Costco (COST) earnings breakdown, and the market outlook a week after rate cuts
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Now, let’s see what is upcoming in the markets this upcoming week, and what happened this week quickly before the week begins!
Looking at the markets last week, Jerome Powell did a larger than expected rate cut at 50bps, causing the market to rally, with SPY up nearly 1%. Here is what that looked like in the heatmaps:
Now to earnings. Let’s break down Costco, COST earnings, which you can see a full breakdown on Unusual Whales at https://unusualwhales.com/stock/COST/earnings.
Costco earnings have been hard to predict, but it generally has a runup into earnings, and then it runs postiviely most days after earnings, with on average being up 2% 20 days after the earnings. Let’s dig in.
For COST, you can see that COST generally over the last ten quarters has come into earnings with its average move positively, but on average only one day before earnings. COSTCO generally is an expensive stock, trading close to $900 at the moment.
Over the last 9 quarters, COST has incredibly well-defined earnings with small implied moves (but expensive due to the price of the underlying), however market markers have been very good at pricing the last moves, with the moves falling within the expected price move 5/8 times. At the moment, the Implied Move (expected move) for COST is quite high, at 3.90% (or $35.33 in dollar terms (which is an expensive move, due to the high stcok price). The 3.9% move is the second biggest move over the last 8 quarters. Due to the large expected move, you can see that there is a lot of premium in COST options right now, where buying contracts might pose a huge risk of IV crush. On the larger historical earnings expected moves, COST has generally finished inside its bands, while rallying significantly in the following days.
You can see that overwhelmingly COST has outperformed in EPS and financials recently, despite them increasing. How would straddles have performed if you took them? Because Costco has had well defined moves, generally, the one week long straddle has performed poorly down on average 32% in one week 8/10 times, meaning it was better to sell volatility into COST earnings. The one week short straddle worked 7/10 times, but the one day short straddle worked 6/10, showing most whales actually hold a bit after COSTO earnings if taken a short.
However, COST’s moves are getting larger given the ATHs it hit and stock split rumored. You can once again see more at unusualwhales.com/stock/COST/earnings
Here are the upcoming earnings this week, including the expected moves, EPS mean estimates, and notable details. See more at unusualwhales.com/earnings. We also updated our earnings breakdowns to show you historical moves and predictions!
Report Date: September 23, 2024
Red Cat Holdings (RCAT) does not provide an EPS estimate but expects a stock price move of $0.98. It has an open interest of 18,490 and a stock volume of 2,583,746.
Report Date: September 24, 2024
KB Home (KBH) expects an EPS of 2.04, with a predicted stock price move of $7.18. It has an open interest of 104,237 and a stock volume of 2,010,021.
Thor Industries (THO) forecasts an EPS of 1.35, with a significant stock price move of $9.22 expected, reporting premarket. It has an open interest of 27,987 and a stock volume of 1,125,464.
Stitch Fix (SFIX) forecasts an EPS of -0.19, with a stock price move of $0.53 expected. It has an open interest of 23,286 and a stock volume of 2,518,061.
AutoZone (AZO), reporting premarket, expects an EPS of 53.59, with a significant stock price move of $156.02 anticipated. The open interest is 9,044, and the stock volume is 281,189.
Report Date: September 25, 2024
Micron Technology (MU) anticipates an EPS of 0.97, with a stock price move of $7.67 expected. It has an open interest of 1,848,203 and a stock volume of 28,710,832.
B Riley Financial (RILY) does not provide an EPS estimate but expects a stock price move of $0.99. It has an open interest of 398,683 and a stock volume of 6,491,888.
Jefferies Financial Group (JEF) expects an EPS of 0.8, with a stock price move of $3.59 anticipated. It has an open interest of 57,471 and a stock volume of 5,377,409.
Cintas (CTAS) forecasts an EPS of 1.0, with a stock price move of $9.66 expected, reporting premarket. It has an open interest of 44,336 and a stock volume of 3,160,568.
Report Date: September 26, 2024
Costco Wholesale (COST) expects an EPS of 5.04, with a stock price move of $35.33 expected. It has an open interest of 316,257 and a stock volume of 4,658,012.
