The following research was contributed to by Christine Short, VP of Research at Wall Street Horizon.
During the Q3 earnings season we profiled 7 companies that had unusual earnings dates, and one that confirmed their earnings date late, which can serve as a foreshadowing of what an upcoming report might reveal, and therefore be an indicator of financial health. Sixty-percent of those companies’ stocks reacted as we expected, using the Wall Street Horizon DateBreaks Factor logic.* Below we review all seven names and how they performed in the 2-day post-earnings drift following their announcement.
Salesforce (CRM) – Followed Expected Logic
Historical Q3 Confirmation Date: November 3
Q3 2022 Confirmation Date: November 10
Confirmation Day Z-Score: 1.7
The Confirmed Date Factor captures to what extent the newly confirmed earnings date conforms to a company’s history or represents a significant outlier, whether notably earlier or later dates than past behavior. Wall Street Horizon findings show there is valuable information to be gained by analyzing Confirmation Timing events and has seen that firms reporting earlier than usual exhibit positive abnormal returns. Likewise, companies that confirm later than average typically exhibit negative abnormal returns.
For the Q3 season, Salesforce was uncharacteristically late in confirming their earnings report date. In recent years CRM has confirmed their Q3 earnings date around November 3, with a standard deviation of +/- 4.5 days. This year they confirmed on November 10, a week past their mean confirmation day.
Results:
While Salesforce reported Q3 results that surpassed expectations on both the top (actual: $7.837B, est: $7.827B**) and bottom-line (actual: $1.40, est: $1.22**), it was the announcement that co-CEO Bret Taylor was stepping down that spooked investors. This resulted in a price decrease of 4.7% in the 2-day post-earnings drift.*** The stock continued trending downward, with the 5-day post-earnings drift showing a slide of 14.3%.
NiSource Inc (NI) – Followed Expected Logic
Company Confirmed Report Date: Monday, November 7, BMO
Projected Report Date (based on historical data): Wednesday, November 2, BMO
DateBreaks Factor: -3*
NiSource crossed our radar ahead of their Q3 report with a confirmed earnings date that was outside of their historical range. NiSource typically reports Q3 results during the first week of November, and they have done so for the last 8 years. There is no day of the week trend, but over the last four years NI has reported on a Monday or Wednesday. The confirmed report date of November 7 was five days later than forecasted.
Results:
NiSource ended up missing EPS expectations (actual: $0.10, est: $0.11**) yet beating revenue expectations (actual: $1.09B, est: $1.02B**). The mixed results lead to an initial decline in the stock after the report, which trended down 2.8%*** in the 2-day post-earnings drift, only to improve slightly by 0.3% in the 5-day post earnings drift.
DuPont de Nemours (DD) – Followed Reverse Logic
Company Confirmed Report Date: Tuesday, November 8, BMO
Projected Report Date (based on historical data): Tuesday, November 1, BMO
DateBreaks Factor: -3*
DuPont historically has reported Q3 results during the last week of October or the first week of November on a Tuesday or Thursday. As such, a report date of November 2 was set. On October 20 DD confirmed an earnings report date of November 8, the latest they’ve reported third quarter results in our 7 year history for that name. This also continued the trend started last year of Tuesday reports, after regularly reporting on Thursdays.
Results:
DuPont beat both on the top (actual: $3.317B, est: $3.215B**) and bottom-line (actual: $0.82, est: $0.79**) in Q3, yet still posted YoY declines of 22% and 29%, respectively. The positive surprise on EPS can partially be attributed to the company buying back $5B in stock, driving EPS improvement. However, the better-than-expected results were enough to encourage investors to take the stock up 8.2%*** in the 2-day post earnings drift.
Becton, Dickinson & Company (BDX) – Followed Reverse Logic
Company Confirmed Report Date: Thursday, November 10, BMO
Projected Report Date (based on historical data): Thursday, November 3, BMO
DateBreaks Factor: -3*
Becton, Dickinson & Company typically reports their fiscal Q4 results during the first week of November, on a Tuesday or Thursday. On October 13 the company confirmed they would release results on November 10, their latest report date in our 10 years of BDX data.
