Earnings season is the heartbeat of the market - and every day brings fresh signals about where money is flowing.
With each report, we learn not just how companies are performing, but how investors are reacting.
In the Daily Beat, we spotlight the most important earnings moves from the prior session - the winners, the losers, and the reactions that reveal what really matters to the market right now.
Whether itβs a bellwether with broad economic implications or a niche name making waves, we cut through the noise to focus on the setups that matter most.
Here are the latest earnings stats from the S&P 500 π
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Wednesday, we heard from the $9B packaged foods company, Conagra Brands $CAG, which beat its headline expectations and had a +3.23 reaction score.
The company posted revenues of $2.63B, versus the expected $2.62B, and earnings per share of $0.39, versus the expected $0.33.
We also received an update from the worlds largest footwear & accessories company, Nike $NKE. They posted a double beat and shareholders were rewarded with a +2.39 reaction score.
In the report, the company delivered revenues of $11.72B, versus the expected $10.99B, and earnings per share of $0.49, versus the expected $0.27.
Now let's dive into the fundamentals and technicals π
CAG had its best earnings reaction in seven quarters π₯
Conagra Brands had a +5.4% post-earnings reaction, and here's what happened:
Net sales declined by 5.8% year-over-year, driven by inflationary pressures and weak consumer demand.
In addition to the weak sales, the company's adjusted gross margin fell 244 basis points year-over-year to 24.4%.
Many were expecting the management team to cut its forward guidance, but the prior guidance was reaffirmed.
This company is one of the hottest messes in the Consumer Staples sector of the S&P 500. The stock is in a more than 50% drawdown from its peak in early 2023, and the price has resolved a multi-decade distribution pattern.
It's giving CarMax $KMX a run for its money in terms of being the worst stock.
Despite all of that, this quarter's earnings reaction was impressive. It was the best we've seen in years.
We think the price is likely heading back to the neckline of the massive top we mentioned previously, where it's likely to be rejected and resume its primary downtrend.
So long as CAG is below 20, the path of least resistance is likely to remain lower for the foreseeable future.
NKE had its second consecutive positive earnings reaction π₯
Nike had a +6.4% post-earnings reaction, and here's what happened:
Top-line grew by 1% year-over-year, and net income tanked 31% over the same period.
New tariffs led to a year-over-year decline of 320 basis point in gross margin.
The management team expects wholesale revenue to return to modest growth in the next fiscal year, driven by a recovery in North America.
We highlighted this setup in the latest issue of the Weekly Beat, noting the historic earnings reaction last quarter. We were betting the bulls would follow-through to the upside this quarter.
This turned out to be spot on. Despite, a nasty intraday reversal, the buyers stepped in and closed the price at the high of the day.
Now, the stock has a brand-new beat streak, which could last for years.
The legendary retail analyst, Jeff Macke, published his Nike Report Card yesterday, giving it a final grade of a B. We recommend you check it out if you want to learn more about the fundamentals from an industry expert.
From a technical perspective, we believe the path of least resistance for NKE is sideways to higher for the foreseeable future.
Happy fishing
-The Beat Team
P.S. Small-cap season is here - Steve Strazza and Patrick Dunuwila went LIVE to talk about which stocks they're buying and why.
