Earnings season is more than halfway complete as 340 of the S&P’s 500 names have reported quarterly results. About three quarters of the bunch have posted earnings above the mean analyst estimates.
While investors are likely focused on Friday’s upcoming monthly employment report, in light of looming uncertainty surrounding the Fed’s next move, earnings from high-profile names will continue to litter the headlines in the meantime. On the earnings front, one potentially worrisome development to keep an eye on is the divergence between Q4 EPS estimates and the broad markets’ performance last month.
Consider the following from earnings authority FactSet:
In October, analysts lowered their Q4 EPS estimates for the S&P 500 by 2.4%, while the equity index rallied upwards of 8%. Put another way, analyst expectations for the next quarter declined in the face of rising stock prices last month. If this divergence persists, it’ll be interesting to see what caves first; either analyst estimates are “too pessimistic” and will revert higher to more normal levels, or the S&P 500 is “overvalued” in light of a lackluster Q4 outlook and due for a pullback.
ETFs to Play Earnings This Week
Below is a look at some of the biggest names reporting quarterly results this week on Wall Street.
See a list of all companies reporting earnings this week here.
Note the ticker of each stock is linked to results from ETFdb’s proprietary (and free) ETF Stock Exposure Tool. How does it work and what does it do? Just search for any ticker and you’ll see which ETFs hold that stock, if any, and how much of their portfolio is allocated to it.
- Activision Blizzard (ATVI) is expected to report EPS of 13 cents on Tuesday after the bell.
- Devon Energy (DVN) is expected to report EPS of 57 cents on Tuesday after the bell.
- Tesla Motors (TSLA) is expected to report EPS of negative 71 cents on Tuesday after the bell.
- Facebook (FB) is expected to report EPS of 35 cents on Wednesday after the bell.
- Prudential Financial (PRU) is expected to report EPS of $2.44 on Wednesday after the bell.
- Qualcomm (QCOM) is expected to report EPS of 71 cents on Wednesday after the bell.
- Whole Foods (WFM) is expected to report EPS of 35 cents on Wednesday after the bell.
- Celgene (CELG) is expected to report EPS of $1.09 on Thursday before the bell.
- Nvidia (NVDA) is expected to report EPS of 25 cents on Thursday after the bell.
- Disney (DIS) is expected to report EPS of $1.17 on Thursday after the bell.
Other Ways to Play
Check out the ETF Trading Cheat Sheet if you want a complete look at the most “trader-friendly” product for virtually every asset class imaginable; note this list includes leveraged and inverse products. Be sure to read the following resources before utilizing these more sophisticated investment vehicles:
- Which one is right for you? Shorting ETFs vs. Inverse ETFs.
- 7 Risks of Trading Leveraged ETFs and How to Avoid Them.
The Bottom Line
Trading either before or after a company’s earnings release can be a risky endeavor for most. One way to alleviate some of the uncertainty is to ensure the best execution for your prospective position; this means remembering to use limit orders, and if you’re savvy enough, doing so during periods of heightened volatility so you may take advantage of discounted prices. An extension of this basic, yet vital, trading tip is to use stop-loss orders to protect yourself from steep, unexpected swings in price.
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