Just Charts: Earnings Season Heats Up

The table below lists our current investment ideas as well as a list of potential ideas we are in the process of evaluating (watch list).  We intend to update this table regularly and will provide detail on any material changes.


Just Charts: Earnings Season Heats Up  - chart1


Consumer Staples mildly underperformed the broader market last week, rising 1.5% versus the S&P500 at 1.7%. XLP is up 1.5% year-to-date vs the SPX at 0.9%; the coming week is marked by a number of earnings releases.


Earnings Calls (in EST):


Monday (4/21):  KMB (10am)


Wednesday (4/23):  PG (8:30am); RAI (9am); TUP (10am); DPS (11am)


Thursday (4/24): HSY (8:30am); MO (9am); MJN (9:30am); CCE (10am); LO (1pm)


Friday (4/25):  CL (11am)


For a seventh straight week, XLP is bullish on immediate term TRADE and intermediate term TREND durations from a quantitative set-up. This is a material shift as the sector traded bearish TRADE and TREND for the majority of the year-to-date.


Just Charts: Earnings Season Heats Up  - chart2


The Hedgeye U.S. Consumption Model shows a worsening outlook over recent weeks, with only 3 of the 12 metrics flashing green. 


Just Charts: Earnings Season Heats Up  - A. CONSUMPT


Despite the bullish quantitative set-up for the sector, we continue to believe that the group is facing numerous headwinds, including:


  • U.S. consumption growth is slowing as inflation rises, in-line with the Macro team’s 1Q14 theme of #InflationAccelerating, and Q2 2014 theme of #ConsumerSlowing
  • The economies and currencies of the emerging market – once the sector’s greatest growth engine – remain weak with the prospect of higher inflation in 2014 eroding real growth
  • The sector is loaded with a premium valuation (P/E of 19.2x)
  • Less sector Yield Chasing as Fed continues its tapering program
  • The high frequency Bloomberg weekly U.S. Consumer Comfort Index has not seen any real improvement over the past 6 months, but improved to -29.1 versus -31.9 in the prior week

Just Charts: Earnings Season Heats Up  - chart3

Just Charts: Earnings Season Heats Up  - chart4

Just Charts: Earnings Season Heats Up  - chart5


Top 5 Week-over-Week Divergent Performances:

Positive Divergence:  SAFM 6.1%; POST 5.7%; MNST 5.5%; NUS 4.9%; KO 4.7%

Negative Divergence:  HLF -7.9%; AVP -2.9%; CCE -1.7%; SAM -1.2%; PM -0.4%



Last Week’s Research Notes


Quantitative Setup

In the charts below we look at the largest companies by market cap in the Consumer Staples space from both a quantitative perspective and fundamental aspect where we can offer one.  As you will see over time, sometimes our fundamental view does not align with the quantitative setup (though not often).


BUD – the King of chasing low-beta-slow-growth-yield is back! Confirmed now for almost a month, BUD is back above its TREND line of $105.48


Just Charts: Earnings Season Heats Up  - chart6



DEO – is not the King of Beers – still bearish TREND @Hedgeye with $129.34 resistance


Just Charts: Earnings Season Heats Up  - chart7



KO – big move on a big price/volume breakout last week; KO back above its $39.59 TREND line


Just Charts: Earnings Season Heats Up  - chart8



PEP – bullish TREND support of $83.14 confirmed last week on a big price/volume move out of earnings


Just Charts: Earnings Season Heats Up  - chart9



GIS – still bullish TREND with $50.21 TREND support


Just Charts: Earnings Season Heats Up  - chart10



MDLZ – hanging onto TREND support of $34.45 – needs to start confirming some higher-highs soon though


Just Charts: Earnings Season Heats Up  - chart11



KMB – still the best looking stock on this list YTD – low volatility ramp to higher-lows and higher-highs w/ TREND support down at $107.23


Just Charts: Earnings Season Heats Up  - chart12



PG – got slow-growth-dividend-yield chasing in that portfolio? The machines are clamoring for those style-factors now; what was TREND resistance of $80.31 is now support


Just Charts: Earnings Season Heats Up  - chart13



MO – raging low-beta bull roaring now! TREND support = $35.68


Just Charts: Earnings Season Heats Up  - chart14



PM – slow-growth-yield-chasing even gets assigned to what’s been a dog – bullish TREND now if $82.13 support holds


Just Charts: Earnings Season Heats Up  - chart15




Howard Penney

Managing Director


Matt Hedrick



Fred Masotta


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