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Will Earnings Reports Drive Shares This Earnings Season?

Sejuti Banerjea
·5 mins read

Yesterday was the first big day this earnings season, with companies like Johnson & Johnson JNJ, JPMorgan Chase JPM, Citigroup C, Blackrock BLK, Wipro Ltd. WIT, Delta Air Lines DAL, First Republic Bank FRC and many others reporting results. And although there were some really big beats, there wasn’t that positive response from the market that we’ve come to expect. Not in most cases at least

Blackrock did see a 3.9% increase in its share prices, but that came in response to an earnings beat of over 18% by the Zacks #2 (Buy) ranked company.

JNJ was not so lucky, as the company wasn’t rewarded either for its 10.6% beat or for the fact that it raised its 2020 guidance. The results were met with a 2.3% slide in share prices, likely an overhang from its recent decision to shelve its coronavirus vaccine candidate after a study participant had an unexplained reaction. If all had gone well, the company would have filed for emergency use authorization in early 2021.

JPM beat by 10.6%, C by 38.6% and FRC by 16.7%, and were met with a respective 1.6%, 4.8% and 1.5% slide in share prices. The pandemic has had the severest impact on the banking sector, despite the Fed’s attempts to smooth things out with a lower federal funds rate and financial support for businesses and individuals.

The situation is unlikely to be resolved soon because of the promise of 0 interest rates until 2023. So overall, banks are in a bit of a pressure cooker situation and the best thing that they can hope for is to try and stay profitable and keep paying the dividends. Until this whole thing blows over.

That means that the virus is playing the biggest role on Wall Street, with things like the elections, mega events and the holidays, all taking a back seat. And so it appears that companies (and market segments) that stand to gain from the virus are the ones that have the best chances of seeing positive reactions.

So other than the market segment or industry, it’s best to look for stocks that are seeing recent estimate revisions, a Zacks Rank #1 (Strong Buy) or #2 and a strong VGM Score (or Value, or Growth). Here are a few stocks that are looking good now-

Apogee Enterprises, Inc. APOG

Apogee designs and develops a whole range of value-added glass products, services and systems for customized window and walls of commercial and institutional buildings, aluminum window frames for commercial operations including shop windows, and value-added glass and acrylic products for picture framing.

Zacks Rank #1

Value Score A, Growth Score B, VGM Score B

Industry: Glass Products (top 1%)

2020 Estimate increased 59 cents (34.7%) 7 days ago

Mohawk Industries, Inc. MHK

This is a leading global manufacturer of flooring products like carpets, rugs, ceramic tiles, laminates, wood, stone and vinyl flooring for residential and commercial spaces.

Zacks Rank #1

Value Score B, Momentum Score A, VGM Score B

Industry: Textile - Home Furnishing (Top 7%)

2020 Estimate jumped 45 cents (7.7%) 7 days ago

Avnet, Inc. AVT

Avnet is one of the world’s largest distributors of electronic components and computer products that it sources from more than 300 component and system manufacturers.

Zacks Rank #1

Value Score B, Growth Score B, VGM Score A

Industry: Electronics - Parts Distribution (Top 1%)

2020 Estimate jumped 8 cents (5.3%) in the last 7 days

Arrow Electronics, Inc. ARW

Arrow is one of the world’s largest distributors of electronic components and enterprise computing products. It serves 150,000+ customers through 300 sales facilities and 45 distribution centers in over 80 countries.

Zacks Rank #2

Value Score A, Growth Score B, Momentum Score B, VGM Score A

Industry: Electronics - Parts Distribution (Top 1%)

2020 Estimate increased 3 cents (0.5%) in the last 7 days

WESCO International, Inc. WCC

WESCO is one of the largest players in the highly fragmented distribution market for electrical construction products in North America.

Zacks Rank #1

Value Score B, VGM Score B

Industry: Electronics - Parts Distribution (Top 1%)

2020 Estimate increased 1 cent (0.2%) 7 days ago

OI Glass, Inc. OI

O-I Glass is the largest manufacturer of glass containers in the world. Its 78 glass manufacturing plants located in 23 countries offer glass containers for rigid packaging.

Zacks Rank #2

Value Score A, Growth Score B, VGM Score A

Industry: Glass Products (top 1%)

2020 Estimate increased 1 cent (1.0%) 7 days ago

 

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JPMorgan Chase Co. (JPM) : Free Stock Analysis Report
 
Avnet, Inc. (AVT) : Free Stock Analysis Report
 
Johnson Johnson (JNJ) : Free Stock Analysis Report
 
WESCO International, Inc. (WCC) : Free Stock Analysis Report
 
Citigroup Inc. (C) : Free Stock Analysis Report
 
OI Glass, Inc. (OI) : Free Stock Analysis Report
 
Arrow Electronics, Inc. (ARW) : Free Stock Analysis Report
 
Delta Air Lines, Inc. (DAL) : Free Stock Analysis Report
 
BlackRock, Inc. (BLK) : Free Stock Analysis Report
 
Apogee Enterprises, Inc. (APOG) : Free Stock Analysis Report
 
Wipro Limited (WIT) : Free Stock Analysis Report
 
First Republic Bank (FRC) : Free Stock Analysis Report
 
Mohawk Industries, Inc. (MHK) : Free Stock Analysis Report
 
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