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The Zacks Analyst Blog Highlights: Lululemon Athletica, Chewy and Sketchers U.S.A.
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For Immediate Release
Chicago, IL – August 3, 2021 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Lululemon Athletica Inc. (LULU - Free Report) , Chewy, Inc. (CHWY - Free Report) and Sketchers U.S.A., Inc. (SKX - Free Report) .
Here are highlights from Monday’s Analyst Blog:
Peak Earnings? Or Just a Peak Report Week?: Global Week Ahead
The Big Tech companies reported last week.
Incorporating much of that, here is what Zacks Research Director Sheraz Mian has for us, in terms of a Q12 earnings update.
“The picture emerging from the Q2 earnings season is one of all-around strength.
195 S&P 500 members have reported Q2 results, so far.
• Total earnings are up +105.0%, • On +22.3% higher revenues, • With 90.8% beating EPS estimates and 86.2% topping revenue estimates.
For Tech, now have Q2 results from 65.8% of the sector’s market cap in the S&P500.
• Total earnings for these Tech companies are up +63.9% from the same period last year, • On +24.7% higher revenues,
• With 96.3% beating EPS estimates and 100% beating revenue estimates.
Aggregate total quarterly earnings are on track to reach a new all-time record -- with impressive momentum on the revenue side.
• Outsized earnings growth is mostly due to easy comps, primarily in Finance. • However, performance on revenue (growth rate and beats %) is tracking above what we saw in other recent periods.”
Next are Reuter’s five world market themes, reordered for equity traders—
(1) Are U.S. macroeconomic upside surprises in the rearview mirror?
Is this year's sharp U.S. growth rebound losing momentum? A raft of economic data due in the world's biggest economy will provide clues.
U.S. non-farm payrolls on Aug. 6th will offer a snapshot of July hiring. Economists polled by Reuters forecast the economy added 926,000 jobs in July after June's forecast-beating 850,000 in June.
Before the payrolls, the ISM manufacturing report and Purchasing Managers' Index (PMI) surveys will be released.
The strength of U.S. economic numbers has at least partly driven stock market gains. But forecast-beating data might become the exception rather than the rule.
Have a look at Citi's U.S. Economic Surprise Index, which measures the degree to which the data is beating or missing economists' forecasts.
It stands at 3.2 -- a far cry from July 2020's record high of 271.
(2) China’s crackdown on Big Tech there raises eyebrows, lowers stocks.
Regulators' crackdowns have frightened investors away from Chinese stocks.
As the leash tightens on tech titans, the aggressive moves might well signal the end of internet firms' "barbarian growth".
Authorities have rushed to calm market nerves with soothing editorials and promises to take things steadier in future. That's put a floor under stocks and the yuan.
What investors will want to see now is how serious China's economic growth slowdown really is.
If PMI surveys in the coming week point to moderating manufacturing growth and flatlining services, that could be the next test for markets.
(3) Crypto is bouncing. Ether faces a change in protocol.
After piggybacking on booming bitcoin to hit a record of almost $4,400 in May, the second-biggest cryptocurrency ether fell to earth with a bump, slumping by nearly half.
Now ether faces a change to its underlying protocol, potentially slashing its supply. The shift, known as EIP-1559 and due for Thursday, aims to stabilise the fees users of the ethereum network pay. Near-term, that could support prices - and may also make the token more easily used in mainstream finance.
But perhaps the move was already priced in during ether's stellar rally earlier in the year? Crypto fans may want to watch this space.
(4) Is Europe going to feel the pinch of high Consumer Price Inflation too?
There's a unique flavor to each earnings season and unlike recent quarters, this one isn't about lockdowns or tax cuts but all about inflation, and how companies deal with it.
Europe's consumer staples sector is on the frontline of concerns about how raw materials, shipping and labor costs might hit margins. Mentions of inflation rose more than 400% year-on-year during STOXX 600 firms' Q2 earnings calls, BofA analysts note. Materials, financials and consumer firms were most prominent.
Many such as Unilever,Reckitt or Nestle have bemoaned feeling the pinch. Other inflation-sensitive heavyweights may follow suit in the coming week, as Nivea maker Beiersdorf, fashion retailer Zalando and automotive supplier Continental report.
A huge week for banks too, with HSBC, Societe Generale, Standard Chartered, Commerzbank, Intesa Sanpaolo and Credit Agricole all due to report.
(5) The Bank of England meets on Thursday.
The Bank of England is set to keep stimulus running at full speed when it meets on Thursday, despite some dissent within its board over the size of its bond-buying program amid rising inflation and improving economic growth
Thanks to a speedy COVID-19 vaccination rollout and an economy adapting well to lockdown and subsequent reopening, the International Monetary Fund expects Britain's 2021 growth to hit a stellar 7%.
It's all rosier than a few months ago and sterling has rallied as Britain's reopening remains on track.
What to watch for at the BOE meeting? Its view on the economy of course, but after two policy makers broke ranks recently to suggest an early end to its nearly 900 billion pound ($1.2 trillion) bond-buying scheme, it will be interesting to gauge whether that view is garnering more support.
