eBay, Goodyear Among Earnings Outliers

Executive Summary

• eBay (NASDAQ:EBAY) and Goodyear highlight two earnings outliers in the consumer discretionary sector

• An international health-care company undergoing a business transformation is profiled with an earnings date revision

• We analyze a high-growth firm that performs COVID-19 testing with an earnings report Monday next week

Earnings Outliers

We feature two earnings outliers this week. By using the Z-score, clients can gauge how statistically unusual a company’s earnings date is relative to normal. We analyze five years of earnings trends to develop a normal earnings date. Wall Street Horizon clients are alerted when a firm has an earnings date Z-score greater than 3.0.

eBay’s Strong Performance Amid Intense Competition

First up is a stalwart in the consumer discretionary sector. eBay Inc (NASDAQ:EBAY) is a $49-billion market cap commerce firm headquartered in California with other businesses in Asia. The Nasdaq 100 and S&P 500 stock has a P/E ratio under 20x, rare for a big-name tech-related company in 2021, so perhaps current expectations are not so high. The company faces intense competition from Amazon (NASDAQ:AMZN), Walmart (NYSE:WMT) and Target (NYSE:TGT). Nevertheless, its stock price has been on a stellar run, climbing from under $50 late last year to above $70 recently.

Figure 1: EBAY Stock Price History (1-Year)

EBAY Daily Chart.

Several Corporate Announcements

Earlier this year, eBay announced it would divest one of its businesses in South Korea in a move to shore up cash. Then in May, the company issued a press release that it would bring on a new CFO. Finally in July, eBay signed an agreement for the partial sale of Adevinta to Permira, reducing its Adevinta stake to 44%. So there’s already interesting corporate activity going on ahead of this week’s earnings release.

Outlier Analysis

eBay has a history of reporting Q2 results between July 20 and 28 with a strong Wednesday trend. On April 29, Wall Street Horizon set a July 27 Unconfirmed earnings date based on the trend. On July 13, however, eBay announced via its website that it will be reporting on Aug. 11 before market, which is significantly later than normal. The resulting Z-score is 4.64. With a high volume of corporate events in the last few months and a much later than usual earnings date, traders should pay close attention to the potential for more unexpected news during eBay’s earnings release next Wednesday.

A Shakeup In Tire Industry

Goodyear Tire & Rubber Co (NASDAQ:GT), based in Ohio, is a $4.3-billion market cap firm in the consumer discretionary sector. Known as a leader in the tire industry, GT has operations around the world and announced in February that it would further its industry dominance by acquiring Cooper Tires. The deal was completed in June. Goodyear is hopeful that the two brand portfolios will add value. Unfortunately, the stock price has not buttressed that corporate goal so far. Shares of GT have fallen from a June peak near $21 to a mid-July nadir under $15. Can this week’s earnings report turn things around?

Figure 2: GT Stock Price History (1-Year)

Goodyear Daily Chart.

Outlier Analysis

Goodyear typically reports between July 26 and 31 with a Friday trend. On April 22, Wall Street Horizon set a July 30 Unconfirmed earnings date based on its history. On July 23, however, GT announced on its website that it would be reporting on Aug. 6 before market. The resulting Z-score is a high 4.2. Traders should note that Goodyear completed the deal with Cooper on June 7, so there could be more news to come regarding this corporate activity. Friday morning’s earnings release will be something portfolio managers should monitor.

Earnings Revisions

Two companies with earnings revisions caught our attention this week. Wall Street Horizon gathers and tracks firms from around the world that publicly declare an earnings date, but then publicly change it. By moving a reporting date, a firm indicates there might soon be unusual news that could draw stock price volatility.

First up is Perrigo Company (NYSE:PRGO). Perrigo is a Dublin-based drug manufacturer in the health-care sector and is primarily known for its lines of affordable self-care products available at retail outlets. An ADR listed on the NYSE and an S&P 500 stock, PRGO has a market cap of $6.3 billion and an above-average dividend yield of 2.0%.

Business Sales

In the past several months, PRGO divested a pair of businesses as it focuses on its core operations. In May, the company sold its Mexico and Brazil over-the-counter business to Advent International. The firm furthered its transformation with a $1.55 billion divesture of its Generic Rx Pharmaceuticals business to Altaris Capital Partners, LLC.

In terms of price action, the stock has been treading water for much of the last year amid this flurry of corporate activity. Next week’s earnings release could shed more light on the firm’s plans.

Figure 3: PRGO Stock Price History (1-Year)

Perrigo Daily Chart.

Revision Analysis

PRGO has a history of reporting Q2 results between Aug. 6 and 11. On July 6, the company sent an email stating it would report on the morning of Aug.10. On July 28, however, PRGO issued a press release stating it would report a day later, on Aug. 11 with a conference call immediately to follow. Traders should be on guard for news regarding its corporate transformation given recent asset sales.

Fulgent Genetics

We wrap up this week’s busy earnings coverage with a look at a $2.7-billion market cap health-care company based in California. This might be an unfamiliar name—Fulgent Genetics Inc (NASDAQ:FLGT). Fulgent provides large-scale COVID-19 testing services and other health-related testing solutions.

Benefitting from COVID-19 Testing Volume

The stock was a high-flyer earlier this year as it benefitted from the pandemic. Its Q1 earnings report features eye-popping figures including record revenue of $359.4 million, up more than 4,500% year-over-year. Billable tests were 3.8 million, a multiple of 290 times the volume of the same quarter last year. It also raised full-year revenue guidance in the May report. The CEO said, “We look forward to supporting the CDC in their ongoing study of variants of the SARS-CoV-2 virus and national surveillance.”¹⁰

Amid growing Delta Variant COVID-19 cases around the world, business could be picking back up for this S&P Mid Cap 400 company. Shares have climbed from near $60 in May to $95 last week as the pandemic takes another turn for the worse.

Figure 4: FLGT Stock Price History (1-Year)

Fulgent Genetics Daily Chart.

Revision Analysis

FLGT has a history of reporting Q2 results between Aug. 4 and 7. On July 26 at 8:02 am, Wall Street Horizon updated its Q2 reporting date to Aug. 5 based on the company’s press release. On July 26 at 8:26 am, FLGT issued a subsequent press release with a correction, “In the headline and first paragraph, the first sentence of release, the date should read: Monday, Aug. 9, 2021 (instead of Thursday, Aug. 5, 2021).” This change resulted in an earnings date revision. Traders should monitor next week’s earnings report given the revision and recent surge in COVID-19 cases.

Conclusion

There has been a flood of corporate merger and acquisition activity in addition to a record pace of IPO volume this year. We highlighted several firms undergoing business changes that have unusual earnings dates this week and next. Traders have their hands full keeping pace with this busy earnings season – as the event data authority for trading and risk, Wall Street Horizon is a valuable resource, alerting clients to the key corporate events that drive volatility.