Few things move stock prices like quarterly earnings and forward guidance. Shares of sneaker and apparel company Nike (NYSE:NKE) recently jumped more than 15% immediately after the company reported better than expected earnings. Conversely, the share price of Boston Beer (NYSE:SAM) cratered 26% after the company announced disappointing earnings and revised down its guidance for the remainder of this year. Knowing which stocks to watch for big movement following earnings can be overwhelming.
Some stocks that have been depressed or idling in place since the spring will be looking for a big catalyst from their upcoming second quarter earnings. Just as with Nike, results that beat Wall Street’s expectations could provide a spark that ignites a share price and gets it to run higher. With earnings season now in full swing, we look at the stocks of seven companies that investors should watch for massive catalysts once they report second quarter financials.
Here are seven stocks to watch during the upcoming earnings season:
- Snap (NYSE:SNAP)
- Square (NYSE:SQ)
- Deere & Company (NYSE:DE)
- PepsiCo (NASDAQ:PEP)
- Advanced Micro Devices (NASDAQ:AMD)
- United Parcel Service (NYSE:UPS)
- Fiserv (NASDAQ:FISV)
Stocks to Watch Following Earnings: Snap (SNAP)
Social media company Snap is proving to be a case study in how quarterly earnings can provide a boost to a share price. SNAP stock jumped 23% immediately after the company reported second quarter earnings that beat analysts expectations across the board. The company behind the popular Snapchat platform reported earnings per share (EPS) of 10 cents compared to a loss of 1 cent forecast by analysts, and revenue of $982 million versus $846 million that had been expected by Wall Street.
Equally impressive, Snap reported that its net loss in the second quarter fell 53% to $152 million from a loss of $326 million a year earlier. The company’s number of daily active users totaled 293 million at the end of June, a 23% year-over-year increase. Investors rewarded the strong quarter by pushing SNAP stock up to more than $79 per share. The bounce higher was welcomed by shareholders who have had to wait as the share price languished around $62 for most of this year, unable to break above $65. The only question now is: will the stock hold onto its latest gains?
Another stock that has been trading sideways in recent months and could use a catalyst from its earnings is financial technology (fintech) company Square. The company reported blockbuster first quarter results and is a market leader in the fast growing online payments sector. Yet despite its success, SQ stock has been stuck in neutral since early May, mostly trading in a range between $230 and $240 and unable to gain any upward momentum.
SQ stock has started to rally in the lead-up to its second quarter earnings on August 5, up 8% since the end of June to as high as $267.77 a share. Strong second quarter results could be the spark needed to push the shares to new heights. Wall Street is looking for the company to report EPS of $0.30 on revenue of $4.99 billion. Any surprise to the upside could prove to be a catalyst for the stock. And another blockbuster quarter is possible as the economy reopens and more merchants use Square’s popular Cash App. The company is also pushing into retail banking, which could drive growth.
Stocks to Watch Following Earnings: Deere & Co. (DE)
The maker of John Deere lawn mowers — as well as construction and agriculture equipment — will be looking to show investors that it is continuing to benefit from the reopening of the U.S. economy and investments in infrastructure when it reports fiscal third quarter results on August 20. In May, the company reported a second consecutive quarter of record profits, saying it is seeing a rapidly improving outlook for farm and construction equipment sales, not just in the U.S. but around the world.
The Moline, Illinois-based company’s revenue in the first two quarters of its 2021 fiscal year have already surpassed the $2.75 billion that Deere & Co. earned in all of its 2020 fiscal year. Yet despite the stellar performance and indications that demand for its products is accelerating as we move into this year’s second half, DE stock has fallen over 10% since peaking at $400.34 a share in early May following its last earnings report. At its July 27 opening share price of $352.40, Deere & Co. stock looks like a bargain. Another blowout quarter could give the share price a much needed boost.
Like Snap, food and beverage company PepsiCo has already reported its latest earnings. And since the company announced stronger than anticipated results on July 13, PEP stock has seen an uptick in options activity, with traders taking out more call options on PepsiCo, effectively betting that the share price will rise going forward. This is a vote of confidence in the company after it reported that its quarterly revenue rose 20.5% compared with the previous year as restaurant demand for its various beverages, which includes its signature Pepsi soft drink, returned.
