The following research was contributed to by Christine Short, VP of Research at Wall Street Horizon.
Corporate Earnings This Week – Executive Summary:
– Traders are casting aside macro issues and focusing on strong U.S. corporate earnings as reporting season winds down
– We feature two companies with later than usual earnings dates that have underperformed a surging stock market in recent months
– A well-known American brand that has been a beneficiary of the work (and snack) from home trend caught our eye with its earnings date revision earlier this month
Earnings Outliers
eHealth, Inc (EHTH) is a $1.2 billion market cap health insurance agency within the Financials sector. As consumers begin ramping up holiday shopping, individuals and families must also compare health care plans. Many people who do not have access to a policy through an employer can look to eHealth for an easy online comparison of private plans. Retirees, in particular, can peruse eHealth’s Medicare offerings.
A 2021 Loser
While the broad U.S. stock market notches new all-time highs day after day it seems, shares of EHTH have been abysmal over the last year. The stock has lost more than a third of its value in the last 52 weeks. Not surprisingly, there has been a shakeup in the firm’s C-suite.
Executive Changes
On September 20, the company appointed a new CFO. Just three days later, eHealth issued a press release detailing more executive changes including a new CEO and Chair of the Board.[ii] Investors greeted the news with enthusiasm as the stock price jumped more than 10% in the two trading days after the announcement. Will the optimism persist through Monday’s unusual earnings date?
Outlier Analysis
eHealth usually reports Q3 earnings from October 22 to October 26 with a strong Thursday trend.
- July 30 – Wall Street Horizon set an unconfirmed earnings date of October 28 based on that trend.
- October 19 – EHTH announced it would report Monday, November 8 BMO.
The Confirmed earnings date is much later than normal and does not fall on a Thursday. The outlier could be due to a change in CEO that was announced effective November 1. The resulting earnings date Z-score is 5.6. A later than average earnings report often signals the possibility for bad news. Additionally, eHealth will speak at the Credit Suisse 30th Annual Healthcare Conference to be held November 8-11.[iii] This small cluster of corporate events could draw share price volatility.
Yamato Holdings Co., LTD (9064.JP) is a logistics firm headquartered in Tokyo. It is a ¥1.04 trillion market cap ($9 billion) and is listed on the Nikkei 225 index. Comparable to a U.S. Industrials sector stock, Yamato has struggled since the summer amid supply chain issues and rising energy prices.
Innovating Transport Operations
Yamato is getting creative with its delivery methods. Last month, the firm announced it was exploring drug delivery by drone to elderly residents.[iv] An aging population in Japan could be an opportunity for Yamato. Elderly citizens and those in rural communities might prefer to stay home rather than venture out to a pharmacy.
Shares of Yamato have sharply underperformed its U.S. counterparts in the last three months as the Dow Jones Transportation Index surged to all-time highs in recent days.
Outlier Analysis
Yamato normally reports Q2 earnings between October 30 and 31. On September 22, however, the company confirmed via the stock exchange that it would report on November 12. The report—two weeks later than expected—resulted in one of the biggest earnings date Z-score we have seen in recent years (26.4). That is a major red flag.
Earnings Revision
We wrap up this week’s Event Data Outlook with a treat. Hostess Brands, Inc. (TWNK) is a household name in the Consumer Staples sector and it trades on the Nasdaq exchange. Shares of the $2.5 billion market cap firm have provided a sugar high for the bulls as the stock price climbed from near $15 in August to just shy of $20 in recent days. The last year has featured a nearly 50% share price rise.
An Optimistic Outlook
The Kansas-based snacking company has been a beneficiary of the trend in families spending more time at home. Moreover, higher prices at the gas pump and labor shortages at restaurants might prompt families to prefer to eat and snack at home in the coming months. Executives at Hostess are optimistic—the CEO and CFO presented at the Barclays Global Consumer Conference 2021 in September and reiterated higher earnings guidance. During the event, TWNK said it is targeting M&A opportunities in macro-snacking segments.
Revision Analysis
Hostess has a history of reporting Q3 earnings between November 5 and November 8.
October 20 – We updated its Q3 2021 earnings date to November 3 AMC Confirmed per a company press release.
November 2 – Hostess issued a press release rescheduling its earnings date to November 9 AMC Confirmed. No explanation for the earnings date push back was given, however.
Watch out for a “zinger” of a report. The later-than-usual earnings date should caution investors. The 6-day delay results in a Z-score of 1.7.
Conclusion
It continues to be another banner earnings season for corporations. Profit margins are running high as many employees work from home. Macro issues such as inflation fears and supply chain disruptions, while making dramatic news stories, seem to be cast aside as firms report record earnings. So far this reporting season, companies that miss analysts’ EPS estimates have exhibited high volatility and heavy selling, however. Wall Street Horizon’s fast and accurate earnings date coverage provides traders clues on where future volatility may lie.
Sources:
[i] https://stockcharts.com/h-sc/ui?s=_EHTH&p=D&yr=1&mn=0&dy=0&id=p07457465044
[ii] https://news.ehealthinsurance.com/news/ehealth-announces-leadership-transition
[iii] https://www.credit-suisse.com/microsites/americas/annual-healthcare-conference/home.html
[iv] https://akihabaranews.com/yamato-explores-drug-delivery-by-drone/
[v] https://www.wsj.com/market-data/quotes/JP/XTKS/9064/advanced-chart
[vi] https://stockcharts.com/h-sc/ui?s=_TWNK&p=D&yr=1&mn=0&dy=0&id=p82297828692
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.