Results:
BDX modestly surpassed earnings (actual: $2.75, est: $2.74**) and revenue (actual: $4.761B, est: $4.710**) expectations when they reported their fourth fiscal quarter. This resulted in the stock increasing 3.7%*** in the 2-day post-earnings drift.
Allegiant Travel Company (ALGT) – Followed Expected Logic
Company Confirmed Report Date: Wednesday, November 2, AMC
Projected Report Date (based on historical data): Wednesday, October 26, AMC
DateBreaks Factor: -3*
Allegiant typically reports Q3 results during the fourth week of October, and they have done so for the last 6 years. This is the first year since we began tracking Allegiant in 2013 that they reported Q3 results in November, suggesting the earnings call would contain bad news.
Results:
As Wall Street Horizon anticipated, profits for ALGT came in well below Wall Street estimates for Q3 (actual: -$0.54, est: -$0.47**). Even slightly better-than-expected revenues of $560.30M (vs est. $556.19**) couldn’t save the airline. Despite increased travel demand, higher costs significantly ate into the bottom-line. Investors took the stock down 1.9%***
AvalonBay Communities Inc. (AVB) – Followed Expected Logic
Company Confirmed Report Date: Thursday, November 3, AMC
Projected Report Date (based on historical data): Wednesday, October 26, AMC
DateBreaks Factor: -3*
Similar to Allegiant, AvalonBay typically reports Q3 results during the fourth week of October, and they have done so for the last 9 years. This is the first year since we began tracking AVB in 2013 that they reported Q3 results in November. This was also the first time they reported on a Thursday, historically favoring a Monday or Wednesday report day.
Results:
AvalonBay is a Real Estate Investment Trust (REIT), they are usually measured by their Funds From Operations (FFO) and not EPS. AVB announced FFO for Q3 came in at $2.50 per share, missing the $2.53** expectation. Revenues of $665.3M missed sell-side estimates by $1M. As a result, the stock ticked down 5.3%*** in the days after the report.
Halliburton (HAL) – Followed Reverse Logic
Company Confirmed Report Date: Tuesday, October 25, BMO
Projected Report Date (based on historical data): Tuesday, October 18, BMO
DateBreaks Factor: -3*
Halliburton had a strong Monday trend up until last quarter when they moved Q3 reporting to Tuesday. They typically report during the third week of October, but shifted to the fourth week this year, with October 25 being the latest they’ve reported Q3 numbers in our 10-year history. While this would normally signal bad news ahead for the company, it’s also important to note Halliburton just onboarded a new CFO in May of this year, the Tuesday report date and shift in week is likely due to that change in management.
Results:
HAL beat on both the top (actual: $5.357B, est: $5.342B**) and bottom-line (actual: $0.60, est: $0.56**) in Q3. Reports of better pricing leverage and improved supply-chain issues sent the stock up 7.7%*** in the 2-day post-earnings drift.
* 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 historical average while Positive is earlier.
**EPS and Revenue estimates provided by FactSet
*** Price change based on the highest or lowest point the stock reaches within the 5 days before and after reporting quarterly earnings results. Delta calculated from closing price.
For more information on the data sourced in this report, please email: info@wallstreethorizon.com
Wall Street Horizon provides institutional traders and investors with the most accurate and comprehensive forward-looking event data. Covering 9,000 companies worldwide, we offer more than 40 corporate event types via a range of delivery options from machine-readable files to API solutions to streaming feeds. By keeping clients apprised of critical market-moving events and event revisions, our data empowers financial professionals to take advantage of or avoid the ensuing volatility.
Christine Short, VP of Research at Wall Street Horizon, is focused on publishing research on Wall Street Horizon event data covering 9,000 global equities in the marketplace. Over the past 15 years in the financial data industry, her research has been widely featured in financial news outlets including regular appearances on networks such as CNBC and Fox to talk corporate earnings and the economy.
Twitter: @ChristineLShort
The author may hold positions in mentioned securities. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.
