Friday
Feb062015

Best and Worst Performing Stocks on Earnings This Season

The average stock that has reported earnings this season has gained on the first trading day following its report.  We've seen a lot of huge moves higher this season, though.  Below is a list of the 40 stocks that have reacted the most positively to their earnings reports this season.  As shown, Glu Mobile (GLUU) has posted the biggest one-day gain at +30.73%, followed closely by K12 (LRN) at +30.32%.  

A number of Tech companies that were pretty down in the dumps heading into this earnings season have seen huge gains following their reports.  A few on the list below include Netflix (NFLX), Tableau Software (DATA), Twitter (TWTR) and Amazon.com (AMZN).  Another Tech stock on the list that we've been positive on based on our Pulse survey work is LinkedIn (LNKD) -- See page 49 of our December report.  Following its report last night, LNKD is up 14% today -- trading to a new all-time high.

There are 61 stocks that have traded up more than 10% on their earnings reports this season, but there are 50 that have traded down more than 10% as well.  Below is a list of the companies that have gotten hit the hardest on earnings this season.  Topping the list is Rentrak (RENT) with a one-day decline of 36.93%.  Hawaiian Holdings (HA) ranks second worst at -26.97%, followed by QuickLogic (QUIK) in third with a loss of 25.26%.  Other notables on the list of losers include Deckers Outdoors (DECK), YELP, Ralph Lauren (RL), KB Home (KBH), Travelzoo (TZOO), and Expedia (EXPE).

Interested in more earnings season analysis?  Sign up for a 5-day free Bespoke Premium trial and check out our Bespoke Report newsletter when it's published this evening.  We'll have a multi-page section on earnings in this week's report.

Friday
Feb062015

Strong Jobs Move Forward Rate Hike Expectations

This morning the Employment Situation Report showed one of the strongest months for the jobs market in the United States in over a decade.  While headline jobs created (Nonfarm Payrolls) beat expectations but weren't a blowout, there were strong upward revisions to prior months, showing that payroll growth continues to accelerate.  The unemployment rate jumped, but did so because the labor force participation rate jumped by 0.2% as Americans surged into the labor force, seeking out higher paying jobs.  To that end, average hourly earnings jumped 0.5% month-over-month, coming in at 2.2% year-over-year versus 1.9% expected and a paltry 1.7% year-over-year last month; there were also upward revisions to the prior month's disappointing wages data.

Overall, the strong report and continued labor market momentum suggest that the Fed's indicated plan to raise rates some time this year is not only on-course, but may in fact have to be pushed up from the baseline assumptions in the market of Q4.  As of yesterday, our Countdown To Liftoff estimate of a likely rate hike date based on the Fed Funds futures market suggested as it had for several weeks that the FOMC would raise rates late in the year, in either September or December, with a slant towards December.  Our index now suggests a rate hike one month earlier, reading October as the month most likely for a hike, declining 1 month day-over-day.  Since the likely scenario is a Fed Funds rate increase at a meeting with a press conference (September or December) we interperate this as the market expecting an increased likelihood of a hike in September.

Thursday
Feb052015

Countdown To Liftoff Stable Ahead of NFP

Ahead of the BLS's release of the Employment Situation Report at 8:30 AM tomorrow morning (featuring the critical Nonfarm Payrolls reading), Bespoke's Countdown To Liftoff measure of the months remaining until a Fed hike is showing a very stable reading.  With a large selloff in bonds taking place over the last week (ten year yields have moved higher in yield by 18 bps in four sessions, while long bonds have seen yields rise 21 bps in the same period) the Fed Funds futures market is roughly unchanged, still predicting a hike some time in November.  For practical purposes, that means December, as there is no Fed meeting in November.

Thursday
Feb052015

A January Fast Food Slowdown

With our monthly Consumer Pulse report, we survey a statistically significant sampling of 1,500 US consumers on a range of financial and economic topics.  One question looks at the fast food space -- asking survey participants if they have visited a variety of chains over the past month.  This gives us a good idea of month-to-month traffic trends for the space.

Below are the results for fast-food store visits from our January Pulse report.  As shown, McDonald's (MCD) is unsurprisingly in the top spot with 47.1% of respondents.  However, that's down from a reading above 50% in November.  Starbucks (SBUX) ranks second with 31.2% of participants visiting the store within the past month.  Taco Bell, Wendy's and Burger King round out the top five.

