Nasdaq Surges 1%; Hershey Posts Downbeat Q3 Results

Hershey (HSY) came out with quarterly earnings of $2.34 per share, missing the Zacks Consensus Estimate of $2.50 per share. This compares to earnings of $2.60 per share a year ago. These figures are adjusted for non-recurring items.

This quarterly report represents an earnings surprise of -6.40%. A quarter ago, it was expected that this chocolate bar and candy maker would post earnings of $1.44 per share when it actually produced earnings of $1.27, delivering a surprise of -11.81%.

Over the last four quarters, the company has surpassed consensus EPS estimates two times.

Hershey, which belongs to the Zacks Food - Confectionery industry, posted revenues of $2.99 billion for the quarter ended September 2024, missing the Zacks Consensus Estimate by 2.79%. This compares to year-ago revenues of $3.03 billion. The company has topped consensus revenue estimates just once over the last four quarters.

The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call.

Hershey shares have lost about 5.2% since the beginning of the year versus the S&P 500's gain of 24.3%.

What's Next for Hershey?

While Hershey has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock?

There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately.

Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.

Ahead of this earnings release, the estimate revisions trend for Hershey: unfavorable. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #5 (Strong Sell) for the stock. So, the shares are expected to underperform the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

It will be interesting to see how estimates for the coming quarters and current fiscal year change in the days ahead. The current consensus EPS estimate is $2.48 on $2.9 billion in revenues for the coming quarter and $9.39 on $11.3 billion in revenues for the current fiscal year.

Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Food - Confectionery is currently in the bottom 6% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.

Lee Enterprises, Incorporated (LEE), another stock in the broader Zacks Consumer Staples sector, has yet to report results for the quarter ended September 2024.

This company is expected to post quarterly earnings of $0.65 per share in its upcoming report, which represents a year-over-year change of +303.1%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days.

Lee Enterprises, Incorporated's revenues are expected to be $169.88 million, up 3.6% from the year-ago quarter.

Zacks Investment Research

December S&P 500 E-Mini futures (ESZ24) are up +0.27%, and December Nasdaq 100 E-Mini futures (NQZ24) are up +0.33% this morning, extending their post-Election Day gains, while investors looked ahead to the Federal Reserve’s interest rate decision.

In yesterday’s trading session, Wall Street’s major indexes ended sharply higher, with the benchmark S&P 500, the blue-chip Dow, and the tech-heavy Nasdaq 100 notching new all-time highs. Tesla surged over +14% and was the top percentage gainer on the Nasdaq 100 amid speculation that the company could be a major beneficiary of Trump’s return to the White House. Also, bank stocks jumped on expectations that the Trump administration would relax regulations for the industry, with Discover Financial Services climbing more than +20% to lead gainers in the S&P 500 and Goldman Sachs rising over +13% to lead gainers in the Dow. In addition, Qualys soared more than +24% after the company posted upbeat Q3 results and boosted its full-year guidance. On the bearish side, Super Micro Computer plummeted about -18% and was the top percentage loser on the S&P 500 and Nasdaq 100 after reporting mixed preliminary FQ1 results and providing below-consensus FQ2 guidance.

“For now, investor sentiment is pro-growth, pro-deregulation, and pro-markets,” said David Bahnsen, chief investment officer at The Bahnsen Group. “There is also an assumption that M&A activity will pick up and that more tax cuts are coming or the existing ones will be extended. This creates a strong backdrop for stocks.”

Today, all eyes are focused on the Federal Reserve’s monetary policy decision later in the day. Fed officials are widely expected to lower their benchmark interest rate by a quarter percentage point as inflation continues to move closer to the 2% target. They have projected another quarter-point reduction this year in December and an additional full point of cuts in 2025, according to the median estimate released in September. Investor attention will also be on Powell’s press conference, where he is anticipated to offer guidance on the Fed’s trajectory for interest rate cuts in the upcoming quarters.

On the earnings front, notable companies like Arista Networks , Airbnb , Warner Bros. Discovery , The Trade Desk , Monster Beverage , Block , Datadog , Hershey , and Duke Energy are slated to release their quarterly results today. According to Bloomberg Intelligence, companies in the S&P 500 are expected to post an average +4.3% increase in quarterly earnings for Q3 compared to the previous year, down from +7.9% growth projected in mid-July.

On the economic data front, investors will focus on U.S. Initial Jobless Claims data, which is set to be released in a couple of hours. Economists estimate this figure to arrive at 223K, compared to last week’s number of 216K.

U.S. Unit Labor Costs and Nonfarm Productivity preliminary data will also be closely watched today. Economists forecast Q3 Unit Labor Costs to be +1.1% q/q and Nonfarm Productivity to stand at +2.6% q/q, compared to the second-quarter numbers of +0.4% q/q and +2.5% q/q, respectively.

U.S. Wholesale Inventories data will come in today. Economists expect the September figure to be -0.1% m/m, compared to +0.1% m/m in August.

