point, 88% of companies have confirmed their earnings date (out of our universe of 10,000 global names).
Source: Wall Street Horizon Conclusion It’s been a strong quarter for corporate earnings. You might have heard this refrain before! The stock market has not cared. Firms beating on the bottom line have not been rewarded, while those that miss (and heaven forbid, guide lower) have been taken to the woodshed. Managing volatility is more important than ever right now as implied vol on the S&P 500 rises above 30% and higher than 40% on the Nasdaq. Wall Street Horizon’s corporate event coverage keeps traders and portfolio managers ahead of the game with the most accurate data. |
