Nike reported earnings on Thursday evening, and the market crushed it on Friday.
It was the stock's 4th consecutive negative earnings reaction. This is one of the longest beat-down streaks in the S&P 500.
Our retail analyst, Jeff Macke, said, "Nike (was) expected to report its worst quarter in years." The expectations were super low, allowing the company to beat expectations across the board.
They reported revenues of $11.27B versus the $11.02 estimate and $0.54 per share versus the $0.30 estimate. It was a great quarter, so why didn't the market reward the stock?
Here's what Jeff thinks, "because of the massive size of the Nike, turning it around is like doing doughnuts in an aircraft carrier. It takes time and space."
In other words, the market wants to see more.
Nike is guilty until proven innocent.
Here are the latest earnings stats from the S&P 500 ๐
*click the image to enlarge it
As you can see, Friday was full of beat, beat, and drops. The market didn't reward seemingly good quarters.
Micron $MU was the largest stock to report earnings. They reported revenues of $8.05B versus the $7.90B estimate and $1.56 per share versus the $1.43 estimate.
Carnival $CCL was the smallest stock to report earnings. They reported revenues of $5.81B versus the $5.75B estimate and $0.13 per share versus the $0.02 estimate.
FedEx $FDX was the only company to report a bottom-line miss. The stock fell 6.45% with a reaction score of -3.07. It was nasty!
Now, let's dig into the data and look at some of the best and worst earnings reactions from Friday ๐
CCL is testing a key level of interest:
Carnival reported a double beat but wasn't rewarded for it. The price fell 1.23% with a muted reaction score of -0.18.
The company is planning for macroeconomic and geopolitical volatility. This has spooked the market.
The stock has suffered a severe drawdown this year. The stock is now finding support at a shelf of former highs.
If CCL is above 19.50, the path of least resistance is higher for the foreseeable future.
LEN had its 6th consecutive negative earnings reaction:
Lennar reported a double beat, but the market hated it. The stock fell 4% with a reaction score of -2.
The company's gross margin on home sales decreased nearly 3% year-over-year. Their guidance suggests margins could continue declining.
The stock has resolved a prolonged distribution pattern and is below its prior cycle's peak. This suggests further weakness is likely.
If LEN is below 117, the path of least resistance is lower for the foreseeable future.
NKE had its 4th consecutive negative earnings reaction:
Nike reported a double beat but traded down to a fresh 5-year low. The stock fell 5.46% with a reaction score of -2.65.
The company's gross margin decreased by over 3% year-over-year. This was primarily caused by higher discounts because of the increased competition.
The stock is now in a greater than 60% drawdown from its 2021 peak. This decline is showing no signs of stopping. Instead, we think the selling pressure could accelerate.
If NKE is below 71.50, the path of least resistance is lower for the foreseeable future.
