This week marks the official kickoff to Q3 peak earnings season, with 2,468 companies (from our global universe of 11,000 companies) scheduled to report their results. All eyes will be on the big tech companies, with five of the seven Magnificent companies scheduled to report: Alphabet on Tuesday, Microsoft and Meta on Wednesday, and Apple and Amazon on Thursday. Nvidia is scheduled to report on November 20th.
Tesla reported better-than-expected final results on Wednesday, kickstarting the Magnificent 7 party but only slightly missing revenue estimates. (1) But that didn’t seem to bother investors. The stock rose more than 10% after the news, pushing the market higher into Thursday after three days of declines. Investors are more concerned about the loss of revenue than the loss of $739 million in regulatory auto financing during the quarter and CEO Elon Musk’s best bet that auto growth could reach 20% to 30% next year. We captured the positive points of the report, including its speculations (2).
With nearly 40% of the S&P 500 index reporting to date, the year-over-year growth rate was 3.6%, marking the fifth consecutive quarter of growth but the slowest growth rate in a year ( 3).
Academic research shows that when a company confirms a quarterly earnings date that is later than its previous announcement date, it’s usually a sign that the company will share bad news on an upcoming conference call, while pushing the announcement date earlier have been shown to suggest the opposite (4). )
This week saw the release of results for a number of large companies on key metrics with Q3 2024 earnings dates out of line with historical norms. This week, 17 companies in the S&P 500 saw outlier earnings dates, with 14 of them having negative DateBreaks Factors* because they were later than normal. Those names are Chipotle Mexican Grill (CMG), Visa (NYSE:V), Fortive Corporation (FTV), Illinois Tool Works (ITW), Otis Worldwide (OTIS), Microsoft (MSFT), Xcel Energy (XEL), and MasterCard. (MA). ), CMS Energy Corp (CMS), Eastman Chemical (EMN), Juniper Networks (JNPR), Comcast Corp (CMCSA), T.Rowe Price (TROW), Charter Communications (CHTR). Three names with positive DateBreaks factors are DR Horton (NYSE:DHI), GoDaddy (GDDY), and Gen Digital (GEN).
visa
Company Confirmation Report Date: Tuesday, October 29th, AMC
Expected reporting date (based on historical data): Tuesday, October 22nd, AMC
DateBreaks factor: -2*
Visa is scheduled to report its fourth-quarter 2024 financial results on Tuesday, October 29, one week later than expected. They still stick to the Tuesday reporting trend, but after reporting in the 43rd week of 2023 (WOY), they pushed the report to the 44th week of the year (WOY).
story continues
It’s no secret that American consumers have been reeling over the past two years as rising inflation has taken a toll. In some quarters, that means your credit card provider’s total payment value (TPV) is down or your delinquent payments are up. In the second quarter, Visa missed Wall Street’s revenue expectations and recorded a decline in payments. (5) Two weeks ago, closely watched peer company American Express reported its third quarter results. These results include lower third-quarter revenue, a full-year 2024 outlook at the lower end of its previous range, and a slowdown in most age groups tracked by credit card providers. (6) Investors will focus on Visa’s performance. There are no clues as to whether the softening of US consumers will continue.
* Wall Street Horizon DateBreaks Factor: A statistical measure that compares a financial year end date (fixed or restated) to a reporting company’s five-year trend for the same quarter. A negative value means the return date is confirmed to be later than the historical average, while a positive value means it is earlier.
DR Horton
Company Confirmation Report Date: Tuesday, October 29th, BMO
Expected reporting date (based on historical data): Tuesday, November 5th, BMO
Date break factor: 3*
Homebuilder DR Horton is also scheduled to report its fourth-quarter 2024 results on Tuesday, Oct. 29, a week earlier than expected for the company name. While DHI typically reports for the fourth quarter in the 45th week of the year, and possibly the 46th week, this move will push the report to the 44th week of the year.