Top Zacks #1 Rank (STRONG BUY) Stocks
This is still a growth stock buying environment. Consider the next 3 stocks in turn.
(1) Lululemon Athletica: This is a $403 a share stock now, giving the market cap a $52.4B heft. I see a Zacks Value score of F, a Zacks Growth score of B, and a Zacks Momentum score of C.
(2) Chewy: This is an $87 a share stock, giving the market cap a $36B value. I see a Zacks Value score of F, a Zacks Growth score of A, and a Zacks Momentum score of B.
(3) Sketchers U.S.A.: This is a $53 stock, with a market cap of $8l.3B. I see a Zacks Value score of D, a Zacks Growth score of F, and a Zacks Momentum score of A.
LULU and CHWY have growth scores of B or A.
SKX has a growth score of F.
Guess which stocks are much higher priced?
Key Global Macro
The week kicks off with a flurry of manufacturing PMIs. It ends with a critical U.S. nonfarm payroll report for July.
On Monday, Japan’s Jibun Bank manufacturing PMI comes out. The prior was 52.2.
China’s Caixin manufacturing PMI for July comes out too. The consensus looks for 51, after 51.3 in June. No sign of change here is the common event.
The Eurozone manufacturing PMI for July should be 62.6. This should mimic the 62.6 seen in June. That is hot.
The U.S. ISM manufacturing PMI should be 60.8 for July, after 60.6 in June.
On Tuesday, Australia’s RBC Commodity Index comes out for July. It is running very hot at +49.1% y/y.
On Wednesday, the Eurozone services PMI should be 60.4 in July. That is similar to the manufacturing PMI for this region.
U.S. ADP payrolls should be +600K.
On Thursday, we get a Bank of England (BoE) monetary policy report. 0.1% should stick around.
On Friday, we get a Reserve Bank of Australia (RBA) monetary policy decision.
U.S. payrolls should be up +926K in July, after +850K in June.
The U.S. household unemployment rate is pegged to fall to 5.7%, after a 5.9% number in June.
Note: the broader U6 U.S. household unemployment rate is still 9.8%.
Conclusion
For the Global Week Ahead, Zacks earnings system shows 96 + 170 + 297 + 384 + 107 = 1054 earnings reports.
That is more than last week’s near 1000 reports.
U.S. monthly nonfarm payrolls usually become the major market catalyst, when that data comes out.
This time around, however, I would focus on the flood of earnings reports.
The potential for actual stock market surprise coming out inside a key earnings report is much higher.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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The Zacks Analyst Blog Highlights: Lululemon Athletica, Chewy and Sketchers U.S.A.
For Immediate Release
Chicago, IL – August 3, 2021 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Lululemon Athletica Inc. (LULU - Free Report) , Chewy, Inc. (CHWY - Free Report) and Sketchers U.S.A., Inc. (SKX - Free Report) .
Here are highlights from Monday’s Analyst Blog:
Peak Earnings? Or Just a Peak Report Week?: Global Week Ahead
The Big Tech companies reported last week.
Incorporating much of that, here is what Zacks Research Director Sheraz Mian has for us, in terms of a Q12 earnings update.
“The picture emerging from the Q2 earnings season is one of all-around strength.
195 S&P 500 members have reported Q2 results, so far.
• Total earnings are up +105.0%,
• On +22.3% higher revenues,
• With 90.8% beating EPS estimates and 86.2% topping revenue estimates.
For Tech, now have Q2 results from 65.8% of the sector’s market cap in the S&P500.
• Total earnings for these Tech companies are up +63.9% from the same period last year,
• On +24.7% higher revenues,
• With 96.3% beating EPS estimates and 100% beating revenue estimates.
Aggregate total quarterly earnings are on track to reach a new all-time record -- with impressive momentum on the revenue side.
• Outsized earnings growth is mostly due to easy comps, primarily in Finance.
• However, performance on revenue (growth rate and beats %) is tracking above what we saw in other recent periods.”
Next are Reuter’s five world market themes, reordered for equity traders—
(1) Are U.S. macroeconomic upside surprises in the rearview mirror?
Is this year's sharp U.S. growth rebound losing momentum?
A raft of economic data due in the world's biggest economy will provide clues.
U.S. non-farm payrolls on Aug. 6th will offer a snapshot of July hiring. Economists polled by Reuters forecast the economy added 926,000 jobs in July after June's forecast-beating 850,000 in June.
Before the payrolls, the ISM manufacturing report and Purchasing Managers' Index (PMI) surveys will be released.
The strength of U.S. economic numbers has at least partly driven stock market gains. But forecast-beating data might become the exception rather than the rule.
Have a look at Citi's U.S. Economic Surprise Index, which measures the degree to which the data is beating or missing economists' forecasts.
It stands at 3.2 -- a far cry from July 2020's record high of 271.
(2) China’s crackdown on Big Tech there raises eyebrows, lowers stocks.
Regulators' crackdowns have frightened investors away from Chinese stocks.
As the leash tightens on tech titans, the aggressive moves might well signal the end of internet firms' "barbarian growth".
