Earnings Season Continues To Surprise; New Market Trend Starting?

Strong Earnings: Some Stocks Shaky

Once again we are seeing another Friday of earnings reports.  Among some of the most active stocks reporting earnings, Foot Locker (FL), Buckle (BKE), Gap Stores (GPS), and Hibbett Sports (HIBB) are catching investor attention; some for not so good reasons.

The Good, The Bad, The Ugly

Just like we talked about yesterday, this earnings season has been interesting to say the least.  Companies are crushing earnings left and right and for many, last year’s same period figures have been dwarfed. But it hasn’t been all fun and games as many investors have seen.

  • Typically when a company beats earnings, you would assume prices would increase.
  • Typically when a company beats on things like revenue and EPS, you would assume prices would increase.
  • Typically when a company sees increases in things like same store sales year over year, you would assume prices would increase.

In previous quarters, that has been the case but today’s spoiled investor is now getting down to the nitty gritty as higher than usual earnings expectations have left the market open to big pitfalls.  Today, for instance FootLocker beat on all fronts except same store comps.  Even though this number was up, it didn’t quite hit the higher expectations of the street.  The company beat on all other fronts but due to this one key factor not meeting or exceeding the street, Foot Locker has suffered a strong pullback during pre market hours.

Foot Locker Mixed

Estimates for Foot Locker had earnings per share expected to jump 13% to 70 cents. Revenue was seen rising 4% to $1.763 billion. Same-store sales are expected to rise 0.7% overall, with store comps up 0.9% and direct-to-consumer comps up 6.5%, according to Consensus Metrix.

Results showed Foot Locker earned 75 cents a share. Revenue climbed nearly 5% to $1.78 billion. Same-store sales edged up 0.5%.

However, the outlook for Foot Locker showed the company aiming at stronger same-store sales later in the year.

Read More: Key Trading Strategy To Play Earnings 

Companies are no longer in a simple revenue beat mode.  Now the focus needs to be on streamlining operations and continuing to hit on all cylinders during this huge economic expansion period. This has brought a bit of unease for some as they think this could signal shaky ground for future quarters.  Needless to say, other companies mentioned: Gap Stores and Hibbett both got slammed on earnings misses.

The shining star today: Buckle (BKE)

Shares of the accessories company ran during pre market hours after strong earnings. Estimates had analysts expecting Buckle earnings to jump 29% to 31 cents. Revenue was seen ticking up 3% to $201 million. Results also showed that Buckle earnings came in at 32 cents, with sales up nearly 3% to $201.1 million. Same-store sales rose 1.4%.

The Best Retail Earning Quarter In Eight Years Continues To Unfold

– Ken Perkins, Retail Metrics President

Retail Metrics President Ken Perkins said this week Tuesday that “the best retail earnings quarter in eight years continues to unfold.” Buckle, which has more than 450 stores across the country, offers both brand names and private-label apparel.

According to analytics from Zack’s, the sustainability of the stock’s immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management’s commentary on the earnings call.

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