What to Know Ahead of Next Week’s Release

The market expects Lowe’s (LOW) to deliver a year-over-year increase in earnings on higher revenues when it reports results for the quarter ended April 2020. This widely-known consensus outlook is important in assessing the company’s earnings picture, but a powerful factor that might influence its near-term stock price is how the actual results compare to these estimates.

The earnings report, which is expected to be released on May 20, 2020, might help the stock move higher if these key numbers are better than expectations. On the other hand, if they miss, the stock may move lower.

While management’s discussion of business conditions on the earnings call will mostly determine the sustainability of the immediate price change and future earnings expectations, it’s worth having a handicapping insight into the odds of a positive EPS surprise.

Zacks Consensus Estimate

This home improvement retailer is expected to post quarterly earnings of $1.32 per share in its upcoming report, which represents a year-over-year change of +8.2%.

Revenues are expected to be $18.17 billion, up 2.4% from the year-ago quarter.

Estimate Revisions Trend

The consensus EPS estimate for the quarter has been revised 2.69% lower over the last 30 days to the current level. This

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Mastercard (MA) Sees a Steady Rebound in Business Volumes

Mastercard Inc. MA has announced second-quarter 2020 operating metrics, which reflected stabilization in business volumes.  

The company’s cross-border business suffered in the first quarter, experiencing a decline of 1% due to lower spending levels induced by the coronavirus.

Nevertheless, Mastercard is undergoing a transitional phase from stabilization to normalization in some markets, driven by the gradual reopening of businesses.

The stabilization phase is characterized by lower level of spending on account of compliance with social distancing and mobility limitations.

The next phase is normalization wherein governments gradually relax restraints and the environment becomes safer for the public at large, enabled by widely available testing and contact tracing kits as well as improved therapeutics even before the rollout of an effective vaccine. This phase is likely to be characterized by a steady recovery in spending to the pre-COVID levels. The company anticipates spending to rebound to normalcy during this phase, but not necessarily evenly.

The company expects specific sectors, such as  home improvement, clothing, healthcare, domestic and intra-regional travel among others to normalize earlier as these witness the ballooning of pent-up demand. Other areas like mass entertainment and long-distance travel will probably take longer to bounce back on track. It’s possible

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Another Data Defying Day As Retail Spend Plummeted

Stocks rallied to close the week, again showing resilience in the face of troubling economic data. An extension of the oil rebound and more positive reopening also provided some ballast to equities.

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  • The S&P 500 climbed 0.39%.
  • The Dow Jones Industrial Average advanced 0.25%
  • The Nasdaq Composite gained 0.79%
  • After being one of the Dow components worst hit by the novel coronavirus, Walt Disney (NYSE:DIS) was the index leader today on news Florida is taking steps to reopen theme parks, including Disney World in Orlando.

Onto the data, which were again dismal. A report released earlier today by the Federal Reserve indicates industrial production plunged 11.2% last month, the worst decline on record (and that data spans more than a century). Even with that, Dow members from the industrial sector 3M (NYSE:MMM) and Caterpillar (NYSE:CAT) closed higher today.

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Separately, the Commerce Department said retail spending tumbled 16.4% in April, far worse than the 12% drop economists expected. The April decline follows an 8.3% in March.

Data points like those are sure to cap gains, but the broader market moved higher

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Volumes And Rejections Up Off The Bottom Just Enough To Move The Needle In Carriers’ Favor

The DHL Supply Chain Pricing Power Index uses the analytics and data contained in FreightWaves SONAR to analyze the market and estimate the negotiating power for rates between shippers and carriers.

Tender volumes are racing to the upside and are tracking positive year-over-year in May, albeit off a depressed 2019 comparison. Volumes have risen more than 15% since the trough on April 16. Tender rejections are reacting slowly to the rising volumes, but rising nonetheless. Capacity remains very loose and spot rates remain depressed, but things are brighter now than they have been in many weeks. 

We had expected volumes to bounce off the bottom once parts of the economy reopened, but the rise over the past two weeks is surprising. The whiplash in freight volumes over the past two months has been like riding a prized steer in a Texas rodeo. Just one month ago, the outbound tender volume index (OTVI) was down 16% y/y. Today, May 14, OTVI is positive on a yearly basis. However, this needs to be taken with a grain of salt — May 2019 was a particularly slow point in the weak first half of 2019. Trade tensions and Trump tweets disrupted freight flows … Read The Rest