Earnings season is the heartbeat of the market, and every day brings fresh signals about where money is flowing.
With each report, we learn not just how companies are performing, but how investors are reacting.
In the Daily Beat, we spotlight the most important S&P 500 earnings moves from the prior session: the winners, the losers, and the reactions that reveal what really matters to the market right now.
Whether it’s a bellwether with broad economic implications or a niche name making waves, we cut through the noise to focus on the setups that matter most.
Here are the latest earnings stats from the S&P 500 👇
*Click the image to enlarge it
At the top of Thursday's Beat Sheet was the $45B grocery store stock, Kroger $KR. Following a mixed earnings report, shareholders were rewarded with a +3.93 reaction score.
KR reported $34.73B in revenue, missing the expected $34.73B, and earnings per share of $1.28, beating the expected $1.20.
The market's positive reaction to Broadcom's $AVGO double beat also stood out to us.
At the bottom of Thursday's list was the $42B communication equipment stock, Ciena $CIEN. After beating headline expectations, shareholders received a -3.68 reaction score.
CIEN's revenues came in at $1.43B, beating the expected $1.40B, and earnings per share of $1.35, beating the expected $1.17.
Let's talk about what else happened 👇
AVGO had a sweet reaction at a key level🔥
Broadcom had a +4.8% post-earnings reaction, and here's what happened:
Revenues grew 29% year-over-year, driven by AI semiconductor revenues surging 106% over the same period. This was way above expectations.
The dramatic rise in the top-line is leading to increased profitability. In the quarter, the operating margin improved by 50 basis points year-over-year.
In addition to the blockbuster report, the management team issued better-than-expected guidance for next quarter. In addition, the management team believes AI semiconductor revenue could surpass $100B in 2027, well above Wall Street's expectations.
We highlighted this report in the latest Weekly Beat column, noting that the stock was hanging on for dear life at the lower bound of a textbook distribution pattern.
It wasn't a good look heading into earnings...
Additionally, shareholders suffered the worst earnings reaction in the stock's history last quarter. Earnings sentiment was clearly negative, and the technicals were confirming it.
On top of that, we just saw Nvidia get beaten down, despite posting incredible numbers.
The bar for AVGO was incredibly high, and we thought they were unlikely to surpass it.
Boy, were we wrong...
They knocked the ball out of the park!
After Thursday's earnings reaction, we now believe this will turn into a "not a top" pattern in AVGO. That means new highs are likely on deck.
CIEN snapped a 2 quarter beat streak🩸
Ciena had a -12.9% post-earnings reaction, and here's what happened:
During the quarter, the top-line increased by 33% year-over-year. This was driven by an unprecedented order intake, resulting in the backlog increasing to $7B
Despite the blowout quarter, gross margin remained flat, and the management team doesn't expect it to increase anytime soon.
Additionally, the management team expects a dramatic increase in CapEx. They also expect rising component costs to squeeze margins.
This report was eerily similar to CSCO a month ago, when the company's AI revenues surged, but margin compression outweighed it.
Ultimately, it's great if a company can increase its top-line, but it means a lot less if it can't do so profitably.
After a parabolic advance off last year's low, we believe Thursday's shift in earnings sentiment will likely cause CIEN to cool off.
Proceed with caution!
Thank you for reading,
-The Beat Team
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