Welcome to our quarterly review of which companies are most likely to beat or miss earnings estimates based on abnormally low or high earnings distortion.
The COVID-driven economic shutdown is hurting corporate earnings, but not as much as Wall Street analysts would have you think. We scrub the numbers to provide our clients with a better measure of earnings and valuation.
Superior analysis of core earnings, as shown by Harvard Business School (HBS) and MIT Sloan, enables us to identify which firms have the most distortion (i.e. unusual gains/losses) in their reported numbers. Note that metrics like Street Earnings (from Refinitiv) and Operating Earnings (from S&P Global) are missing $0.45 out of every $1.00 of earnings distortion found by our Robo-Analyst according to HBS and MIT Sloan.
As corporate managers bury key data in footnotes to manipulate earnings, and investors miss them, investment opportunities arise because stocks’ prices tend to be driven by core earnings power.
Only our research gives investors the tools they need to accurately measure core earnings[1].
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Every week during the upcoming earnings season, we will publish an Earnings Distortion Scorecard focused on key companies reporting the following week. We segment these companies into five categories:
- Strong Beat
- Beat
- In-line
- Miss
- Strong Miss
These Earnings Distortion Scores are a short-term predictor of the likelihood of a company to miss expectations in the next quarter based on how much their estimates contain unusual gains/losses which cause earnings to be over/understated.
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Earnings Season Weekly Reports
Starting the week of July 6, 2020, we’ll break down the important earnings releases for the following week. In this analysis, you’ll get-up-to date information regarding a stock’s earnings release date and its Earnings Distortion Score on the likelihood of beating or missing consensus expectations.
This report will be available to Gold and higher members.
Each week, we will focus on the following companies:
Week of 7/6/20: ABT, BAC, BK, BLK, C, CFG, CTAS, DHR, DOV, DPZ, EBAY, ETFC, FAST, FRC, GS, HON, JBHT, JNJ, JPM, KMI, KSU, MS, MSFT, NFLX, NUE, NVR, OMC, PEP, PGR, PNC, PPG, RF, SCHW, SGEN, SNA, STT, TFC, TXT, UAL, UNH, USB, WFC
Week of 7/13/20: AAL, ABBV, ADS, AEP, AGR, AJG, ALGN, ALK, ALLE, ALXN, AMGN, AMP, AMZN, APD, APH, AVY, AXP, BA, BIIB, BKR, CDNS, CE, CERN, CHKP, CMA, CMG, CMS, CNC, COF, COG, CSX, CTXS, DFS, EDU, ELS, ESS, EW, FE, FTV, GD, GOOGL, HAL, HAS, HOG, HSY, HSY, IBM, IEX, INTC, IPG, ISRG, ITW, KKR, KO, LH, LMT, LUV, LVS, LW, MTB, NEM, NSC, ORLY, PCAR, PKG, PLD, PM, PNR, POOL, RCL, RHI, ROK, RTX, SCCO, SLB, SLG, SNAP, SUI, SYF, T, TEAM, TEL, TER, TRV, TSCO, TWTR, TXN, UNP, V, VFC, VMC, VTR, VZ, WHR, WRB, YNDX, ZION
Week of 7/20/20: AAPL, ABC, ABMD, ADM, ADP, AEE, AFL, AIV, AKAM, AMD, AME, AMT, ANET, ANTM, AON, AOS, APA, APO, APTV, ARE, ATUS, AVB, AYX, BAH, BAX, BEN, BIO, BLL, BMRN, BR, BRO, BSX, BXP, CAT, CB, CBRE, CCI, CDAY, CDW, CF, CGNX, CHD, CHRW, CHTR, CI, CINF, CL, CLX, CMCSA, CME, CMI, COP, CSGP, CTSH, CTVA, CVX, CXO, D, DD, DHI, DISH, DLR, DRE, DVA, DXCM, EA, ECL, ED, EIX, EPD, EQIX, EQR, ES, ETN, ETR, ETSY, EXAS, EXC, EXR, F, FBHS, FICO, FLS, FMC, FTI, FTNT, GDDY, GE, GILD, GPC, GPN, GRMN, HBI, HCA, HES, HIG, HII, HOLX, HWM, ICE, IDXX, INCY, INVH, IP, IPGP, IR, IRM, IT, JCI, JNPR, K, LDOS, LEG, LHX, LIN, LKQ, LLY, LNT, LRCX, LYB, MA, MAA, MAS, MASI, MCD, MCK, MDLZ, MELI, MET, MKL, MLM, MMC, MMM, MO, MOH, MPWR, MRK, MSCI, MSI, MTD, MXIM, MYL, NBIX, NBL, NI, NLSN, NOC, NOV, NWL, NXPI, OKE, OXY, PAYC, PEAK, PEG, PFE, PFG, PG, PINS, PKI, PSA, PSX, PWR, PYPL, QCOM, QRVO, REG, RL, RNG, SBUX, SHOP, SHW, SIRI, SO, SPGI, SPOT, SQ, SRE, SSNC, STX, SWK, SYK, TAP, TDOC, TFX, TRMB, TROW, TRU, TT, TWLO, TYL, UAA, UDR, UNM, URI, URI, VLO, VRSK, VRTX, W, WAB, WAT, WDC, WELL, WLTW, WM, WMB, WPC, WRK, WU, WY, XEL, XLNX, XOM, XRAY, XYL, YUM, YUMC, ZBRA, ZEN
Week of 7/27/20: AES, AIG, ALB, ALL, ALNY, ANSS, ATO, ATVI, AVLR, AWK, BAP, BAP, BKI, BKNG, BMY, BWA, CABO, CAH, CNP, CTL, CVNA, CVS, DIS, DUK, DVN, DXC, EMR, EOG, EPAM, EVRG, EXPD, FANG, FIS, FLT, FOXA, FRT, HFC, HSIC, HST, HUM, HZNP, IAC, IFF, J, KDP, KHC, KIM, KLAC, L, LBRDK, LNC, LNG, LYFT, MAR, MCHP, MNST, MOS, MPC, MRO, MTCH, NCLH, NET, NLOK, NRG, NWSA, O, PH, PNW, PODD, PPL, PRGO, PRU, PTON, PXD, RE, REGN, ROKU, RSG, SBAC, SEE, SRPT, STE, SWKS, TDG, TECH, TSN, TTD, TTWO, UBER, UI, VNO, WEC, WMG, WTRG, WYNN, ZBH, ZG, ZTS
Week of 8/3/20: A, AAP, AMAT, BABA, CSCO, DDOG, NVDA, PGR, SPG, SYY, TPR, VIPS, ZTO
Week of 8/10/20: ADI, BIDU, CRM, DE, EL, GPS, HD, HPQ, HRL, INTU, JKHY, JWN, KEYS, KSS, LB, LOW, NDSN, NTAP, ROST, SNPS, SPLK, TGT, TJX, VMW, WMT
See past Earnings Distortion Scorecard reports here.
This article originally published on July 6, 2020.
Disclosure: David Trainer, Kyle Guske II, and Matt Shuler receive no compensation to write about any specific stock, sector, style, or theme.
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[1] Our core earnings are a superior measure of profits, as demonstrated in Core Earnings: New Data & Evidence a paper by professors at Harvard Business School (HBS) & MIT Sloan. The paper empirically shows that our data is superior to “Operating Income After Depreciation” and “Income Before Special Items” from Compustat, owned by S&P Global (SPGI).