A Pair of Bullish Earnings Date Confirmation Stocks and A Bearish Late Retail Confirmer

Key Takeaways:

• Amid corporate downsizing news and robust consumer demand trends, there’s an emerging bifurcated economic backdrop

• We highlight two key transportation stocks with early earnings date confirmations – a bullish sign

• Over in retail, one auto parts name has been losing market share, and more bad news might be in store after its late earnings confirmation date

Layoff headlines litter Wall Street. Specifically, it’s the tech sector that sees firms slashing headcounts as corporate “rightsizing” following the great pandemic hiring spree corrects itself. Other sectors, too, have seen a modest uptick in staff reduction plans – mainly at the white-collar level as opposed to the still tight employment picture in the boots-on-the-ground part of the economy. 

This trend comes after supply chain woes riddled the economic landscape from mid-2020 through early last year. That situation has improved, but now potential over-hiring along with uncertainty on how consumer demand shapes up are in the spotlight. So far this earnings season, overall consumption levels appear to be on a decent footing. We’ll know more after the retail sector posts Q4 results, but January’s official Retail Sales data was particularly strong – high enough to stoke inflation fears and a further jump in the Federal Reserve’s rate hike outlook by traders.

There are a lot of moving parts, right? It’s like a complex logistical challenge for traders to coordinate as they position themselves for what could be a choppy 2023 ahead given this year’s strong start in stocks. Well, a pair of major Industrials sector bellwethers crossed our radar with unusual earnings date confirmation timing events. 

For background, an earnings date confirmation is a corporate event type in which a firm states when it will post quarterly results. At Wall Street Horizon, we compare that confirmation date to when the company normally confirms its reporting date. When it’s materially earlier than average for the company, evidence shows there are positive abnormal returns in the stock price. But when a late confirmation timing event happens, weaker equity returns are often seen. 

FedEx (FDX) and UPS (UPS) both show up on our early confirmation date list. So, that’s good news for traders long those shares. 

Early Confirmers: FedEx and UPS

First, FedEx has a confirmed date Z-score of –1.63, indicative of a bullish early confirm. It is welcome news for investors who have endured a more than 55% plunge in the share price from FDX’s peak in May 2021 to a low in September last year. 

Along the embattled way, there were cautious to downright pessimistic outlooks given by CEO Raj Subramaniam. Forecasts of weakening global demand and dire profit warning updates sent FDX plunging from near $320 at its all-time high to under $150. Lately, however, the stock has been delivering a rebound – that comes as the global goods shipper announced a more than 10% cut in management-level jobs earlier this month. With earnings on tap March 16, perhaps some hopeful news will finally come about. But volatility could also strike this week as Subramaniam speaks at the Citi Global Industrial Tech and Mobility Conference Tuesday through Thursday. 

UPS is also en route to offer results, but its Q1 report isn’t due out until April 25 BMO. The UPS stock price hasn’t suffered as much as FDX in the last couple of years. Recently, though, UPS has lost ground to FDX. Back in January, UPS beat analysts’ earnings estimates, but missed on the top line and issued a cautious revenue projection. 

Wall Street Horizon’s data suggests good news could be on the docket come April since the company is also an early confirmer with a Z-score of –1.22. Together, FDX and UPS results are sometimes seen as a leading consumer demand indicator, so there’s another reason to be upbeat about the economic backdrop right now. Though that might draw more angst from Jay Powell and the rest of the FOMC.

FedEx Has Struggled Compared to UPS YoY

Source: Stockcharts.com

Late Confirmer: Advance Auto Parts (AAP)

But here’s one for you bears out there – Advance Auto Parts. This Consumer Discretionary sector retailer is front and center with a confirmed earnings date of February 28 BMO. AAP has been left in the dust over the last year as its competitors, namely AutoZone (AZO) and O’Reilly Automotive (ORLY), have soared to all-time highs. With AAP off by 30% over the last 52 weeks, a late confirmation timing event in advance of next Tuesday’s Q4 report is not what the bulls want to see. 

Advance Auto Parts: The Third Wheel to AAP and ORLY

Source: Stockcharts.com