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 S&P 500 earnings moves from the prior session: the winners, the losers, and the reactions that reveal what really matters to the market right now.
Whether itโs 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 ๐
*Click the image to enlarge it
At the top of Friday's Beat Sheet was the $68B railroad stock, CSX Corp. $CSX. After missing headline expectations across the board, shareholders were rewarded with a +1.98 reaction score.
The company reported $3.51B in revenues, missing the expected $3.54B, and earnings per share of $0.39, missing the expected $0.41.
At the bottom of the list was the semiconductor behemoth, Intel $INTC. After beating the market's expectations, shareholders were punished with a -5.04 reaction score.
Revenues came in at $13.67B, beating the expected $13.43B, and earnings per share of $0.15, a country mile above the expected $0.08.
Let's talk about what else happened ๐
CSX rallied on "bad news"๐ฅ
CSX Corp. had a +2.4% post-earnings reaction, and here's what happened:
Revenues fell 1% year-over-year, and adjusted operating income cratered 12% over the same period.
While most business segments contracted, fertilizer volumes increased by 7% year-over-year.
This wasn't a good quarter, but the management team's forward guidance was tremendous. They expect low single-digit revenue growth, 200-300 basis points of operating margin expansion, and at least 50% free cash flow growth.
This was the best miss/miss/pop we've seen so far this earnings season. When these events happen, we know for a fact that the worst-case scenario is priced in and the path of least resistance is higher.
And look at the massive base the stock has carved out over the past few years. This looks like a launchpad for a much larger upside move.
With the Dow Jones Transportation Average breaking out to fresh all-time highs, we expect CSX to play catch-up.
INTC had its worst earnings reaction since 2002๐ฉธ
Intel had a -17% post-earnings reaction, and here's what happened:
Revenue, gross margin, and EPS exceeded guidance despite industry-wide supply constraints and a year-over-year decline in revenue.
The company closed a $5B investment in Nvidia $NVDA and received accelerated U.S. government funding.
While this quarter's results exceeded the market's expectations, the management team's forward guidance was weaker than expected.
This earnings reaction wasn't just bad: it was horrible. We haven't seen the market react this negatively to an Intel earnings event in 24 years.
And while the technicals still look constructive, we don't expect significant progress anytime soon.
Until INTC makes a decisive move above its late 2023 peak, the path of least resistance is sideways for the foreseeable future.
Happy Monday!
-The Beat Team
P.S. Q3 earnings are in. Here are the takeaways, and how we identified them.
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