Best and Worst Performing S&P 500 Stocks on Earnings
While the average stock that has reported earnings this season has gone down 0.82% on its earnings reaction day, there have of course been some big winners. There are 27 stocks in the S&P 500 that have gained 5% or more on their earnings reaction days so far this season (which began on July 10th). These 27 stocks are listed in the table below.
As shown, Michael Kors (KORS) tops the list with a one-day gain of 21.54% that it saw on August 8th after earnings. Perrigo (PRGO) ranks 2nd with a gain of 15.78%, followed by Illumina (ILMN), Freeport-McMoRan (FCX), and Netflix (NFLX). Other notables on the list of earnings season winners include Boeing (BA), Verizon (VZ), Caterpillar (CAT), and AT&T (T).
One more thing — while these stocks saw huge gains on their earnings reaction days, they’ve on average declined by 2.28% since then. This means there hasn’t been much upside follow-through for the stocks that initially reacted the most positively to earnings.
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While there have been 27 S&P 500 stocks that have gained 5% or more on their earnings reaction days this season, there have been a lot more than have fallen 5% or more. Sixty-two in fact.
Below is a list of this season’s biggest losers in the S&P 500. Seagate Tech (STX) ranks at the top with a one-day drop of 16.5%, followed by Akamai (AKAM), Viacom (VIAB), and Interpublic (IPG). Other notables on the list of earnings season losers include Macy’s (M), Starbucks (SBUX), Under Armour (UAA), and Johnson Controls (JCI).
Above we pointed out that the biggest earnings season winners have seen no upside follow-through after their initial jumps. The biggest losers also haven’t seen any kind of bounce since their big drops. On average, the stocks below have fallen another 3.13% since the close on their earnings reaction days.
Stocks Selling Off Post Earnings
Nearly 2,500 companies have reported earnings since the current earnings season began, and the average stock that has reported has actually fallen 0.82% on its earnings reaction day. Notably as well is that stocks that have reported have continued to fall even after their initial earnings reaction day.
Below is a chart detailing this trend. As shown, companies that have beaten earnings estimates have averaged a small gain of 0.81% on their earnings reaction days this season. Companies that have missed EPS estimates have gotten hit hard, however, with a one-day drop of 3.61%.
Once the initial earnings reaction day passes, investors have been hitting the “Sell” button, regardless of whether the company beat or missed. While stocks that have beaten EPS have averaged a small gain on their earnings reaction days, they’re down an average of 2.63% since then. That’s actually worse than the average decline of 2.02% that stocks that have missed EPS estimates have seen since their earnings reaction days.
There’s been lots of commentary about this being the strongest earnings season in years in terms of actual earnings growth. But based on how stock prices have been reacting to their earnings reports, it looks like that strength was fully priced in well in advance of the start of the third quarter.
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US Equity Share Continues to Drop
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We continue to monitor the drop in the share of world market cap that the US stock market makes up. It has been falling like a rock all year, and it dipped another 46 basis points since the start of August.
Below is a chart showing the US’ % of world stock market cap going back to 2003 (blue line). We’ve also overlaid a chart of the S&P 500 over the same time period. There’s lots to glean from the historical trend going back to the turn of the millennium, but we want to focus on the last two years. As you can see, even though the S&P 500 has blown out to new all-time highs on a regular basis since the end of 2016, the country’s share of total stock market cap has been falling. The reasons? Other countries have seen their stock markets perform even better than the US, and the US Dollar has been falling.
While President Trump can claim that the stock market has done exceptionally well since he was elected, he’s actually overseen a huge loss in the US’ share of total world stock market cap. When grading a Presidency, you could argue that the latter is actually more important.
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The Closer – 8/10/17 – Still the Calmest Year Since 1973
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Two days ago on our blog site, in a post titled “What a Difference Less Than Three Months Can Make,” we showed a chart of how quickly the Brazilian Ibovespa recovered from the late May sell-off related to corruption charges against President Temer. In referencing the quick turnaround, we noted that, “The sell-off and subsequent rebound in Brazilian equities serve as an excellent reminder of how quickly sentiment can change in the market for both the good and the bad.” We went on to point out that, “as good as things seem today, it wouldn’t take a lot to have investors looking at the markets from an entirely different perspective.” And that’s exactly where we are today. With a 1% decline in the S&P 500 and a 2% decline in the Nasdaq, investors are looking at equities from a much different perspective today than they were just a couple of days ago.
