Week of November 30: COVID-19 Corporate Event Impact Report
- A stellar earnings season gives way to year-end optimism, aided by vaccine hopes
- Notable shareholder meetings in the energy sector
- A gauge on the American traveler’s dining trends is featured in our earnings date outlier briefing
Holiday Cheer Amid Dismal COVID Data
It used to be “Merger Monday” on Wall Street. Now it seems to be “Vaccine Monday” as each of the past three weeks has kicked off with positive trial results from major global drug makers. First, it was Pfizer (PFE), then Moderna (MRNA), and last week AstraZeneca (AZN) reported encouraging data. Investors shrugged off rising case counts in the US and climbing new daily deaths in the developed world. Global stocks discount the present and look forward to the state of the economy about six months ahead. We can pin the global equity market rally on high expectations for a ‘return to normal’ next year. The most beaten down sectors and investing themes surged throughout much of November on hopes that there is light at the end of the tunnel. We might already see signs of a positive inflection with new daily case counts having fallen across the European Union countries over the last three weeks.
Strong Earnings and Favorable Seasonal Trends
It’s not all vaccine hopes though. The Q3 earnings season featured the best EPS beat rate on record for US stocks. This past reporting period came after stellar Q2 results relative to analyst expectations. The earnings revision ratio, a gauge of how analysts are changing their EPS forecasts, surged in light of the corporate world performing above expectations. Q3 earnings season is largely over, however. Investors must find a new catalyst. The November through April period is known as a bullish part of the calendar. November and December specifically can feature strong runs for stocks, and what a November it has been. A major theme has been sector rotation favoring the most beaten down areas of the market.
The best performing sector this month is Energy. The beleaguered group is up a whopping 37% in November, its best gain ever. Financials are up 20% and Industrials is third best at +17%. A slew of shareholder meetings take place this week among global oil & gas firms. The virtual gatherings begin today with Petroleo Brasileiro S.A. (PBR). PetroBras used to be among the biggest international stocks with a market cap above $300 billion in the oil heyday of the mid-late 2000s. It’s now a paltry $65 billion, about 12% the size of Tesla (TSLA) and half of Zoom (ZM), for perspective. Next up is Russia-based Lukoil (LUKOY) with its Extraordinary General Shareholder meeting on December 3. Finally, Seadrill Limited (SDRLF) hosts its virtual shareholder meeting on Thursday. Investors must always be aware of important corporate events such as shareholder meetings to stay in-tune with the latest potential board changes, particularly within sectors experiencing fundamental turmoil.
Earnings Date Outlier
We feature an American favorite in this week’s earning date outlier. Cracker Barrel Old Country Store (CBRL) stood out with an unusual earnings date. Wall Street Horizon expected the Consumer Discretionary stock to report on November 24 before the open based on its reporting trends. The firm had a history of reporting results between November 21-26, usually on Tuesdays. A company press release on November 20 confirmed the reporting date would be December 3 before the bell. The result is a Z-score of 4.1 – meaning the official earnings date is 4.1 standard deviations later than average.
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.
A lot is going on in the restaurant space. You know Cracker Barrel’s operation if you have driven cross-country through the South, Midwest, and East. Comfort food at a reasonable price with a charming store of knick knacks. The company is situated interestingly in that the more people travel via interstate, the more customers they will receive (all else equal). Americans opting to hit the road versus fly the friendly skies is a net benefit. COVID has been the curveball. State restrictions on gatherings and indoor dining have devastated the sit-down dining industry. Cracker Barrel also tends to cater to older individuals, which has not been a strong eat-out demographic this year. CBRL’s report will be one to watch to gauge the state of the consumer and their travel trends.