Earnings Preview: Q1 2019 Strengths & Weaknesses

Most companies won’t report their Q1 results until late April, so in this post we used the Amenity text analytics platform to narrow the focus on what companies have been saying, specifically regarding trends in January and February, to identify potential pockets of strength and weakness in Q1.

Please note: This in no way represents investment advice. All transcript text provided by S&P Global Market Intelligence.

How is Q1 2019 Sentiment Tracking?

For this effort we look at our Amenity Forecast Index. Overall, sentiment continues its upward climb from January lows though it remains -12% year-over-year (see exhibit below).

About the Index: Earnings sentiment of only forward-looking commentary from U.S. quarterly earnings calls. This analysis goes beyond the stated revenue and EPS guidance to capture all significant forward-looking financial commentary: market share, new products, pricing, inflation, margins, growth, Capex, hiring, share repurchase, etc.

The Amenity Forecast Index is 37.5, +12% month-over-month, but -12% year-over-year:
Exhibit: Amenity Forecast Index of Forward-Looking Sentiment

1. Mixed signals in Consumer/Retail, with a slow start to tax refund season a complicating factor
  • Kohl's (3/5/19):

"February is off to a slow start. We believe it’s primarily weather-driven, but it is starting below our plan."

  • Urban Outfitters (3/5/19):

"Our sales have started out the year weaker than we anticipated."

  • L Brands (2/28/19):

"February has been a little choppy because of what we believe to be some effect from tax refund timing."

  • Lowe's (2/27/19):

"Our U.S. comps improved by 2.4% (in Q4), delivering a positive 5.8% comp in January."

  • Wingstop (2/27/19):

"We do feel very good about the strong start we had to the year."

2. Relative strength for Industrial/B2B as trade tensions ease
  • Marriott (3/1/19):

"We’ve now seen in January and February the market strengthen. We’ve seen backing away a little bit from some of the trade dynamic. I think we’ve seen our corporate clients particularly get a little less fearful, a little less anxious."

  • IMI (3/1/19):

"There’s a lot of volatility, particularly in Industrial Automation. We saw particularly strong January. That was offset by lower first half of February that bounced back in the second half of February. So volatility is the name of the game in Industrial Automation."

  • Analog Devices (2/20/19):

"January orders was stronger than December. Now that’s not unusual for us, but it is a good sign, and that was spent in orders across all of our B2B markets."

3. Beating the dead horse; Europe is weak
  • Univar (3/4/19):

"In Europe, we saw business conditions weakness progressively as uncertainty in the economy led to cautious behavior from customers. We’ve seen this uncertainty in many markets continue into January and February, and as a result, are being restrained and prudent with our discretionary spending and measured in our outlook."

  • Garrett Motion (2/20/19):

"So far 2019 is off to a slow start, with the continued deceleration in China and reduced diesel registration in Europe, all pointing to a lower Q1 and H1 2019 macros."

4. Risk in the oil patch
  • Solaris Oilfield Infrastructure (2/28/19):

"Due to the recent commodity price volatility and delay in operator setting budget, Q1 is off to a slow start and there is some uncertainty around the ultimate size and trajectory of the completions market in 2019."

  • Select Energy Services (2/27/19):

"As we look at the first quarter, many of our customers have gotten off to slow starts for the year, and we’ve seen some seasonal challenges, such as cold weather conditions impacting operations."

See Amenity in March: 

Our team at Amenity Analytics looks forward to joining Fintech leaders participating in the AI and Data Science in Trading Conference on Tuesday, March 19 and Wednesday, March 20. Please use our discount code Sponsor10 to save on your registration and meet us at our booth.

Join the Amenity Viewer Beta Program today to analyze earnings call transcriptions and enable you to spot outliers, identify critical insights, and understand key drivers.

Transcript text provided by S&P Global Market Intelligence.

Copyright ©2019. All rights reserved.

March 21, 2019

Micron Earnings: Clouds Lifting? Text Analytics Points to Yes

While Micron's 2Q earnings reveal weakness, a closer look with our text analytics platform shows that Micron may have bottomed out, and could be poised for a resurgance in Cloud orders when comparing their latest sentiment with key players.
March 20, 2019

FedEx Earnings: Secular and Cyclical Issues at Play, Plus Something to Watch

As expected FedEx's FYQ3 earnings disappointed with the root cause being international and supply chain challenges. We used our text analytics platform to explore the issues as well as uncovered a new development around China that bears watching.
March 20, 2019

Smartsheet Earnings: Management Commentary Clouds Otherwise Strong Gains

Smartsheet's Q4 earnings came in as expected from our earlier analysis, however our text analytics platform picked up on some interesting management commentary around net expansion rate that could lead to some trouble down the road. Is this a trap door or is Smartsheet managing expectations?
March 18, 2019

FedEx Earnings Preview: Europe and Amazon Risks Ahead of Q3

We preview FedEx's FYQ3 earnings, using our text analytics platform to revisit Europe macro and supply chain challenges that were uncovered as part of our earlier FedEx assessment on December 2018. Our prognosis for Tuesday's earnings? Continued Europe issues and Amazon risk.

Stay Informed: Join Our Newsletter

Keep up to date with our analyses and how we're making changes.

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
We respect your privacy. We will use your email to keep you informed about Amenity Analytics.