The earnings season is a period when there could often be recapitulations and the exit of investors from erroneous assumptions. At present, it could only be said what effect the economic situation seems to be having on companies whose releases may have been surprising.
Market situation - financial results of companies
Already after the first week of financial results for the third quarter of this year, positive surprises in many companies could be experienced. In particular, it seems that companies in the banking sector, which could give an overall view of the sector's performance, performed well. According to John Butters, senior analyst at FactSet, “Through Friday, 20% of the companies in the S&P 500 had reported third-quarter results. Of these companies, 72% reported actual earnings per share, or EPS, above estimates, which is below the 5-year average of 77% and below the 10-year average of 73%, Butters said. In aggregate, companies are reporting earnings that are 2.3% above estimates, which is below the 5-year average of 8.7% and below the 10-year average of 6.5%."
Will Humana Inc. surprise again?
The Louisville-based U.S. insurer would probably surprise positively, according to the Zacks ranking. The ranking, conducted by the Zacks institute, conducts a meta-analysis of analysts' forecasts and, based on this, estimates likely surprises and their magnitude among analysts. It groups companies by ranking, where the best ones, to whose results analysts least agree, seem to have historically shown the biggest surprises after the earnings releases.
Among the companies with a high ranking and recommendation (buy) by the Zacks Institute is Humana Inc. (Humana), which continuously appears to be in a strong uptrend for quite some time. According to the institute's analysis, the company's projected Zacks EPS is 1.12 percent better than analysts' consensus, which now stands at EPS of 6.28 (previously 8.67). The company notoriously seems to have positively surprised analysts with its results for the past 7 years. We will see its earnings report as early as November 2.
Source: Mt5, Humana.cfd, Daily
The situation in the automotive market
After Tesla's (Tesla) relatively positive financial data in the face of worsening sector performance expected by most analysts, it appears to be a surprise. Still, the electric carmaker's shares don't seem to be factoring in the price.
As early as October 26, we will learn the financial results of Ford, whose projected EPS is 0.27 (previously 0.68). According to Zacks investment research, “Ford’s third-quarter results are likely to be boosted by an increase in sales volume. The Zacks Consensus Estimate for total wholesale shipments worldwide is pegged at 1,101,000 units, indicating an increase from 1,012,000 units in the year-ago period.", and "The Zacks Consensus Estimate for Ford’s to-be-reported quarter’s earnings and revenues is pegged at 29 cents per share and $37.3 billion, respectively. Ford surpassed earnings estimates in two of the trailing four quarters for as many misses, with the average surprise being 24.5%. ”(the average EPS profit deviation for this company was 24.5% compared to analysts' consensus). If these predictions turn out to be true, positive signals could be expected on the Ford (Ford) share price. Especially considering what seems to be already included in stock prices, i.e. negative factors in the form of rising costs and problems with the supply chain in the industry.
Source: Mt5, Ford, Daily
What else is on the stock market this week?
As it was mentioned in Friday's recap of the week, today's financial reports from Google (Alphabet), Apple (Apple), and Facebook (Facebook), among others, seem particularly important. Of particular interest for the last company would l be the results of the social media industry and their investment in the Metaverse project. Amazon, McDonald's, and MasterCard, among others, will report on Thursday, October 27.
Grzegorz Dróżdż, Junior Financial Markets Analyst Conotoxia Ltd. (Cinkciarz.pl investment service)
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