Earnings Potpourri – Monday Morning Market Memo – May 4, 2020

Earnings Potpourri – Monday Morning Market Memo – May 4, 2020

Good morning,

We are in the heart of earnings season, and last week was filled with reports from many of the world’s largest companies. Looking at some notable names and individual movers:

3M stock rose after the company Post-it earnings and revenues that were above consensus estimates; PepsiCo shares gained a bit after investors liked the “taste” of their earnings and revenues numbers; United Parcel Service stock fell approximately 6% after delivering a miss on earnings; Alphabet shareholders found what they were searching for when the stock jumped 9% after reporting a beat on the top line; Facebook shareholders were smiling as investors liked their better-than-expected revenues….

In what were perhaps the two most anticipated and widely followed reports, Amazon.com shares were discounted after the company said it will spend its profits from the second quarter on responding to the coronavirus pandemic, and Apple finished slightly in the red even though their earnings were ahead of expectations. Looking at a lower tech company, Clorox reported a clean beat on both earnings and revenues as demand surged for its namesake bleach (and other cleaning products). Away from individual companies and looking at the “scoreboard” as a whole….

For the first quarter of 2020, with 55% of the companies in the S&P 500 reporting actual results, 65% of S&P 500 companies have reported a positive EPS (earnings per share) surprise, which is below the 5-year average of 73%, according to data from FactSet.

Normally during earnings season, the guidance companies provide is often more important than their reports on a quarter that is already behind us. Currently though, the new reality is that many companies are not providing forward guidance due to the fact there is too much uncertainty regarding the path/curve/outcome of the pandemic. Bottom line, this is not a normal earnings season.

As always, feel free to contact us with any questions you may have or if you would like to set up a meeting.

All the best – Southport Station Financial Management, LLC