PepsiCo’s fiscal second-quarter EPS amounted to $1.72 compared to $1.53 expected by analysts. Revenue surged 20.5% to $19.22 billion versus $17.96 billion that had been anticipated. PepsiCo said its food service revenue, which includes sales to restaurants, stadiums and college campuses, doubled during the quarter. Following the strong quarter, PepsiCo said that it now expects EPS growth for all of its current fiscal year of 11%, up from its previous forecast of high-single digit growth.
PEP stock rose nearly 3% immediately after releasing its latest quarterly numbers. But Wall Street is expecting more judging from the options activity. PEP stock is up 7% year-to-date at $157.31 at the start of July 27.
Stocks to Watch Following Earnings: Advanced Micro Devices (AMD)
Semiconductor company AMD will be hoping for some type of bounce when it reports second quarter results on July 27 after the close of the market. AMD stock has barely budged this year, down a slight 1.7% since the start of January. The share price has stuck close to $90 for the past seven months. The company’s main rival Nvidia (NASDAQ:NVDA) has climbed 45% higher so far in 2021. The reasons for AMD’s subpar performance include the ongoing global semiconductor shortage and uncertainty surrounding its $35 billion acquisition of Xilinx (NASDAQ:XLNX).
However, a strong second quarter performance could be the catalyst that drives AMD shares above $100, which analysts have been forecasting for nearly a year now. For the second quarter, Wall Street is calling for AMD to report revenues of $3.6 billion, which would be 87% higher than a year ago. EPS is forecast to come in at 54 cents, which would be a 200% annual increase. In the first quarter of this year, AMD reported EPS of 52 cents, 18% better than the 44 cents that analysts had forecast. Does the company have another positive surprise in store for its second quarter results?
United Parcel Service (UPS)
Shipping and logistics giant United Parcel Service saw a big leap in its share price following its first quarter earnings in April. The world’s largest parcel delivery company said strong online shopping and its delivery of Covid-19 vaccines around the world drove its revenue in the first quarter 227% higher to $22.9 billion, beating Wall Street estimates of $20.5 billion. First quarter EPS was $2.77. UPS stock leapt 25% following the results and nearly reached $220 a share. However, since then the shares have trended down, and at close on July 26, shares were $209.86.
Analysts expected United Parcel Service to post EPS of $2.81 on revenue of $23.19 billion. The company reported EPS of $3.06 and revenue of $23.42 billion. The stock price dropped between sessions and continued to drop slightly at the beginning of the July 27 session but has since risen slightly. This performance from UPS is an indication of how online shopping is holding up as the economy reopens and consumers return to in-person shopping at malls and outlet stores.
Stocks to Watch Following Earnings: Fiserv (FISV)
The consensus view of analysts is that financial technology (fintech) company Fiserv’s stock is extremely undervalued right now. FISV stock, which closed on July 26 at $111.31, is another security that has done nothing so far in 2021. Year-to-date at that point, the share price was down a marginal 2.2%. It had essentially been sitting at $110 since last Christmas. This after the Brookfield, Wisconsin-based company announced mixed first quarter earnings. Fiserv’s EPS came in at $1.17 in the first quarter, ahead of expectations. But it reported revenue of $3.56 billion, which missed the consensus estimate by a slight 0.1%.
A beat to the upside when the company reported second quarter results on July 27 before the markets opened was the push FISV stock needs to begin moving higher. Analysts expected the company, whose technology helps facilitate financial transactions at banks, brokerages and retailers, to report Q2 revenue of $3.72 billion, representing 15% growth over the year earlier period — the company instead reported revenue of $3.86 billion. EPS, which was forecast to be $1.29, was reported at $1.37. The median price target on the stock is currently $141.41, which would imply a 25% increase from its July 27 open of $113.
On the date of publication, Joel Baglole held long positions in SQ, NVDA, DE, UPS and FISV. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia.
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