Earnings season is a potential volatile time for the market as companies report data that is unknown to investors. As this quarter’s earnings season comes to a close, it’s important to look at the scorecard and evaluate future expected earnings. With less than 10% of the S&P 500 left to report, 79.6% have beaten EPS estimates and 62.6% have beaten revenue estimates. As we start a new week, here’s 10 names that are set to announce with their earnings expectations as well as their expected price movement.
Despite the major market indices either at or near all-time highs, we’re in an earnings recession with the worst earnings growth since 2008. For the quarter, earnings have declined 35.5% on 11.3% lower revenues. However, the market has been willing to forego COVID-related earnings in anticipation that earnings will be restored quickly. That being said, the response to positive earnings beats has generally been less enthusiastic that previous quarters.
This round of earnings announcements has many companies that were considered “essential” during the closures and may be impactful as forward guidance is given and future COVID-related costs are weighed.
Here are six large cap companies that are set to announce this week and what to expect.
Earnings Opportunity #1: Walmart Inc (NYSE: WMT)
Walmart is a company that experienced a couple of rather large bearish trades leading into the company’s earnings this week on August 18 before market open. The current analyst estimates for Q2 EPS of $1.25 is lower than what the company earned last year at $1.27 per share on a 3.8% increase in revenue.
The expected move based on this week’s option expiration implied volatility is +/- $6.54. That represents the one standard deviation or 68.2% probability of movement for the next 5 trading days.
Earnings Opportunity #2: Home Depot Inc (NYSE: HD)
Home Depot is expected to see their quarterly EPS increase 16.4% year-over-year to $3.69. The current estimate has been sharply revised higher over the past 90 days from $2.94. As an “essential” company during the COVID-19 closures, it was able to do well. The question is whether the estimates are too optimistic and what the guidance will be.
The current expected move for this week is +/- $12.79.
Earnings Opportunity #3: Deere & Company (NYSE: DE)
Deere is certainly a company that was profoundly impacted by the slow-down in the U.S. economy in Q2. The current estimates are for a 56.8% decline in EPS year-over-year from $2.71 per share to $1.17 on 26.4% decline in revenues. The current annual revenue growth is expected to decline 18.4% with little recovery expected into next year.
The current expected move for this week is +/- $9.06.
Earnings Opportunity #4: NVIDIA Corporation (NASDAQ: NVDA)
Semiconductor companies seemed to fair well during the pandemic as gaming and computing was a hot commodity and the 58.9% estimated increase Q2 EPS reflects that dynamic. The estimates for 2021 revenue is for a 34.4% increase year-over-year with a 5-year expected EPS growth rate of 16.83%. There were significant positive revisions to EPS a little over 60 days ago and has remained stable ever since.
The current expected move for this week is +/- $35.6.
Earnings Opportunity #5: Lowe`s Companies Inc (NYSE: LOW)
Lowe’s is a compatriot to Home Depot in the retail world. With many companies considered “nonessential” during the beginning stages of the pandemic, it placed companies like LOW, WMT and HD in a good position. Current analyst estimates are for a 35.8% increase in quarterly EPS year-over-year on a 14.9% increase in revenue. The company has seen its Q2 EPS increase from $2.08 to $2.92 over the past 90 days. For fiscal year 2021, estimates are for a 26.6% increase in EPS and a 9.4% increase in revenue.
The current expected move for this week is +/- $9.33.
Earnings Opportunity #6: Target Corporation (NYSE: TGT)
Similar to HD and LOW, Target is a company that is a competitor to Walmart. These companies were all “essential” and become interesting as they will be an indication of the costs of adding COVID-related protective measures for customers and employees. Analysts are currently expecting an 11% decline in quarterly EPS on 8.8% higher revenues. The current estimate of $1.62 was just revised from $1.46 in the past 7 days.
The current expected move for this week is +/- $8.69.