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 itโs mega-cap leaders, niche growth stories, or the sectors most tied to the economy, weโve got you covered on what traders need to know right now.
One of the largest integrated freight & logistics stocks, FedEx $FDX, beat its headline expectations and rallied +2.7% as a result. This snapped a streak of 4 consecutive negative earnings reactions.
Following a mixed report, the $33B residential construction giant, Lennar $LEN, suffered its 8th consecutive negative earnings reaction. No stock in the S&P 500 has a longer beatdown streak than this one.
There were no S&P 500 earnings reactions on Monday, so we couldn't help but tell you about one of the hottest growth stocks in the market, American Battery Technology $ABAT.
Over the past year, ABAT's sales have increased more than 11x, and the price is on the cusp of climbing out of a massive bearish-to-bullish reversal pattern. With the technicals confirming the fundamentals, we think this name is going much higher.
The only earnings reaction on Tuesday came from the $69B specialty retailer, AutoZone $AZO, which had a slightly negative post-earnings reaction after the company posted worse-than-expected headline numbers.
As we told in the last Weekly Beat, we were expecting another negative earnings reaction because of the bearish fundamental trends that have developed over the past few quarters. This latest quarterly report reiterated those negative trends.
On Wednesday, the provider of corporate uniforms, Cintas $CTAS, beat its headline expectations, but had a slightly negative earnings reaction. Despite the short-term weakness, this is one of the best long-term stocks in the market, highlighted by 42 consecutive years of dividend increases.
We also heard from the world's fifth-largest semiconductor company, Micron Technology $MU, which was punished for smashing its top and bottom line expectations. As we mentioned in the last Weekly Beat, we have very low conviction in this stock's technical breakout because the fundamentals do not confirm it.
On Thursday, the $144B consulting giant, Accenture $ACN, beat its headline expectations and suffered a -2.7% post-earnings reaction. The market's negative reaction was less about the past quarter and more about the forward guidance, which was significantly weaker than anticipated.
Last, but not least, the $7B auto & truck dealership company, CarMax $KMX, missed expectations across the board and crashed lower as a result. This company is a complete disaster, and we believe it should be kicked out of the S&P 500.
What's happening next week ๐
Next week, we'll be focusing on the world's largest footwear & accessories company, Nike $NKE. The stock is coming off one of its best earnings reactions ever, and we believe the bulls are likely to show up again after this quarter's earnings report.
Beyond NKE, weโll also be watching:
The cruise line giant, Royal Caribbean $RCL.
The Wall Street firm, Jefferies Financial $JEF.
And the human resources software behemoth, Paychex $PAYX.
In addition, we'll hear from the egg producer, Cal-Maine Foods $CALM, the frozen foods producer, Conagra Brands $CAG, and the precious metals explorer, Novagold Resources $NG.
This is one of the final weeks before the end of the current earnings season, so it'll be on the slower side. However, there will be plenty to cover at the Daily Beat.
Now, letโs dive into the top setups heading into next week.
Here's the setup in NKE ahead of Tuesday's earnings report ๐
Nike is expected to post $10.99B in revenue and EPS of $0.27 after Tuesday's closing bell.
Heading into the report, the price is retesting a key level of interest. This is the same place that marked the top back in 2015, and it was flipped into support in 2018 and 2020.
Now, we're back at the scene of the crime.
The bears tried to break this key level during the Tariff Tantrum earlier this year, but failed miserably. Last quarter was the best earnings reaction ever as the company posted better-than-expected results and forward guidance.
We believe the squeeze is on in NKE as long as the price holds above 68.
Here are the past 3 years of earnings results & reactions for NKE ๐
Nike is coming off one of its longest beatdown streaks ever. From late 2023 to early this year, the stock had six consecutive negative earnings reactions.
This historic bearish streak came to a decisive end last quarter, and the odds favor a new bullish technical and fundamental regime.
In addition, the key level of interest we mentioned previously adds to our conviction. We highly doubt one of the greatest American brands ever will complete a massive top amidst a raging equity bull market.
We expect another significant upside move in NKE following Tuesday's earnings report.
Here's the setup in CCL ahead of Monday's earnings report ๐
Carnival is expected to report $8.10B in revenue and EPS of $1.32 after Monday's closing bell.
Ahead of the call, the price is flirting with the resolution of a massive multi-year bearish-to-bullish reversal pattern. A positive reaction this week could be the catalyst to decisively mark the beginning of a brand-new primary uptrend, which could last for years.
Its biggest competitor, Royal Caribbean $RCL, has already broken out to new all-time highs. We believe there's a good chance CCL will catch up soon.
We're looking for CCL to gap-n-go above 31 following its earnings report. If that happens, the path of least resistance will be higher for the foreseeable future.
Here are the past 3 years of earnings results & reactions for CCL ๐
As you can see, the EPS growth for Carnival has been horrendous over the past three years. However, last quarter, this changed in a significant way, and the market responded with one of the strongest earnings reactions in years.
The market is expecting similar earnings growth this quarter, and if the company delivers, we anticipate the market will respond positively.
Also, notice the post-earnings drift. Before the paradigm shift last quarter, the stock had experienced negative post-earnings drift in seven consecutive quarters.
The tide is turning for this company, and we expect another strong earnings report before the opening bell on Monday.
If the CCL gaps above 31, we expect there to be a big chase higher for the foreseeable future, creating a textbook gap-n-go.
Happy Sunday
-The Beat Team
P.S. Small-cap season is here - Steve Strazza and Mary Thwaites went LIVE to talk about which stocks they're buying and why.
