Research Blog

With high uncertainty and volatility in energy markets, we feature an important earnings date revision

Executive Summary

  • After a stellar first week of earnings season, investors await reporting dates from heavy hitters before month-end
  • Two firms with unusual earnings dates look to boost their cloud presence as the world continues to move more virtual
  • With uncertainty and volatility running high in energy markets and consumers flush with cash, a firm with high brand recognition is featured with an important earnings date revision

Earnings Outliers

Citrix Systems (CTXS) is a $12.3 billion digital workspace firm in the Information Technology sector. Listed on both the Nasdaq 100 and S&P 500, the company’s offerings are staples for many businesses’ IT infrastructure. Citrix is at the heart of two major themes developing in the global corporate world: systems security and the future of hybrid work. Amid the chaotic industry—though ripe with opportunity—there have been shifts within the firm.

C-Suite Change

Earlier this month, Citrix issued a press release to announce the immediate departure of former CEO David J. Henshall. Bob Calderoni takes over as the Chief Executive.¹ In a statement, the company said it remains committed to transitioning the business to SaaS (software as a service). There were other changes to the leadership team in the press release.

Poor Price Action

Citrix also disclosed preliminary third quarter 2021 revenue figures in the October 6th message. While net sales are now forecast to verify at the midpoint to the high end of its previously announced guidance range of $765 million to $775 million, the stock price reaction was abysmal. Shares are down more than 30% from the 52-week high.

Driving the declines are a pair of recent earnings reports. CTXS fell from $140 to $125 in late April and then again from $115 to $100 at the end of August. Disappointing Q2 results and soft Q3 guidance kept the bears in charge over the summer. All eyes are now on the Q3 report as analysts scrutinize the company’s shift to the cloud.

Figure 1: Citrix Stock Price History (1-Year)²

Outlier Analysis

Citrix usually reports Q3 earnings from October 22 to 25 with a Wednesday or Thursday trend.

July 30 - Wall Street Horizon set an Unconfirmed Q3 earnings date of October 28 BMO based on its reporting history.

October 6 - We changed the Q3 earnings date to November 4 BMO Confirmed via press release.

The later than usual earnings date resulted in a very high Z-score of 5.54. Traders should be on guard for unusual results or other announcements given the leadership transition and recent earnings-related volatility.

Rockwell Automation (ROK) is up next with an earlier than expected earnings date. ROK is a $37B U.S. large cap company in the Industrials sector. The stock has a broad range this year—rising from $240 in the first quarter to a 52-week high of $325 in early August before dipping to $290 in September. Shares are again approaching $325 ahead of its Q4 earnings report.

Figure 2: Rockwell Automation Stock Price History (1-Year)

Upcoming Corporate Events

Traders should also take note of Rockwell’s Investor Meeting 2021 to be held on November 10-11. The Analyst Day will also feature the company’s 30th annual Automation Fair in Houston, Texas. Clusters of events often lead to elevated share price volatility that can be valuable to those in the know.

Another SaaS Story

What else is happening with Rockwell Automation? Like Citrix, it is pushing into the SaaS space. Back on June 25, the firm announced an expansion of its industrial cloud software offering with the acquisition of Plex Systems.³ It was a sizable deal valued at $2.22 billion in cash. Investors took the news in stride and volume was high around the announcement. That M&A activity comes after the completion of a deal to buy Fiix Inc., in January.

Outlier Analysis

ROK usually reports Q3 results from November 6 to 12 with a Tuesday or Wednesday trend.

  • July 28 -  Wall Street Horizon set an Unconfirmed Q3 earnings date of November 9 BMO based on the historical trend.
  • October 19 – ROK put out a press release stating it would report earlier than anticipated—November 2 BMO.
  • October 19 – Wall Street Horizon promptly notified clients of the new Confirmed earnings date. The earlier-than-expected earnings date resulted in a –3.5 Z-score.

After a pair of acquisitions and ahead of an important Investor Day, traders should be alert to the possibility of unusual news in the November 2 report and stock price volatility.

Earnings Revision

Before powering down this week’s Event Data Outlook, let’s dive into an earnings revision at Generac Holdings Inc. (GNRC) in the Industrials sector. Unfortunately for many around the world, Generac has become a household name. Generac designs and manufactures standby and portable generators. It’s the go-to product suite when the lights go out both at home and for businesses.

Industry Dominance and Innovation

Generac has a commanding 80% market share in North America. An area of growth for the company is recent investment activity in backup solar energy storage. With constant innovation and industry-leading products, it’s little wonder that its stock price is at an all-time high.

International Power Market Troubles

Looking ahead, energy market turmoil in Asia and parts of Europe could be yet another boon. The fear of losing power during the winter months might lead to increased generator sales outside of North America. Perhaps investors are pricing in that notion considering the nearly 20% stock price rally already this month.

Figure 3: Generac Stock Price History (1-Year)⁴

Revision Analysis

GNRC has historically reported Q3 results between October 26 to November 1 with a Wednesday-Thursday trend (occasionally on Tuesday).

  • September 27 - Wall Street Horizon set a confirmed earnings date of October 27 BMO after receiving direct communication from the company's IR department. We then set a Confirmed earnings date of October 27 BMO.
  • October 19 – GNRC issued a press release stating it would report Q3 results later than usual—on November 2 BMO. The reconfirmed date is 6 days later than first scheduled, resulting in a Z-score of 1.39.

Conclusion

Earnings season is already off to a hot start with another high EPS beat rate among S&P 500 firms that have reported. Investors like what they see as many equity indices are once again near all-time highs. Volatility can strike at any time, though. A single poor earnings report can send a stock dropping while unexpected news can send the short-sellers scurrying for cover. The solution is to have the latest and most accurate corporate event data at your fingertips. Wall Street Horizon is the solution for global traders looking to manage risk.

 


¹https://www.businesswire.com/news/home/20211006005967/en/ 
²https://stockcharts.com/h-sc/ui?s=_CTXS&p=D&yr=1&mn=0&dy=0&id=p04533011007 

³https://ir.rockwellautomation.com/press-releases/press-releases-details/2021/Rockwell-Automation-to-Expand-Industrial-Cloud-Software-Offering-with-Acquisition-of-Plex-Systems/default.aspx 
⁴https://stockcharts.com/h-sc/ui?s=_GNRC&p=D&yr=1&mn=0&dy=0&id=p06964685824