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Chart of the Day: Milton's Top 25 Winners & Losers During A Busy Earnings Week

Synopsis

Milton's Top 25 had its busiest week of Q3 earnings season with seven of the top 25 reporting. Milton's biggest winners outperformed Milton's biggest losers by a margin of 2 to 1 (as measured by average absolute stock price returns; +20% versus -10% week-to-date). We also highlight a commonality between Milton's earnings-related winners and Milton's earnings-related losers.

Background

Every Monday, Milton refreshes a list and identifies 25 out of the approximately 1,000 stocks (US publicly-traded) that Milton thinks has the most upside potential over the next 12 months. This list becomes each week's Top 25.

Per previous Blog Posts, Milton uses a 100% data-driven process to develop views by leveraging the latest techniques in artificial intelligence and natural language processing. Unlike humans, complex AI systems like Milton can handle a heavy volume of information and different types of data simultaneously. As part of the process, Milton reads nearly every major financial news source in the US every day and incorporates the latest news and data into its stock analysis.

Milton's Top 25: A Busy Earnings Week

This past Monday, Milton posted the Top 25 to all users. The companies included on the list span across seven GICS sectors with a median market capitalization of $8 billion. Seven of the companies reported earnings this week and we were curious to learn how Milton performed week by week. Below, we highlighted week-to-date stock price performance for all of the Top 25 stocks. The companies who reported earnings this week are in orange.

Winners: Average Performance +20% Week-To-Date

  • Etsy (ticker: ETSY): +25% week-to-date. Etsy, the online consumer goods marketplace, reported better than expected Q3 2018 results, raised full-year 2018 revenue guidance, and announced a $200mm stock repurchase plan.
  • Twilio (ticker: TWLO): +25% week-to-date. Twilio, the cloud communications platform, reported blowout Q3 2018 results and guided Q4 2018 above Street expectations. Additionally, Twilio recently announced the acquisition of email marketer SendGrid (ticker: SEND), a public company that also reported better-than-expected Q3 2018 results, with the stock rising >30% on its earnings.
  • RingCentral (ticker: RNG): +10% week-to-date. RingCentral, the SaaS communications IT provider, beat Q3 2018 Wall Street expectations and guided full-year 2018 above Street expectations.

Losers: Average Performance -10% Week-To-Date

  • Square (ticker: SQ): -5% week-to-date. Square, the payments and commerce eco-system, reported better than expected Q3 2018 results versus Wall Street consensus on revenue and EPS, but issued mixed guidance for Q4 2018. Q4 2018 revenue guidance was above expectations, but EPS guidance was lower than Street expectations from higher spending.
  • Nektar Therapeutics (ticker: NKTR): -9% week-to-date. Nektar, a biopharma company, reported better than expected Q3 2018 results versus Wall Street consensus on both revenue and EPS. The company also announced a clinical oncology collaboration with Pfizer.
  • Match Group (ticker: MTCH): -15% week-to-date. Match Group, the provider of data products such as Match and Tinder, reported Q3 2018 results that were better than expectations led by Tinder. However, Q4 2018 revenue guidance was below expectations, with management citing a stronger US dollar and the European Union's GDPR privacy law as headwinds.

Any Interesting Commonalities?

The commonality that we found most notable when analyzing how Milton did this week can be best summarized in the table below.

Key Takeaways

  • All six companies on Milton's Top 25 list, who have reported earnings this week, beat Wall Street expectations for both revenues and earnings per share for the current reporting quarter.
  • The winners beat Wall Street expectations for Q3 2018 revenue and EPS. They also beat Wall Street's future expectations for Q4 2018 on both revenue and EPS based on forward Q4 2018 or full-year 2018 company guidance.
  • The losers beat Wall Street expectations for Q3 2018 revenue and EPS, but missed Wall Street's future expectations for Q4 2018 on either revenue or EPS based on forward Q4 2018 or full-year 2018 company guidance.

Conclusion

Our team is constantly trying to improve Milton's underlying AI and these exercises are extremely helpful. Based on a very limited sample size, we can conclude that Milton may benefit from better data inputs related to forward quarterly expectations by Wall Street analysts and investors.

Contact Us

If you have any questions or comments about our findings or Milton in general, feel free to reach out directly to the Milton team at milton@apteo.co or myself at manan@apteo.co!


About Apteo
Apteo, the company behind Milton, is made up of curious data scientists, engineers, and financial analysts based in the Flatiron neighborhood in New York City.  We have a passion for technology and investing, and we strongly believe that investing is one of the most reliable and effective ways to build long-term wealth.  We build AI tools to help informed investors make better decisions.  

To learn more about us, please reach out to us at info@apteo.co, join our mailing list at milton.ai, or subscribe to Milton’s blog at blog.milton.ai.


Disclaimer
Apteo, Inc. is not an investment advisor and makes no representation or recommendation regarding investment in any fund or investment vehicle.

Chart of the Day: Milton's Top 25 Winners & Losers During A Busy Earnings Week
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