At 15.3%, Dunkin Donuts (DNKN) gets about half the visits that Starbucks gets.  Chipotle (CMG) is right up there with Dunkin Donuts, and it's ahead of Pizza Hut, KFC, Sonic, Jack in the Box, Popeye's and Denny's.  Also, Chipotle is one of the only chains that saw a month-over-month increase in foot traffic from December to January.  We know Chipotle just got hit hard yesterday following earnings, but the company continues to grow its brand nicely.

Along with survey analysis on specific companies and areas of the market, our monthly Consumer Pulse report also monitors trends in the broad US economy including the state of employment.  In this regard, our just-published January Pulse report is a great read ahead of Friday’s non-farm payrolls number.  To view the full survey report, sign up for a 5-day free trial to Pulse today.  Enter “pulseblog” in the coupon code section of the Pulse subscribe page to receive a 10% discount on your new membership!

Thursday
Feb052015

Bulls Retreat; Stocks Rally

Well, it looks like the market's recent volatility may be finally making its presence felt in the sentiment of individual investors.  According to the weekly survey from the American Association of Individual Investors (AAII), bullish sentiment dropped to 35.5% this week from last week's reading of 44.17%.  This week's reading is the lowest level of bullish sentiment that we have seen since early October.  Given the drop in bullish sentiment, it's ironic that the S&P 500 is having one of its best weeks of the year.

While bullish sentiment fell this week, bearish sentiment spiked ten percentage points from 22.4% up to 32.4%.  This was the largest one-week increase for bearish sentiment in thirteen months, and is the highest weekly reading since 10/16.

Thursday
Feb052015

Jobless Claims Better Than Expected Again

Jobless claims for the latest week came in better than expected for the second straight week, partly reversing the recent trend of four straight weeks where weekly claims were higher than expected.  While economists were forecasting claims to come in at a level of 290K, the actual reading came in at 278K.  This week's reading was an uptick of 11K from last week, but considering the fact that last week's reading was the lowest reading of the expansion, that is not a very big deal.

Even after this week's increase in claims, the four-week moving average dropped by 6.5K down to 292.75K.  This is because last week's weekly reading was such a large decline, so we are still dropping much larger numbers from the four-week count.  In fact, unless weekly claims rise above 317K next week, the four-week moving average will drop once again.

On a non-seasonally adjusted basis (NSA), weekly claims rose by 23.8K.  While this is a larger increase than the seasonally adjusted increase, we would still note that for the current week of the year NSA claims are well below their historical average (since 2000) of 413.8K.  It was also the lowest reading for the current week of the year since at least 2000.

Wednesday
Feb042015

Weak Guidance, But Investors Are Buying on Earnings

Last Friday we noted that forward guidance so far this earnings season has been as bad we've seen since the depths of the financial crisis.  Don't tell that to investors, though, because they've been bidding stocks higher on their earnings report days.  Since the start of earnings season, the average one-day change in reaction to earnings (for companies that report after hours, we use the next day's change) for the 750+ stocks that have reported has been +0.43%.  That's a solid reading, especially with the S&P 500 flat since earnings season began.  As shown below, if the gains continue through the end of earnings season in mid-February, it will be back-to-back quarters where stocks have gone higher in reaction to earnings.  Prior to last earnings season, we'd had two earnings seasons where stocks reacted very negatively to their reports.  

So how has the +0.43% average gain on earnings this season been achieved?  Well, typically you see a stock make the majority of its earnings move in after hours or pre-market trading right after the earnings report has been released.  This means that if you didn't own the stock heading into its earnings report, you likely won't be able to take part in the big gain (or loss) that occurs due to the earnings news.  This earnings season, however, the average stock has moved more during regular trading hours than it has outside of trading hours.  As shown below, the average stock that has reported has opened higher by 0.09% following its earnings report, then it has averaged an additional gain of 0.34% from the open to the close of trading for a full day's change of +0.43%.  It looks as if investors are in more of a "wait and see" mode this season, waiting to buy until after earnings are released if the results are to their liking.

Looking for more earnings season analysis?  Sign up for a 5-day free Bespoke Premium trial today.

Wednesday
Feb042015

ISM Non Manufacturing Rebounds Modestly

After a weak report in December, where the headline reading came in weaker than expected and all ten components declined for the first time in the history of the report, January's release of ISM Non Manufacturing saw a slight improvement from December.  While economists were expecting a reading of 56.4 in the headline index, the actual level was slightly better at 56.7.

The table below breaks out this month's report based on each of the report's individual sub indices and shows their change over the last month and year.  Relative to last month, breadth improved this month as the sub indices were evenly split between month over month increases and declines.  Of the components that saw increases this month, the biggest gain was in Business Activity which increased 2.9 points from 58.6 to 61.5.  On the downside, the biggest declines came from Prices and Employment.  The decline in Employment was the largest one month decline since last February, and would seem to not bode well for this Friday's Non Farm Payrolls report.   

The chart below shows the Employment component of the ISM Non Manufacturing report since 1997.  After hitting a nine-year high of 58.3 in October, this component has dropped for three straight months to its current level of 51.6.  This is the largest three month decline for the component since December 2008.  One key difference between now and then, however, is the fact that in December 2008, the Employment index was in the mid-30s, which is a level indicative of sharp contraction.  Today, the component is still above 50, which is indicative of growth, albeit not as brisk as it was a few months ago.

 

Wednesday
Feb042015

Apple's (AAPL) Smartphone Dominance

Smartphones are a key area of interest in our survey work at Bespoke Market Intelligence.  On a quarterly basis, we run a detailed survey on Apple and its competitors to look for ahead-of-the-curve product trends.  In our monthly Consumer Pulse survey of 1,500 US consumers, we also ask questions about smartphones to track the Apple vs. Samsung battle for dominance.  One of the questions we ask smartphone owners in our monthly Pulse survey is which brand of phone do they plan to purchase next.  This helps identify retention rates for the various smartphone makers.  As shown below, Apple (AAPL) is dominating in this regards, with 50.9% of smartphone owners planning on purchasing an Apple smartphone next.  Samsung ranks second at 31.8%, followed by LG way down at 5.6%.

The key to recent results is the expanding lead that Apple has taken over Samsung over the past three months.  Back in November, Apple’s lead was much less than it is now, which indicates that the larger iPhone screens to rival Samsung models have really provided Apple with a boost.  Tim Cook gave consumers what they wanted, and as evidenced by the company’s most recent quarterly results, it has paid off so far.

Along with survey analysis on specific companies, our monthly Consumer Pulse report also monitors trends in the broad US economy including the state of employment.  In this regard, our just-published January Pulse report is a great read ahead of Friday’s non-farm payrolls number.  To view the full survey report, sign up for a 5-day free trial to Pulse today.  Enter “pulseblog” in the coupon code section of the Pulse subscribe page to receive a 10% discount on your new membership!

Wednesday
Feb042015

Oil Inventories Continue to Swell

Crude oil inventories for the latest week continued to swell, and for the fourth straight week came in well ahead of consensus forecasts.  While traders were expecting crude oil stockpiles to increase by 3.25 million barrels, the actual build was nearly twice that at 6.333 million barrels.  The chart below compares current inventory levels to average levels for the last ten years as well as going back to 1983.  Anecdotally, the recent ballooning of crude oil inventories has caused us to have to increase the upper range of our y-axis for three straight weeks now!  As the lower chart illustrates, crude oil inventories are currently 88 million barrels above average for this time of year, which works out to about 27% in percentage terms. 

In order to fully grasp the magnitude of the recent builds in crude oil inventories, we would note that over the last four weeks total stockpiles have increased by 30.667 million barrels.  The chart below shows the rolling four-week changes in US crude oil inventories going back to 1983.  As shown, at no other point in the last 32 years have crude oil inventories seen a bigger increase over a four-week period.

Wednesday
Feb042015

Commodity Prices Falling in Non Manufacturing Sector Too

Following Monday's release of the ISM Manufacturing report for January, we noted the net number of commodities rising in price in January fell to its lowest level since December 2008.  In this morning's release of the ISM Non Manufacturing report, we didn't see nearly as large a drop in the number of commodities rising in price, but it was still weak.  Companies in the services sector saw price increases in seven different commodities, and increases in ten.  This is a slight decline compared to December, but nowhere near the severity of the declines in the manufacturing sector.

The chart below compares the three-month moving average of the net number of commodities rising in price in the ISM Non Manufacturing report to the year over year change in the CPI.  As we mentioned in our post on the ISM Manufacturing report, the two series have tracked each other very closely over the last several years, suggesting further downside risk in headline inflation readings.

In the chart below, we have taken the results of the commodities surveys from both the ISM Manufacturing and Non Manufacturing reports and combined them into an overall ISM commodities reading.  Based on the results of both surveys, companies saw price increases in nine commodities in January and declines in 33.  This works out to a net of negative 24 (lowest since December 2008), taking the three month average down to -14.33 (lowest since April 2009).  

Wednesday
Feb042015

Macy's Shines in January Store Visits

Even though Macy's (M) is trading down this morning, the company just pre-announced higher-than expected 2015 earnings after the close yesterday.  Interestingly, our monthly Consumer Pulse survey has identified big strength in Macy's over the last few months at least in terms of foot traffic.  Each month, we survey a statistically significant sampling of US consumers on various economic and market trends, and one of the questions we ask participants is whether they have visited a number of different department stores over the past month.  We ask this question to track the trends in publicly traded department stores.

As shown below, most department stores saw the obvious pick-up in foot traffic that you would expect during the holiday season, but Macy's saw one of the biggest jumps.  Macy's was also the only store that saw in increase in foot traffic from December to January.  Our January reading also put Macy's ahead of Kohl's as the most visited store over the past month. 

While this data alone doesn't mean investors should rush out to buy Macy's stock, it does act as confirmation of the strong guidance Macy's just pre-announced.  It will be interesting to see if Macy's holds onto the foot-traffic lead when our February Pulse report is released at the end of this month.

Interested in seeing our entire Consumer Pulse Survey?  Sign up for a free Pulse trial to access our just-published January Pulse report.  Enter "pulseblog" in the coupon code section of the Pulse subscribe page to receive a 10% discount on your new membership.

Wednesday
Feb042015

Bespoke CNBC Appearance (2/4/15)

Bespoke's Paul Hickey appeared on CNBC's Fast Money on Tuesday (2/3/15) to discuss trends among S&P 500 companies reporting earnings based on their revenue exposure to international markets.  To view the segment, click on the image below.

Tuesday
Feb032015

Ford Truck Sales Rebound in a Big Way

After several months where sales were negatively impacted by consumers awaiting the new revamped F-150 truck, sales of Ford trucks rebounded in a big way in the month of January.  In the first month of 2015, Ford announced sales of 54,370 F-series trucks, representing a 17% increase versus of January of last year.  This was the highest reading for the month of January since 2004 and the eighth highest reading for the month of January since 1996.  Sales of pickup trucks are often a sign of strength or weakness in the small business and construction sectors as these types of businesses are the most common users of these vehicles.  While much of this month's strength is likely attributable to pent up demand from consumers waiting for the new model of the F-150 to be released, it helps to alleviate fears that the weakness we saw in prior months was related to a slowdown in the economy.

Tuesday
Feb032015

A Look at the Year's Best and Worst

The average stock in the Russell 3,000 is down 1.89% so far in 2015.  Below is a look at the average YTD performance of Russell 3,000 stocks by sector.  Interestingly, Energy sector stocks are actually outperforming year-to-date through this morning, averaging a decline of just 1.31% so far this year.  Industrials and Materials stocks have been the real underperformers -- falling an average of 3.8% YTD.  Technology ranks third worst with an average decline of 2.63%.  

Two sectors have seen their stocks average gains so far this year -- Utilities (+3.07%) and Health Care (+0.66%).  The outperformance of Health Care and Utilities in 2015 is a continuation of what we saw in 2014.

Below is a look at the 35 best performing stocks in the Russell 3,000 so far in 2015.  As shown, just one stock -- Foundation Medicine (FMI) is up more than 100%, while six are up more than 50% -- AINC, ZIOP, FWM, BEBE, EGLT, ARRY.  There aren't many household names on the list of 2015's top performers, but two of the most notable ones are Netflix (NFLX) and Newmont Mining (NEM).  Other names on the list you've probably heard of include gun-maker Smith & Wesson (SWHC), MarineMax (HZO), Tilly's (TLYS), Pacific Sunwear (PSUN) and El Pollo Loco (LOCO).

Five stocks in the Russell 3,000 are down more than 50% year-to-date already, while 37 are down more than 30% YTD.  FXCM is the worst with a huge decline of 88%, followed by Harvest Natural Resources (HNR) and Ocwen Financial (OCN).  Other notables on the list of losers include LeapFrog (LF), Stratasys (SSYS), AK Steel (AKS), Travelzoo (TZOO) and Weight Watchers (WTW).

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