Last week began with the biggest market declines in two years for the S&P 500 and DJIA, followed by four days of gains that returned the indexes to their best trading days in two years. The increase in new jobless claims that contributed to Monday’s decline showed improvement on Thursday, falling by 17,000 from the previous week to 233,000 (1).
There were also some decent earnings reports in the consumer sector, with Costco (NASDAQ:COST), Restaurant Brands (NYSE:QSR), and Under Armor (NYSE:UA) all beating expectations. But to that end, the average credit card balance in the U.S. is now $6,329, up nearly 5% from last year, according to a new report by TransUnion. (2) The story remains that consumers may be carrying the burden, and this week to read more about consumers, from Walmart (NYSE:WMT) and Home Depot (NYSE:HD) Get your results.
According to FactSet, 91% of S&P 500 companies have reported second-quarter results, and the current headline earnings per share growth rate is 10.80%, down from 11.50% the previous week. (3) To date, 78% of S&P 500 companies have reported beating analyst earnings estimates, but only 59% have exceeded sales (4).
The Late Earnings Report Index, our proprietary measure of CEO uncertainty, fell to its lowest level in nine years during the fourth quarter earnings season, then rose again during the first quarter earnings season and rose further thereafter. I did. The second quarter season is finally over.
LERI tracks the change in the balance sheet date of outliers in publicly traded companies with market capitalizations of $250 million or more. The LERI has a threshold of 100, above which a company feels uncertain about its current and short-term prospects. A LERI reading below 100 suggests that companies feel they have a pretty good crystal ball in the short term.
The official reading of LERI after the peak season of the second quarter reporting season (data collected in the third quarter) is 186, significantly above the baseline. That year. As of August 9, 2024, there were 151 late outliers and 73 early outliers.
Will retail profits continue to highlight the exploitation of American consumers?
Source: Wall Street Horizon
This week begins what we call the retail earnings parade portion of the reporting season. We’re already hearing from consumer-focused companies, especially restaurants and consumer staples companies, that consumer spending continues to cool and shoppers are becoming more discerning and value-oriented. In addition to this, the labor scenario is softening, with the unemployment rate rising to 4.30% in July, the highest level since 2021. (5)
This week’s retail party begins with results from Home Depot, Walmart, Tapestry (NYSE:TPR), and Dillard’s (NYSE:DDS).
Will retail profits continue to highlight the exploitation of American consumers?
Source: Wall Street Horizon
Academic research shows that when a company announces a quarterly earnings date that is later than its previous announcement date, it is usually a sign that the company will share bad news on an upcoming conference call, while an earlier announcement date have been shown to suggest the opposite (6).
For the remainder of the second quarter earnings season, only three S&P 500 companies have confirmed outlier earnings dates, all of which are later than normal, resulting in a negative DateBreaks Factor*. Those names are Agilent Technologies (NYSE:A), Bath & Body Works (NYSE:BBWI), and Autodesk (NASDAQ:ADSK).
* 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 confirms that the return date is later than the historical average, a positive value means it is earlier
Agilent Technologies (NYSE:A)
Company Confirmation Report Date: Wednesday, August 21st, AMC Expected Report Date (based on historical data): Tuesday, August 13th, AMCDateBreaks Factor: -3*
Agilent is scheduled to report its fiscal 2024 third-quarter financial results on Wednesday, August 21, more than a week later than expected, slower than usual, and the slowest it has ever reported for this quarter. Masu. This also appears to be the first time since 2019 that news has been reported on a Wednesday, with Tuesday coverage having been advantageous for the past four years.
Medical technology company Agilent has been dealing with months of slump in orders for research supplies and equipment after benefiting from increased demand following the coronavirus pandemic. Revenue growth is down from the fourth quarter of 2023, and revenue growth is down from the third quarter of 2023. (7) The company announced in June that it would lay off 3% of its workforce, which is in addition to its last announced layoffs. 2023. (8)
Bath & Body Works (NYSE:BBWI)
Company Confirmation Report Date: Wednesday, August 28, BMO Forecast Report Date (Based on Historical Data): Wednesday, August 21, BMODateBreaks Factor: -2*
Bath & Body Works is scheduled to report its second-quarter 2024 results on Wednesday, August 28, one week later than expected. This also pushed the results to the 35th week of the year, although for the past 10 years the company has always announced its second quarter results on the Wednesday of the 34th week of the year. This is Bath & Body Works’ most recent second quarter report to date.
For discretionary retailers like Bath & Body Works, the slowdown in consumer spending may not bode well. While the past two quarters have seen no revenue growth, the company continues to see impressive revenue growth (9). But that may be coming to an end. According to FactSet data, the sell-side expects Bath & Body Works’ earnings per share to decline 10% in the second quarter (10).
The second-quarter 2024 earnings season continues to fade, with only 1,681 companies scheduled to report this week. So far, 61% of companies in a universe of 11,000 companies have reported results.
Will retail profits continue to highlight the exploitation of American consumers?
Source: Wall Street Horizon
1 Weekly Claims for Unemployment Insurance, U.S. Department of Labor, August 8, 2024, https://www.dol.gov 2 The average consumer now carries $6,329 in credit card debt, CNBC, 2024 August 8, 2024, https://www.cnbc .com 3 FactSet Earnings Insight, FactSet, John Butters August 9, 2024, https://advantage.factset.com 4 FactSet Earnings Insight, FactSet, John Butters , August 9, 2024, https://advantage.factset.com 5 Employment Situation Overview, U.S. Bureau of Labor Statistics, August 2, 2024, https://www.bls.gov?6 Time Will Tell: Information in the Timing of Scheduled Earnings News, Journal of Financial and Quantitative Analysis, Eric C. Travis L. Johnson, December 2018, https://papers.ssrn.com7 Agilent Reports Second Quarter 2024 Financial Results, Agilent , May 29, 2024, https://www.investor.agilent.com -Second-Quarter-Fiscal-year-2024-Financial-Results/default.aspx8 As the lab equipment market continues to slump, Agilent to 3% reduction, Medtech Dive, June 14, 2024, https://www.medtechdive.com9 Bath & Body Works Reports First Quarter 2024 Results, June 4, 2024, https://investors.bbwinc .com10 FactSet Earnings Insight, FactSet, John Butters, August 9, 2024, https://advantage.factset.com
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This article first appeared on GuruFocus.