Blackberry (BB) anticipates an EPS of -0.04, with a stock price move of $0.23 expected. It has an open interest of 287,729 and a stock volume of 18,884,520.
Accenture (ACN), reporting premarket, forecasts an EPS of 2.77, with a stock price move of $15.43 anticipated. The open interest is 102,745, and the stock volume is 5,230,982.
CarMax (KMX), also reporting premarket, expects an EPS of 0.85, with a stock price move of $7.06 expected. It has an open interest of 79,079 and a stock volume of 3,706,522.
Jabil (JBL), reporting premarket, anticipates an EPS of 2.12, with a stock price move of $9.69 expected. It has an open interest of 52,336 and a stock volume of 5,766,861.
Aldeyra Therapeutics (ALDX) does not provide an EPS estimate but expects a stock price move of $1.00. It has an open interest of 16,427 and a stock volume of 861,778.
Vail Resorts (MTN) forecasts an EPS of -4.28, with a stock price move of $13.26 anticipated. It has an open interest of 13,183 and a stock volume of 1,365,810.
Standard Lithium (SLI), with an unknown reporting time, forecasts an EPS of -0.04, with a stock price move of $0.30 expected. It has an open interest of 7,953 and a stock volume of 3,424,434.
Here is the economic calendar this week. More at unusualwhales.com/economic-calendar:
Monday, September 23:
Atlanta Fed President Raphael Bostic speaks at 5:00 AM.
S&P flash U.S. manufacturing PMI for September is reported at 48.4, up from 47.9, at 6:45 AM.
S&P flash U.S. services PMI for September is reported at 55.4, down slightly from 55.7, also at 6:45 AM.
Chicago Fed President Austan Goolsbee speaks at 7:15 AM.
Minneapolis Fed President Neel Kashkari speaks at 10:00 AM.
Tuesday, September 24:
S&P Case-Shiller home price index (20 cities) for July is forecasted at 6.5%, reported at 6:00 AM.
Federal Reserve Governor Michelle Bowman speaks at 6:00 AM.
Consumer confidence for September is expected to be 102.8, down from 103.3, reported at 7:00 AM.
Wednesday, September 25:
New home sales for August are forecasted to be 700K, down from 739K, reported at 7:00 AM.
Federal Reserve Governor Adriana Kugler speaks at 1:00 PM.
Thursday, September 26:
GDP (second revision) for Q2 is forecasted at 2.9%, down from 3.0%, reported at 5:30 AM.
Durable goods orders for August are expected to be -3%, a significant drop from the previous 9.8%, also at 5:30 AM.
Initial jobless claims for September are forecasted at 223K, up from 219K, also at 5:30 AM.
Federal Reserve Governor Adriana Kugler and Boston Fed President Susan Collins speak together at 6:10 AM.
Federal Reserve Governor Michelle Bowman speaks at 6:15 AM.
Federal Reserve Chair Jerome Powell gives opening remarks at 6:20 AM.
New York Fed President John Williams speaks at 6:25 AM.
Pending home sales for August are expected to be 1%, a significant improvement from -5.5%, reported at 7:00 AM.
Federal Reserve Governor Lisa Cook and Vice Chair for Supervision Michael Barr speak at 7:30 AM.
Minneapolis Fed President Neel Kashkari speaks with Fed Vice Chair for Supervision Michael Barr at 10:00 AM.
Friday, September 27:
Advanced retail and wholesale inventories for August are expected to be 0.8% and 0.3%, respectively, reported at 5:30 AM.
Advanced U.S. trade balance in goods for August is forecasted at $102.7 billion, also at 5:30 AM.
Core PCE (year-over-year) for August is expected to be 2.7%, up from 2.6%, also reported at 5:30 AM.
PCE (year-over-year) for August is forecasted at 2.2%, down from 2.5%, with the PCE index expected at 0.1%, down from 0.2%, also at 5:30 AM.
Personal spending and income for August are expected to be 0.3% and 0.4%, respectively, reported at 5:30 AM.
Consumer sentiment (final) for September is forecasted at 69.2, up from 69, reported at 7:00 AM.
Federal Reserve Governor Michelle Bowman speaks at 10:15 AM.
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Thank you as always for reading and have a great week!