Let’s take a look at the Nasdaq first. After running into resistance at its uptrend channel in late July, it’s the bottom end of that channel that’s coming into play this week. It will be a big test in the coming days to see if this channel can hold, and bulls have their fingers crossed.
In tonight’s Closer sent to Bespoke Institutional clients, we go into more detail on Thursday’s decline and what current trends suggest for the year ahead.
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Bespoke’s Sector Snapshot — 8/10/17
We’ve just released our weekly Sector Snapshot report (see a sample here) for Bespoke Premium and Bespoke Institutional members. Please log-in here to view the report if you’re already a member. If you’re not yet a subscriber and would like to see the report, please start a 30-day trial to Bespoke Premium now.
Below is one of the many charts included in this week’s Sector Snapshot, which shows that the S&P 500 and six sectors are now below their 50-day moving averages (black vertical “N” line). Four of those six sectors are now in oversold territory as well after today’s 1.4% sell-off.
To see our full Sector Snapshot with additional commentary plus six pages of charts that include analysis of valuations, breadth, technicals, and relative strength, start a 30-day free trial to our Bespoke Premium package now. Here’s a breakdown of the products you’ll receive.
ETF Trends: International – 8/10/17
Chart of the Day: Streaks Are Made to Be Broken
Short Interest Report – 8/10/17
Short interest figures for the end of July were released after the close on Wednesday, so we have just updated our regular report on short interest trends for the market, sectors, and individual stocks for clients. Below we wanted to quickly highlight the stocks with the highest levels of short interest as a percentage of float. The list below shows the 16 stocks in the S&P 1500 that have more than 40% of their free-floating shares sold short. Through early Thursday, the 16 stocks listed below were getting slaughtered with an average decline of 7.7% (median: -4.47%) compared to a decline of 0.78% for the S&P 1500.
Of the 16 names listed, just four stocks are up so far this month, and none of them are up even 5%. To the downside, there is no shortage of big losers with six stocks down more than 10%, including Applied Optoelectronics (AAOI) and Lannett (LCI) which are both down more than 20% in less than eight trading days. If there is one trend that has been constant nearly all year it is that holding stocks with high short interest has been a recipe for big losses.
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Jobless Claims Slightly Higher Than Expected
Jobless claims this week came in slightly ahead of forecasts rising to 244K compared to consensus expectations of 240K. While the report was a bit weaker than expected, it was still the 10th straight week where claims were at or below 250K and the 127th straight week where claims have been below 300K. To find similar streaks, you have to go all the way back to 1973.
Although claims increased this week, the four-week moving average dropped from 242K down to 241K. That puts the reading within 6K of the multi-decade low of 235.5K from mid-May. That said, given the numbers that will be dropping off in the next couple of weeks, there is pretty much zero chance that we make a new low in the four-week moving average anytime soon.
On a non-seasonally adjusted (NSA) basis, jobless claims increased from 198.8K up to 211.7K. For the current week of the year, however, that is nearly 100K below the average of 309.7K for the current week of the year dating back to 2000. In fact, in the history of the weekly jobless claims data going back to 1968, there has never been an NSA print for the current week of the year that was lower. That’s pretty solid!
the Bespoke 50 — 8/10/17
Every Thursday, Bespoke publishes its “Bespoke 50” list of top growth stocks in the Russell 3,000. Our “Bespoke 50” portfolio is made up of the 50 stocks that fit a proprietary growth screen that we created a number of years ago. Since inception in early 2012, the “Bespoke 50” has beaten the S&P 500 by 46.5 percentage points. Through today, the “Bespoke 50” is up 123.8% since inception versus the S&P 500’s gain of 77.3%. Always remember, though, that past performance is no guarantee of future returns.
To view our “Bespoke 50” list of top growth stocks, sign up for Bespoke Premium ($99/month) at this checkout page and get your first month free. This is a great deal!
