Research Blog

Week of October 26: COVID-19 Corporate Event Impact Report

Executive Summary

  • Earnings season steps into high gear with some big-name companies reporting later than usual – a warning sign for investors
  • Investor days and other corporate events are on the docket this week that will give further clues into the state of the consumer and economy as the pandemic spreads
  • COVID outbreaks across the world lead some schools to pivot back to ‘learn from home’

Earnings Date Outliers

It is the busy season for corporate earnings. This week and next is the heart of the reporting season. Wall Street Horizon closely analyzes trends in actual versus expected earnings dates. When a firm confirms an upcoming quarterly report release date that varies from history, we know about it and we report it to our clients. These outliers often signal that something is amiss with the company. Two key outliers that crossed our radar – T-Mobile and Honeywell.

We expected T-Mobile (TMUS) to release earnings on October 26 after the bell based on historical trends. The major telecommunication services company has a clear history of reporting third quarter earnings on a Monday near the end of October. On October 13, however, TMUS issued a press release stating that Q3 2020 results would hit the wires on November 5 after-hours. For options traders, this crossed the October 30 weekly options expiration. The result is a very high Z-score of 3.03 – we use the Z-score to gauge just how unusual the earnings revision is relative to historical trends. T-Mobile’s stock has had a great year, rising more than 40%, so the bar is high for the early November announcement. Analysts expect an earnings recovery following a difficult first half of the year.

Wall Street Horizon Z-score: statistical measurement of how an earnings date (confirmed or revised) compares to the reporting company's 5-year trend for the same quarter. This metric is included in our DateBreaks product, learn more.

Honeywell (HON) also jumped out to us with a Z-score of 5.11. We forecast the earnings date to be October 15 before the market open, but HON had other ideas. The major industrial stock and component of the Dow Jones Industrial Average confirmed an earnings date of October 30, before the bell. This later than expected earnings date crosses a weekly options expiration – so traders beware! In company news, HON recently acquired Ballard Unmanned Systems as the firm continues to venture into the data & surveillance space.

Dividend Changes

Penske Automotive Group (PAG) has recovered remarkably well from the COVID-crash earlier this year. The Michigan-based international transportation services company has seen its stock rise to fresh year-to-date highs of late. It has been a mixed bag for firms involved in transportation – the major auto companies have struggled to produce new vehicles due to COVID outbreaks while the used car market has been hotter than ever. With booming retail sales in the US, firms and families need to move goods around – and they are looking to Penske. Individuals leaving cities for the suburbs is also a tailwind for the trucking company. PAG recently resumed its dividend as of October 14 in a hopeful sign of continued recovery. We track all dividend suspensions and resumptions for our clients, learn more.

Conference and Shareholder Meeting Highlights

Bed Bath & Beyond Inc (BBBY) hosts its 2020 Virtual Investor Day on Wednesday. The household goods company has performed very well this year as consumers stay safe & stay home. Naturally, we all like to start home improvement projects when we are hunkered down at the homestead. Retail sales for home projects are very strong in 2020. That trend lends itself to furnishings and domestic merchandise buying, too. The New Jersey-based consumer discretionary stock is up nearly 50% this year – and that includes a massive 75% drawdown from January through early April. It’s been a wild ride. As for the investor day, expect updates on business operations and the state of the North American consumer. Many executives will present. Wall Street Horizon tracks not just earnings dates and dividend figures, but also key corporate events for our clients. Knowing when market-moving news may hit the wires provides traders and portfolio managers a leg-up versus the market.

Teladoc, Inc. (TDOC) is slated to host a virtual shareholder meeting on Thursday this week following Wednesday’s earnings report. TDOC is one of a handful of companies that has been a clear winner from COVID-19. The virtual health care company recently teamed up with Livongo on a cross-selling program – and the share price reacted very favorably to the deal. There should be plenty for the firm to discuss at the event later this week as the ‘new normal’ suggests telemedicine is here to stay. A sign of the times, one of the key metrics that could be discussed both during the earnings announcement and at the shareholder event is the number of app downloads. Not surprisingly, March and April featured massive y/y growth in downloads, but recent months have been strong as well.

COVID-19 Altering School Plans Around the World

Europe is enduring a brutal second wave of the virus, resulting in further restrictive measures being taken by government officials for citizens and schools. As go schools, so too goes the corporate world. There have been some important updates since last week. In Hong Kong, two schools were forced to shutter due to infection outbreaks. In Shanghai, international students are learning virtually, while local students remain in-person. Meanwhile, children are relegated to eating lunch in silence in Singapore as extra precautions are being taken in that region. Further west in London (the city went into a second lockdown recently but has since re-opened) if a student contracts the virus, he or she must quarantine for 14 days while the school remains open. Let’s end with some positive news – in-person classes have resumed in Zurich. In the States, there was an uptick for in-person learning from the prior week despite rising cases across the nation.