That is The Takeaway from at this time’s Morning Transient, which you’ll enroll to obtain in your inbox each morning together with:
So has begun execution on one in every of my three hobbies: studying an insane quantity of earnings name transcripts (go forward and guess the opposite two, have at it).
Whereas I undoubtedly take this follow method too critically, the fact is that this pastime helps convey to floor an attention-grabbing theme so far in earnings season: stumbling iconic firms inside a still-solid economic system.
A few stumblers on your watch checklist:
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Tesla: Weak quarterly numbers, worrying earnings name with no steerage, cautious post-EPS analyst commentary, all resulting in a inventory hammering. Wedbush analyst and Tesla watcher Dan Ives had some selection phrases in regards to the firm on Yahoo Finance Dwell.
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Intel: Weak quarterly numbers, uninspiring Q1 steerage, cautious post-EPS analyst commentary, one other inventory hammering. Intel CEO Pat Gelsinger provided up his trademark energetic tackle the outcomes and outlook within the above video.
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Levi’s: Ugly efficiency within the division retailer channel, new CEO shedding 10% to fifteen% of the workforce. Levi’s CFO Harmit Singh sounded a contact extra cautious on Yahoo Finance than after we final talked to him a number of months in the past.
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Citi: Simply all-around dreadful earnings day as CEO Jane Fraser restructures the financial institution, together with hundreds of layoffs as reported by Yahoo Finance’s David Hollerith.
Going by these studies and earnings calls, I can’t assist however take into consideration why that is occurring at this level within the financial cycle. Will it’s occurring to the rivals of the aforementioned firms? Does Tesla’s commentary sign weak outlook from Ford’s and GM’s earnings subsequent week? Does Levi’s mushy gross sales at shops imply dangerous outcomes from Macy’s in February?
What’s subsequent for these firms and their leaders (like Levi’s new CEO Michelle Gass, who’s credited with not doing a terrific job at Kohl’s)?
Extra questions than solutions on these firms, little question.
However I fancy one conclusion that needs to be factored in when you’re eyeing a inventory in February, March, or every time.
Dangerous earnings and outlooks are dangerous earnings and outlooks for a cause. Fairly often they replicate poor execution relative to a competitor, structural trade challenges, or each. Execs might hype that issues will get higher quickly, however they typically don’t — and typically they worsen.
And on this context, a inventory which will appear “low cost” buying and selling on a PE a number of of 6x ahead earnings is nothing greater than a price lure.
Go learn some earnings name transcripts at this time and develop into a greater investor!
Brian Sozzi is Yahoo Finance’s Government Editor. Comply with Sozzi on Twitter/X @BrianSozzi and on LinkedIn. Tips about offers, mergers, activist conditions, or the rest? Electronic mail brian.sozzi@yahoofinance.com.
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