U.S. Consumer Credit data will be reported today as well. Economists forecast this figure to be $12.20B in September, compared to the previous figure of $8.93B.

In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.422%, down -0.20%.

The Euro Stoxx 50 futures are up +0.81% this morning as investors continued to digest Donald Trump’s presidential election victory and political turmoil in Germany, while also awaiting monetary policy decisions from the Federal Reserve and the Bank of England. Bank and mining stocks outperformed on Thursday. Data from the Federal Statistical Office released on Thursday showed that Germany’s industrial production and exports fell more than expected in September, adding to the country’s woes. Separately, EU statistics agency Eurostat reported Thursday that Eurozone retail sales grew much stronger than expected in September, indicating that private consumption is finally beginning to pick up. Meanwhile, market participants are positioning in anticipation of quarter-point rate cuts from the Federal Reserve and the Bank of England later today. On the negative side, political uncertainty is rampant in Europe’s largest economy after German Chancellor Olaf Scholz said on Wednesday that he would call a confidence vote on January 15th, potentially setting the stage for a snap federal election in March. This came after Scholz dismissed his Finance Minister Christian Lindner, effectively bringing the current governing coalition to an end. In corporate news, Banco Bpm Spa (BAMI.M.DX) surged over +8% on plans to pursue full ownership of asset manager Anima Holding in a deal valued at up to 1.6 billion euros ($1.7 billion).

Germany’s Exports, Germany’s Imports, Germany’s Industrial Production, and Eurozone’s Retail Sales data were released today.

The German September Exports came in at -1.7% m/m, weaker than expectations of -1.4% m/m.

The German September Imports stood at +2.1% m/m, stronger than expectations of +0.5% m/m.

The German September Industrial Production has been reported at -2.5% m/m, weaker than expectations of -1.1% m/m.

Eurozone September Retail Sales arrived at +0.5% m/m and +2.9% y/y, stronger than expectations of +0.4% m/m and +1.3% y/y.

Asian stock markets today settled mixed. China’s Shanghai Composite Index (SHCOMP) closed up +2.57%, and Japan’s Nikkei 225 Stock Index (NIK) closed down -0.25%.

China’s Shanghai Composite Index closed sharply higher today. The rally was driven by expectations that Beijing might introduce more aggressive stimulus measures to offset any negative impact from Trump’s return to the White House. Brokers and insurance stocks led the gains on Thursday. Customs data showed on Thursday that China’s exports rose at the quickest rate in over two years in October, offering essential support for an economy striving to regain momentum. Meanwhile, Chinese policymakers slashed the daily reference rate for the yuan to the lowest level since late 2023, indicating that the People’s Bank of China is allowing depreciation amid potential trade tensions with the U.S. under a Donald Trump presidency. In other news, Bloomberg reported that China’s regulators urged the nation’s banks to reduce the rates paid on demand deposits from other financial institutions, aiming to free up idle funds to stimulate the economy. Investors are currently awaiting updates from the ongoing Standing Committee meeting of the National People’s Congress, with expectations for an additional 6 trillion yuan in fiscal stimulus over the next three years.

The Chinese October Trade Balance stood at $95.72B, stronger than expectations of $73.50B.

The Chinese October Exports came in at +12.7% y/y, stronger than expectations of +5.0% y/y.

The Chinese October Imports arrived at -2.3% y/y, weaker than expectations of -1.5% y/y.

Japan’s Nikkei 225 Stock Index closed marginally lower today, likely due to position adjustments by investors ahead of the Fed decision scheduled for later today. Retail, healthcare, and technology stocks weighed on the index on Thursday. Government data released on Thursday showed that Japan’s inflation-adjusted wages fell 0.1% in September, marking the second consecutive monthly drop and highlighting the negative effect of persistently high prices on nominal wages. Meanwhile, the yen strengthened following remarks from Atsushi Mimura, Japan’s chief currency official, who stated that authorities would take appropriate action against excessive currency movements. Investors also kept their attention on the wider economic implications of Donald Trump’s U.S. presidential election victory, both globally and for Japanese firms. Citi Research strategist Ryota Sakagami said in a note that if the recent Trump trades of equity strength, long-term yield gains, and yen weakness persist, these factors are expected to fuel a rally in Japanese equities around the turn of the year. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed up +19.19% to 27.52.

Pre-Market U.S. Stock Movers

Qualcomm climbed over +7% in pre-market trading after the semiconductor company posted upbeat FQ4 results, gave strong FQ1 guidance, and announced a new $15 billion buyback program.

e.l.f. Beauty surged more than +9% in pre-market trading after the company reported better-than-expected FQ2 results and raised its full-year guidance.

Lyft soared over +22% in pre-market trading after reporting stronger-than-expected Q3 revenue and boosting its full-year guidance.

Applovin jumped more than +28% in pre-market trading after the company posted upbeat Q3 results and issued above-consensus Q4 revenue guidance.

Arm Holdings slid over -6% in pre-market trading after the semiconductor design company provided weaker-than-expected FQ3 revenue guidance.