Authorities have rushed to calm market nerves with soothing editorials and promises to take things steadier in future. That's put a floor under stocks and the yuan.
What investors will want to see now is how serious China's economic growth slowdown really is.
If PMI surveys in the coming week point to moderating manufacturing growth and flatlining services, that could be the next test for markets.
(3) Crypto is bouncing. Ether faces a change in protocol.
After piggybacking on booming bitcoin to hit a record of almost $4,400 in May, the second-biggest cryptocurrency ether fell to earth with a bump, slumping by nearly half.
Now ether faces a change to its underlying protocol, potentially slashing its supply. The shift, known as EIP-1559 and due for Thursday, aims to stabilise the fees users of the ethereum network pay. Near-term, that could support prices - and may also make the token more easily used in mainstream finance.
But perhaps the move was already priced in during ether's stellar rally earlier in the year? Crypto fans may want to watch this space.
(4) Is Europe going to feel the pinch of high Consumer Price Inflation too?
There's a unique flavor to each earnings season and unlike recent quarters, this one isn't about lockdowns or tax cuts but all about inflation, and how companies deal with it.
Europe's consumer staples sector is on the frontline of concerns about how raw materials, shipping and labor costs might hit margins. Mentions of inflation rose more than 400% year-on-year during STOXX 600 firms' Q2 earnings calls, BofA analysts note. Materials, financials and consumer firms were most prominent.
Many such as Unilever, Reckitt or Nestle have bemoaned feeling the pinch. Other inflation-sensitive heavyweights may follow suit in the coming week, as Nivea maker Beiersdorf, fashion retailer Zalando and automotive supplier Continental report.
A huge week for banks too, with HSBC, Societe Generale, Standard Chartered, Commerzbank, Intesa Sanpaolo and Credit Agricole all due to report.
(5) The Bank of England meets on Thursday.
The Bank of England is set to keep stimulus running at full speed when it meets on Thursday, despite some dissent within its board over the size of its bond-buying program amid rising inflation and improving economic growth
Thanks to a speedy COVID-19 vaccination rollout and an economy adapting well to lockdown and subsequent reopening, the International Monetary Fund expects Britain's 2021 growth to hit a stellar 7%.
It's all rosier than a few months ago and sterling has rallied as Britain's reopening remains on track.
What to watch for at the BOE meeting? Its view on the economy of course, but after two policy makers broke ranks recently to suggest an early end to its nearly 900 billion pound ($1.2 trillion) bond-buying scheme, it will be interesting to gauge whether that view is garnering more support.
Top Zacks #1 Rank (STRONG BUY) Stocks
This is still a growth stock buying environment. Consider the next 3 stocks in turn.
(1) Lululemon Athletica: This is a $403 a share stock now, giving the market cap a $52.4B heft. I see a Zacks Value score of F, a Zacks Growth score of B, and a Zacks Momentum score of C.
(2) Chewy: This is an $87 a share stock, giving the market cap a $36B value. I see a Zacks Value score of F, a Zacks Growth score of A, and a Zacks Momentum score of B.
(3) Sketchers U.S.A.: This is a $53 stock, with a market cap of $8l.3B. I see a Zacks Value score of D, a Zacks Growth score of F, and a Zacks Momentum score of A.
LULU and CHWY have growth scores of B or A.
SKX has a growth score of F.
Guess which stocks are much higher priced?
Key Global Macro
The week kicks off with a flurry of manufacturing PMIs. It ends with a critical U.S. nonfarm payroll report for July.
On Monday, Japan’s Jibun Bank manufacturing PMI comes out. The prior was 52.2.
China’s Caixin manufacturing PMI for July comes out too. The consensus looks for 51, after 51.3 in June. No sign of change here is the common event.
The Eurozone manufacturing PMI for July should be 62.6. This should mimic the 62.6 seen in June. That is hot.
The U.S. ISM manufacturing PMI should be 60.8 for July, after 60.6 in June.
On Tuesday, Australia’s RBC Commodity Index comes out for July. It is running very hot at +49.1% y/y.
On Wednesday, the Eurozone services PMI should be 60.4 in July. That is similar to the manufacturing PMI for this region.
U.S. ADP payrolls should be +600K.
On Thursday, we get a Bank of England (BoE) monetary policy report. 0.1% should stick around.
On Friday, we get a Reserve Bank of Australia (RBA) monetary policy decision.
U.S. payrolls should be up +926K in July, after +850K in June.
The U.S. household unemployment rate is pegged to fall to 5.7%, after a 5.9% number in June.
Note: the broader U6 U.S. household unemployment rate is still 9.8%.
Conclusion
For the Global Week Ahead, Zacks earnings system shows 96 + 170 + 297 + 384 + 107 = 1054 earnings reports.
That is more than last week’s near 1000 reports.
U.S. monthly nonfarm payrolls usually become the major market catalyst, when that data comes out.
This time around, however, I would focus on the flood of earnings reports.
The potential for actual stock market surprise coming out inside a key earnings report is much higher.
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Zacks Investment Research
800-767-3771 ext. 9339
support@zacks.com
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.