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Q4 S&P 500 EPS growth is expected to come in at 16.9%, the highest growth rate in three years
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Large-cap outlier earnings dates this week include: ANSYS, Akamai Technologies and Trimble Inc.
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The third week of peak season begins this week, with 1,233 companies expected to report
Despite being a packed week for earnings, it was Federal Reserve testimony, January’s CPI reading, and proposed steel tariffs that took center stage for investors last week.
Federal Reserve Chairman Jerome Powell was already giving conservative commentary regarding future rate cuts when he spoke to the Senate Banking Committee on Tuesday, reiterating the Fed was in “no rush” to ease, and commenting that inflation was “moving in the right direction.” That argument got flipped on its head a bit by Wednesday morning when January CPI came in hotter than expected, showing a 3% increase in YoY inflation, moving away from the Fed’s 2% target. Powell worked this change into his comments on Wednesday to the House Financial Services Committee. "I would say we're close, but not there on inflation," Powell reiterated. "You can see today's inflation print, which says the same thing."
After the CPI report, the CME Group’s FedWatch tool showed the probability of a rate cut at the June FOMC meeting falling to 36.9%. On Friday, February 7, the probability of a rate cut at that meeting was 52%, and that was even after a strong January jobs report. The June meeting was anticipated to be the first time in 2025 that we would see the Fed cut rates, but now that expectation has moved into September, with a 58% probability of a cut. Some in the industry have gone as far as to say they expect no rate cuts in 2025, including Bank of America (NYSE:BAC) CEO, Brian Moynihan.
Going hand-in-hand with inflation concerns, tariff talk once again took over the headlines last week when President Trump announced a 25% tariff on steel and aluminium products that would be implemented on March 12. Industries ranging from auto, homebuilding, household durables and even consumer staples names such as Coca-Cola (NYSE:KO) reacted with how this would impact their bottom line.
The Q4 earnings season continued with results from restaurants, enterprise technology companies and others. Restaurants have been a mixed bag, even within similar segments. Fast food restaurants have been duking it out for market share, as the US consumer in particular remains very value-conscious. McDonald’s (NYSE:MCD) was able to tap into this over the summer by bringing back their $5 value meals, but Q4 results released on Monday showed sales took a hit due to an E. coli outbreak. Yum! Brands, which reported results on February 6, showed same-store sales (SSS) for its KFC brand were flat for the quarter, while Pizza Hut’s SSS fell 1% YoY. Yum! Brands' (NYSE:YUM) Taco Bell was the leader in its portfolio with SSS which increased by 5%. Restaurant Brands (NYSE:QSR) was out with results on Wednesday that showed the quick-serve names in its portfolio were also doing well in this environment, with Burger King and Popeyes posting SSS results of 1.5% and 0.1%, respectively.
With 77% of companies from the S&P 500 now having released results for Q4, growth is at 16.9%, the highest level in 3 years. Revenue growth stands at 5.2%.
On Deck this Week
This week marks the third peak week of earnings season with 1,233 companies (in our global universe of 11k) set to report, and 78 from the S&P 500. It’s a bit of a light “peak” week due to the President’s Day holiday on Monday, February 17 during which US markets are closed. Once Americans return from their long weekend, they’ll have some consumer-centric reports to look forward to such as Etsy (NASDAQ:ETSY), Walmart (NYSE:WMT) and Hasbro (NASDAQ:HAS).
Source: Wall Street Horizon
Outlier Earnings Dates This Week
Academic research shows that when a company confirms a quarterly earnings date that is later than when they have historically reported, it’s typically a sign that the company will share negative news on their upcoming call while moving a release date earlier suggests the opposite.
This week we get results from a number of large companies on major indexes that have pushed their Q4 2024 earnings dates outside of their historical norms. Five companies within the S&P 500 confirmed outlier earnings dates for this week, three of which are later than usual and therefore have negative DateBreaks Factors*. Those names are Akamai Technologies (NASDAQ:AKAM), CF Industries Holdings (NYSE:CF) and (NASDAQ:TRMB). The two names with positive DateBreak Factors are ANSYS (NASDAQ:ANSS) and Insulet Corp (NASDAQ:PODD).
*Wall Street Horizon DateBreaks Factor: statistical measurement of how an earnings date (confirmed or revised) compares to the reporting company's 5-year trend for the same quarter. Negative means the earnings date is confirmed to be later than the historical average while Positive is earlier.
Akamai Technologies
Company Confirmed Report Date: Thursday, February 20, AMC
Projected Report Date (based on historical data): Tuesday, February 11, AMC
DateBreaks Factor: -3*
Akamai Technologies is set to report its Q4 2024 results on Thursday, February 20, nine days later than expected. By releasing results on February 20 they are not only reporting the latest that they have in a decade, but pushing into the 8th week of the year (WoY), when they typically report during the 7th WoY. This will also be the first time in at least ten years that they will report on a Thursday, bucking the long-term Tuesday trend.
ANSYS
Company Confirmed Report Date: Wednesday, February 19, AMC
Projected Report Date (based on historical data): Wednesday, February 26, AMC
DateBreaks Factor: 2*
ANSYS is set to report their Q4 2024 results on Wednesday, February 19, a week earlier than expected. While this adheres to their usual Wednesday reporting trend, it would be the earliest they’ve reported in at least ten years.
Q4 Earnings Wave
We are well into peak earnings season at this point, which started on February 3 and runs until February 28.
Currently, February 27 is predicted to be the most active day with 881 companies anticipated to report. Thus far, 74% of companies have confirmed their earnings date (out of our universe of 11,000+ global names), and 39% have reported results.
Source: Wall Street Horizon