Today’s U.S. Earnings Spotlight: Thursday - November 7th

Arista Networks (ANET), Airbnb (ABNB), Duke Energy (DUK), Motorola (MSI), Transdigm (TDG), EOG Resources (EOG), Becton Dickinson (BDX), Air Products (APD), CRH (CRH), Fortinet (FTNT), The Trade Desk (TTD), Monster Beverage (MNST), TC Energy (TRP), Block (SQ), Kenvue (KVUE), PG E (PCG), Datadog (DDOG), Vistra Energy (VST), Hershey Co (HSY), Axon Enterprise (AXON), Rockwell Automation (ROK), Barrick Gold (GOLD), Cloudflare (NET), Mettler-Toledo (MTD), Wheaton Precious Metals (WPM), Halliburton (HAL), BCE Inc (BCE), Corpay (CPAY), Pinterest (PINS), Cameco (CCJ), Expedia (EXPE), Warner Bros Discovery (WBD), Moderna (MRNA), Carlyle Group (CG), DraftKings (DKNG), News Corp (NWS), Toast (TOST), Dynatrace Inc (DT), Insulet (PODD), News Corp (NWSA), US Foods (USFD), Bentley (BSY), Akamai (AKAM), Affirm Holdings (AFRM), Credicorp (BAP), Evergy (EVRG), Viatris (VTRS), Endeavor Group (EDR), Ralph Lauren (RL), Solventum (SOLV), Molson Coors Brewing (TAPa), Tapestry (TPR), EPAM Systems (EPAM), Ovintiv (OVV), Rivian Automotive (RIVN), UWM Holdings (UWMC), Stantec (STN), Sendas Distribuidora (ASAI), Dropbox (DBX), MACOM Tech (MTSI), Tempur Sealy International (TPX), H&R Block (HRB), Unity Software (U), Doximity (DOCS), Stepstone (STEP), Planet Fitness Inc (PLNT), Genpact (G), Americold Realty (COLD), OneStream (OS), Bill Com (BILL), Installed Building (IBP), Arcadium Lithium (ALTM), Red Rock Resorts (RRR), Nexstar (NXST), Nova (NVMI), Clear Secure (YOU), Sealed Air (SEE), Air Lease (AL), Civitas Resources (CIVI), Lumentum Holdings Inc (LITE), Dentsply (XRAY), Murphy Oil (MUR), Upstart (UPST), Nuscale Power (SMR), Millicom (TIGO), PACS (PACS), ADMA Biologics Inc (ADMA), RXO Inc (RXO), Nelnet (NNI), Sweetgreen (SG), Main Street Capital (MAIN), Primo Water (PRMW), Cogent (CCOI), Hilton Grand Vacations (HGV), Haemonetics (HAE), Acushnet Holdings (GOLF), DXC Technology (DXC), Hagerty (HGTY), Prestige Consumer Health (PBH), Under Armour (UAA), Oscar Health (OSCR), Walker&Dunlop (WD), Sportradar (SRAD), Kratos Defense&Security (KTOS), Algonquin Power (AQN), Iovance Biotherapeutics (IOVA), Jfrog (FROG), Envestnet (ENV), Blackline (BL), MDU Resources (MDU), Ringcentral Inc (RNG), Globalstar Inc (GSAT), CarGurus (CARG), Tidewater (TDW), Tecnoglass (TGLS), PTC Therapeutics (PTCT), United Parks Resorts (PRKS), MP Materials (MP), Steven Madden (SHOO), Resideo Tech (REZI), Brighthouse Financial (BHF), Burford (BUR), ACV Auctions (ACVA), LCI Industries (LCII), Playtika (PLTK), Diodes (DIOD), IAMGold (IAG), Appian (APPN), Astrana Health (ASTH), PENN Entertainment (PENN), Tegna (TGNA), YETI (YETI), Synaptics (SYNA), Alarm.com Holdings (ALRM), Geo (GEO), Evolent Health Inc (EVH), Chesapeake Utilities (CPK), Medical Properties (MPW), Sunrun Inc (RUN), Lifestance Health Group (LFST), Geron (GERN), Quidel (QDEL), Capri Holdings (CPRI), Bloom Energy (BE), Grindr (GRND), Privia Health Group (PRVA), Hanesbrands (HBI), Avepoint (AVPT), Lightspeed Commerce (LSPD), Strategic Education (STRA), Five9 (FIVN), New Fortress Energy (NFE), Goodrx (GDRX), Vericel Corp Ord (VCEL), NAble (NABL), Jamf (JAMF), Cable One Inc (CABO), Flywire (FLYW), Ziff Davis (ZD), International Seaways (INSW), Warby Parker (WRBY), Rxsight (RXST), Ligand (LGND), Krispy Kreme (DNUT), MannKind (MNKD), NCR (VYX), Semrush Holdings (SEMR).

On the date of publication, Oleksandr Pylypenko did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policyhere.