Part of Dr. Horton’s move may be related to the fact that they were scheduled to report on the same day as the US presidential election. Our data shows that while many companies changed their reporting dates to avoid announcing their earnings that week, the majority postponed their earnings announcements to a later week. America’s largest home builder reported impressive third-quarter results despite continued inflation and rising mortgage rates (7). Demand for affordable housing remains high, so we continue to benefit from limited supply. Analysts believe that the low interest rate environment that began last month when the Federal Reserve cut interest rates by a whopping 50 bps will be beneficial to home builders (8).
Big tech companies have been in the spotlight this week, with many of their stock prices reaching all-time highs. How they perform may determine how this earnings season is perceived and where the U.S. market heads. According to FactSet, combined EPS growth for these seven companies in the third quarter is expected to be 18.1% year-over-year. (9) If we remove these seven companies from the S&P 500, the blended growth rate, currently 3.6%, collapses to 0.1%. .(10)
Megatech’s earnings announcement this week will determine earnings season and the U.S. market
Source: Wall Street Horizon
This earnings season will peak from October 28th to November 15th and is expected to generate more than 2,000 reports each week. November 7th is currently predicted to be the most active day, with 1,422 companies expected to report. So far, 73% of companies have confirmed their financial year end date (out of over 11,000 global companies). The remaining dates are estimated based on historical reporting data.
Megatech’s earnings announcement this week will determine earnings season and the U.S. market
Source: Wall Street Horizon
1 Tesla Q3 2024 Update, October 23, 2024, https://digitalassets.tesla.com
2 Tesla Q3 2024 Financial Results and Q&A Webcast, October 23, 2024, https://livestream.tesla.com/
3 Earnings Insight, FactSet, John Butters, October 18, 2024, https://advantage.factset.com
4 Time Will Tell: Information in the Timing of Scheduled Earnings News, Journal of Financial and Quantitative Analysis, Eric C. So, Travis L. Johnson, December 2018, https://papers.ssrn.com
5 Visa 2024 Third Quarter Financial Results, July 23, 2024, https://investor.visa.com
6 American Express Reports Third Quarter Earnings per Share of $3.49, Raises Full-Year 2024 EPS Guidance, October 18, 2024, https://ir.americanexpress.com
7 American construction contractor DR HORTON, INC. reports third-quarter 2024 earnings and declares quarterly dividend of $0.30 per share, July 18, 2024, https://investor.drhorton.com
Eight U.S. home construction stocks soar on hopes of boosting demand after Fed rate cut, Reuters, Pratyush Thakur, September 19, 2024, https://www.reuters.com
9 “Are The Magnificent 7 Companies Top Contributors Top Contributors for the S&P 500 for Q3?”, FactSet, John Butters, October 21, 2024, https://insight.factset.com
“10 Are The Magnificent 7 Companies Top Contributors Top Contributors for the S&P 500 for Q3?” FactSet, John Butters, October 21, 2024, https://insight.factset.com
Copyright 2024 Wall Street Horizon, Inc. All rights reserved. Do not copy, distribute, sell, or modify this document without the prior written consent of Wall Street Horizon. This information is provided for informational purposes only. Neither TMX Group Limited nor its affiliates guarantee the completeness of the information contained herein and assume no liability for any errors or omissions in the information or for your use of or reliance on the information. This publication is not intended to provide legal, accounting, tax, investment, financial, or other advice and should not be relied upon for such advice. The information provided is not a solicitation of an offer to purchase any security, including any securities listed on the Toronto Stock Exchange or the TSX Venture Exchange. TMX Group and its affiliates do not endorse or recommend any securities mentioned herein. TMX, TMX Design, TMX Group, Toronto Stock Exchange, TSX, and TSX Venture Exchange are trademarks of TSX Inc. and are used under license. Wall Street Horizon is a trademark of Wall Street Horizon, Inc. All other trademarks used herein are the property of their respective owners.
This article first appeared on GuruFocus.
