Where are they Now? 5 out of 6 Companies with Off-Trend Q3 Earnings Dates Performed as our Data Indicated
During the Q3 earnings season we profiled 6 companies that had unusual or revised earnings dates which can serve as a foreshadowing of what an upcoming report might reveal, and therefore be an indicator of financial health. All but one of those companies' stocks reacted as we expected, using the Wall Street Horizon DateBreaks Factor logic.* Below we review all 6 names and how they performed in the three days following their announcement.
Facebook (FB) - Followed Reverse Logic
Company Confirmed Report Date: Monday, October 25, AMC
Projected Report Date (based on historical data): Wednesday, October 27, AMC
We flagged Facebook (now Meta Platforms) ahead of their Q3 report because they confirmed an unusual earnings date, outside of the historical date range in which we’ve typically seen them report. Facebook tends to report the last Wednesday or Thursday of October and has done so for the last three years. Prior to that they reported the first week of November for three years. Due to the more recent trend, we expected they would report on Wednesday, October 27. Instead FB confirmed they would report Monday, October 25, the first time they reported on a Monday since the IPO in 2012. According to academic research, an earlier than usual earnings date often indicates good news will be announced.
Despite beating EPS expectations (actual: $3.22, est: $3.19*), Facebook slightly missed on revenues (actual: $29.0B, est: $29.5B*). The results came as Facebook whistleblower Fraces Haugen was giving her testimony to British lawmakers, news that had the stock trending lower even prior to the report. This resulted in a price decrease of $29.66 or -9.5%.**
PulteGroup Inc (PHM) - Followed Expected Logic
Company Confirmed Report Date: Tuesday, October 26, BMO
Projected Report Date (based on historical data): October 21, BMO
Unlike Facebook, PulteGroup announced a Q3 earnings date that was 5 days later than we had predicted. The homebuilder has reported Q3 earnings from October 20 - 24 for the last 7 years, typically on a Tuesday. Historically speaking, moving an earnings date later is a cue that that negative news will be shared in the earnings report and on the call.
PHM slightly beat Wall Street estimates for both EPS (actual: $1.82, est: $1.80*), and revenues (actual: $3.479B, est: $3.420B*). Major supply chain disruptions negatively impacted the availability of building products, and new home orders dropped 17% YoY across all regions. Investors took the stock -2.9% ($1.44)** lower in the 3-day post earning period.
Booking.com (BKNG) - Followed Expected Logic
Company Confirmed Report Date: Wednesday, November 3 AMC
Projected Report Date (based on historical data): Thursday, November 4, AMC
Booking.com has reported from November 5 - 7 for the last 5 years, typically on Thursday. For Q3 2021 they reported for the first time on a Wednesday, and slightly earlier than usual.
BKNG easily surpassed Wall Street estimates for both EPS (actual: $37.70, est: $33.01*), and revenues (actual: $4.676B, est: $4.297B*). The revenue uptick was driven by increased demand for travel, with room night trends increasing QoQ, with particular strength in European travel. Satisfied investors took the stock up $204.53 or +8.4%** in the 3-day post-earnings period.
Hostess Brands (TWNK) - Followed Expected Logic
Company Confirmed Report Date: Tuesday, November 9, AMC
Revised from: Tuesday, November 3, AMC
Hostess has a history of reporting Q3 earnings between November 5 and November 8. The company initially confirmed they would release Q3 results on November 3, AMC and later rescheduled for November 9 AMC with no explanation. The change could have been due to management turnover, with CFO Brian T. Purcell resigning from the company, effective November 9.
When Hostess reported they narrowly beat on both the top (actual: $287.97M, est: $280.83M**) and the bottom-line (actual: $0.21, est: $0.20**). The company also raised full year 2021 net revenue growth to 9-10%, while keeping adjusted EPS guidance the same. Despite the decent results, investors still brought the stock down $0.62 or -3.3% after the report.
Hilton Grand Vacations (HGV) - Followed Expected Logic
Company Confirmed Report Date: Tuesday, November 9, BMO
Projected Report Date (based on historical data): Thursday, October 28, BMO
Hilton Grand Vacations usually reports Q3 earnings from October 29 to November 1 with no day of the week trend. However, on October 26 the owner and operator of timeshare resorts announced they would report results on November 9 BMO, 11 days later than we expected.
Wall Street analysts were far too conservative with their HGV estimates, with the company blowing expectations out of the water. Earnings per share came in at $0.90 for Q3 vs. an estimate of $0.22.* Revenues of $928M easily surpassed an estimate of $387.74M.* Despite the great results all around, investors still brought the stock down $2.98 or -5.4%** in the days after the report. This could be due to the changing demands of consumers who are increasingly looking for more flexibility when it comes to travel, the antithesis of HGV’s time-share model. With variants of the COVID-19 virus still causing uncertainty, travelers are seeking more flexible bookings to account for potential cancellations. Most time-share models are non-refundable and require a good chunk of change upfront, as well as ongoing fees.
Alibaba Group Holding (BABA) - Followed Expected Logic
Company Confirmed Report Date: Thursday, November 18, BMO
Projected Report Date (based on historical data): Thursday, November 11, BMO
Alibaba has historically (over the last 5 years) reported fiscal Q2 results from November 1 - 5, so a report date of November 18 is much later than usual.
Singles Day, the world’s largest annual shopping event, is held every year on November 11. While Alibaba did report another record Singles Day in 2021, there were signs that growth is slowing. That bad news carried into their Q3 report a week later. BABA missed significantly on the top and bottom-line, reporting revenues of $31.5B (vs est. of $31.94B*) and EPS of $1.76 (vs. est. of $1.85*). As a result the stock traded down -18.9%** in the post-earnings drift period.
*EPS and Revenue estimates provided by FactSet
** Price change based on the highest or lowest point the stock reaches within the 3 days before and after reporting quarterly earnings results. Delta calculated from closing price.