Earnings are the heartbeat of the market - and every week brings a fresh set of opportunities and risks. With each report, we get new information about corporate health, investor sentiment, and the sectors driving leadership (or lagging).
In the Weekly Beat, we spotlight the most important earnings reactions from the prior week - the winners, the losers, and the surprises that moved markets. Then we shift our focus forward, breaking down the biggest setups and expectations for the week ahead.
Whether itβs mega-cap leaders, niche growth stories, or the sectors most tied to the economy, weβve got you covered on what traders need to know right now.
Despite reporting a double beat Adobe $ADBE had its fifth consecutive negative earnings reaction. The stock is flirting with the resolution of a massive distribution pattern.
The company's revenue reached a new all-time high, and their new AI products are growing much faster than anticipated. Moreover, the management boosted its forward guidance after this quarter. All of this amazing news, yet the stock looks terrible? It doesn't get more bearish than this!
There were no S&P 500 earnings reactions on Monday, but since we were in Toronto, we wrote about Agnico Eagle Mines $AEM, Canada's largest Gold miner. Their corporate HQ was a two minute walk from our hotel!
The stock has one of the strongest absolute and relative uptrends in its industry. When we wrote about it, the price was in a high and tight bullish continuation pattern. This was authoritatively resolved on Friday.
There were no S&P 500 earnings reactions on Tuesday so we wrote about one of the hottest technical and fundamental growth stocks in the market, Amprius Technologies $AMPX.
Over the past 12-months, the company has more than doubled sales, and the market has rewarded shareholders with more than 900% over the same period. After we wrote about AMPX, the price popped over 30%.
Following a double beat, one of the largest packaged foods stocks, General Mills $GIS, fell nearly 1%. The GLP-1 boom is hurting their business and the market is punishing shareholders for it.
The price is at a key level of interest, which marked the 2018 peak and 2020 lows. Will polarity save the stock, or are the bears about to attack again?
After reporting mixed headline results, the $22B restaurant chain, Darden Restaurants $DRI, suffered a nearly 8% decline. This negative post-earnings reaction snapped a 3-quarter beat streak.
FactSet Research Systems $FDS crashed over 10% after a mixed earnings report for its worst earnings reaction since 2012. Additionally, the stock had its worst week since 2000.
What's happening next week π
Next week, we'll be focusing on the fifth-largest semiconductors company, Micron $MU. It has been a laggard versus its peers, but the price is breaking out to fresh all-time highs ahead of its report. Does the market know something we don't?
Beyond MU, weβll also be watching:
The retail giant, Costco $COST.
One of the best secular uptrends in the market, Autozone $AZO.
And the California-based homebuilder, KB Home $KBH.
In addition, we'll hear from the struggling consulting firm, Accenture $ACN, the electronic component producer, Jabil $JBL, and the provider of corporate uniforms, Cintas $CTAS.
It'll be on the slower side in terms of new earnings reactions, but we'll provide you with all the information you need at The Daily Beat.
Now, letβs dive into the top setups heading into next week.
Here's the setup in MU ahead of Tuesday's earnings report π
Micron Technology is expected to post $11.16B in revenue and EPS of $2.81 after Tuesday's closing bell.
Heading into the report, the price is breaking above last summer's peak, printing fresh all-time highs. It's doing so with authority - the 14-day RSI recently hit 86, indicating an extreme demand for the stock.
So long as MU holds the breakout above 158, the path of least resistance is likely to remain higher for the foreseeable future.
Here are the past 3 years of earnings results & reactions for MU π
Over the past three years, Micron Technology has consistently smashed Wall Street's headline expectations, but has been punished for it several times.
In 2024, the stock rallied by more than 14% on two separate occasions, marking its best earnings reactions of the 21st century. However, the bulls were unable to follow through after both instances with positive post-earnings reactions in the subsequent quarters.
The past three quarters have been beat / beat/ drops, which is the market's way of telling us it doesn't like the fundamental story with this company right now.
Despite the bullish technical outlook we highlighted previously, these consistent negative earnings reactions make us hesitant to buy the base breakout.
A positive earnings reaction this week would change our tone entirely, and we would be buyers of a gap-n-go type move.
Here's the setup in COST ahead of Thursday's earnings report π
Costco Wholesale is expected to post $86.08B in revenue and EPS of $5.80 after Thursday's closing bell.
Ahead of the call, the price is climbing down the right-hand side of a prolonged potential distribution pattern.
While still one of the strongest names in its industry over the long term, the short-term weakness is undeniable. We see no evidence to suggest that this is about to change.
After rallying over 150% from the low in 2022 to the high earlier this year, this digestion of gains is well-deserved.
So long as COST holds above 920, the path of least resistance is likely to remain sideways for the foreseeable future. A close below that level would mark the beginning of a new short to intermediate-term downtrend.
Here are the past 3 years of earnings results & reactions for COST π
Over the past three years, Costco Wholesale has consistently grown its top and bottom lines and exceeded the market's headline expectations.
However, the reactions have been anything but consistent. The past seven post-earnings reactions have been the following: rally, drop, rally, drop, rally, drop, rally. This reinforces the range-bound price action we've seen recently.
The bottom line is that COST is one of the most important consumer stocks, and it's taking a breather at the moment.
We have no conviction trading this stock in either direction until this range is decisively resolved.
Here's the setup in AZO ahead of Tuesday's earnings report π
Autozone is expected to post $6.25B in revenue and EPS of $50.73 before Tuesday's opening bell.
Prior to the report, the price is finding stiff resistance at a key Fibonacci extension level. This short-term downtrend suggests the post-earnings move will be in the same direction.
This company and O'Reilly Automotive $ORLY are the two bellwethers of the auto parts industry, and sport some of the sweetest secular uptrends in the market. They don't have bear markets like most stocks... They just grind higher, slow and steady.
We think AZO is likely to retest the shelf of former highs from this year following this earnings report before resuming the long-term primary uptrend.
Here are the past 3 years of earnings results & reactions for AZO π
Over the past four quarters, Autozone has consistently missed Mr. Market's headline expectations and been punished for it. We think that's likely to happen again this quarter.
Additionally, the bottom-line growth has been decelerating over the past three quarters, adding to the short-term bearish case.
As you can see, the pre- and post-earnings drift is almost always negative. The stock loves to dump around its earnings reports, then pump once all of the new information is priced in.
This aligns perfectly with our technical outlook of a retest of 3,916 before a resumption of the primary uptrend.
With the technicals and fundamentals firmly in control by the bears ahead of Tuesday's report, we're expecting another post-earnings beatdown next week for AZO.
Happy Sunday
-The Beat Team
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