Key Sector Updates for the Week Ending 12/05/2024
Focus List Updates for the two weeks ending 11/21/2024:
Archrock (AROC) reported better-than-expected Q3 FY24 results. Revenue and adjusted EPS beat estimates by 3% and 9%, respectively. Revenue from its core business, contract operations, grew 18% y/y, driven by strong compression demand. The utilization rate was 95%, indicating sustained tightness in the compressor market. The company raised its FY24 adjusted EBITDA guidance by 10% at the midpoint, which came in 5% ahead of estimates. The stock is extended after breaking out of a stage-one cup-with-handle base and is 2% off its 52-week high. Support is near its July highs of $23.4 (-4%).
Last week saw all of the major U.S. indices surging into fresh highs. The S&P 500, equal-weight S&P 500, and Nasdaq Composite made new all-time highs as a group for the first time since July. The Russell 2000 broke above its July peak and to its highest level since November 2021. It remains about 2% off all-time highs.
Sector Performance Following Trump Election Victory
Here are some figures related to U.S. presidential elections since 1900 (31 elections). Highlighted in green below are the most lopsided races and in red the narrowest. Recent history has shown generally much closer races.
Key Sector Updates for the Week Ending 10/31/2024
1. First Solar (FSLR), the world’s largest thin-film solar module maker, reported weaker-than-expected Q3 FY34 results.
Revenue (+11% y/y) missed estimates by 17% and EPS (+16% y/y) missed estimates by 7%. Earnings were primarily
impacted by a $50M product warranty reserve charge during the quarter. Management cut its FY24 guidance for net sales by
7% to $4.1B–4.25B, missing estimates by 6%, and EPS by 2% to $13.0–13.5, missing estimates by 2%. The decline was
primarily driven by a decrease in the volume of MW sold, market headwinds in India, and other operational challenges. Gross
margin remained strong at 50.2% (+320bps y/y), buoyed by the 45X manufacturing production tax credit and other incentives
from the Inflation Reduction Act.
The stock was down 7% following the results. It is trading 40% off its 52-week high and is below all its key moving
averages. It has been under distribution for the past few weeks, with an Acc/Dist Rating of D and Up/Down Volume ratio
of 0.7. RS line is in a downtrend, with an RS Rating of 73.
2. FL- ACWA power (ICF.SA) signed four agreements worth $1.78B at the Future Investment Initiative in Riyadh to advance green
energy projects across multiple regions. Key deals include a $690M funding arrangement with the National Bank of Kuwait for
working capital and a $240M Shariah-compliant loan from the International Finance Corporation for solar projects in Uzbekistan.
In addition, an $800M investment will fund Gotion Power’s battery plant in Morocco and $54M will be used to develop an R&D
center in Shanghai with a focus on renewable technologies.
The stock took support along its 50-DMA and is forming the right side of a stage-four consolidation base, with the pivot 4%
away. RS line is near highs, with a strong RS Rating of 92 and an Acc/Dist Rating of B.
Newmont Corporation (NEM), the world’s largest gold miner, reported lower-than-expected Q3 results yesterday after market
hours. Revenue of $4.61B (+85% y/y) missed estimates by 2% while EPS of $0.81 missed estimates by 5%. Gold production in
Q3 grew 29% y/y to 1.67Moz and was in line with estimates. The earnings decline was mainly driven by higher all-in sustaining
cost (AISC) of $1,611/oz (+13% y/y), which came in above consensus of $1,445/oz. Realization in Q3 was $2,518/oz and beat
estimates of $2,445/oz. The company reiterated its full-year production guidance for FY24, with production in Q4 expected to be
~1.8Moz at an AISC of $1,475/oz. The higher production in Q4 is expected to be driven by improved grades at Penasquito and
Tanami and improved throughput at Lihir mines. The stock is down more than 8% after it gapped down and breached support
along its 50-DMA. Next support is near $50 (-5%), followed by its 100-DMA (-7%).
As earnings season is now fully underway, we will break down U.S. companies growth by positive growers and also by those select few which are showing accelerating sales and EPS growth. As S&P 500 earnings have grown solidly for the past three quarters, the number of companies with accelerating growth will naturally be lower than three quarters ago, but just how rare is it now?
Key Sector Updates for the Week Ending 10/17/2024
1. The transportation sector ETF XTN is up 2% this week and is breaking out of a stage-one consolidation base, after bouncing off
its 200-DMA few weeks ago. The sector ETF is trending upward, backed by strong results from United Airlines (UAL) and Hunt J
B (JBHT).
J. B. Hunt (JBHT; +3%) reported better-than-expected results, with revenue (-3% y/y) beating estimates by 2% and EPS
(-17% y/y) beating estimates by 7%. Revenue in the largest segment, intermodal, was flat y/y with volume rising 5% y/y.
Weak spots were trucking and last mile services. Operating income (-7% y/y) was impacted by lower profits from all the
segments, except trucks, which benefitted from lower costs. Volumes and pricing continued to be weak, while the beat
was due to lower costs and drove the stock higher.
The stock was up 7% intraday but closed 3% higher after retaking its 200-DMA. Key resistance level remains at
$190. RS line is near its lows, with a poor RS Rating of 42 and an Acc/Dist Rating of B-
Key Points:
