Walgreens, Badger Meter Eye Big Earnings Moves
Earnings season is getting exciting.
This week marks the formal kick-off of the season, with economic bellwether Alcoa set report along with multiple banking stocks.
That’s not where our attention is going today, though.
We will break down what you can expect from Walgreens Boots Alliance Inc. (Nasdaq: WBA) earnings and Badger Meter Inc. (NYSE: BMI), a small-cap industrial solutions stock.
These may seem like random stocks, but potentially large moves on earnings unite them.
That’s what we saw from our Earnings Edge companies last week.
Acuity Brands Inc. (NYSE: AYI) shares popped more than 10% on earnings, breaking out of the sideways trend channel we highlighted. Look for the stock to continue higher from here in the coming weeks.
Tilray Inc. (Nasdaq: TLRY), the cannabis stock, rose as much as 5%, but it wasn’t enough to break out. So watch for it to move out of its wedge pattern to give you the new direction for the stock.
Now, let’s dive into this week’s Earnings Edge…
Earnings Edge Stock No. 1: Walgreens Boots Alliance Inc. (Nasdaq: WBA)
Earnings Announcement Date: Thursday, before the open.
Expectations: Earnings at $1.03 per share. Revenue at $33 billion.
Average Analyst Rating: Hold.
Walgreens, the retail pharmaceutical giant, has benefited from the COVID-19 vaccine rollout.
Customers can come into its stores, get shots and buy whatever else they need.
But Walgreens is working on another aspect to drive traffic, hosting in-store medical practices.
In the past few months, it’s announced the expansion of this program in Florida and Indiana. That brings its new partnership to a dozen U.S. states. These numbers will continue to expand, and you can bet analysts will be interested in these results as they develop.
That’s exactly what the earnings call is for.
We’ll see what pops up this week, but just based on the stocks price chart, a pretty big move is likely.
Walgreens Earnings Call Should Trigger Big Move
WBA is trading in a descending triangle pattern, with a strong horizontal support line in green and a falling resistance line in red.
As these converge, a breakout is imminent. But as we saw last week with Acuity Brands, earnings can provide the pop to breakout at any point.
Right now, WBA is hovering near the bottom of this pattern. It wouldn’t take much to break lower from these prices, but it also gives room for a sizeable move higher on earnings and still stay within the triangle pattern.
You can expect a big move this week in one direction or the other.
Earnings Edge Stock No. 2: Badger Meter Inc. (NYSE: BMI)
Earnings Announcement Date: Friday, before the open.
Expectations: Earnings at $0.50 per share. Revenue at $127 million.
Average Analyst Rating: Hold.
Badger Meter is on the opposite side of the market. It’s largely known for its flow meters for cities around the U.S.
But, being a publicly traded company puts it in the spotlight four times a year when it reports.
It’s coming off a solid quarter that saw revenues climb 34.8% on the back of solid order rates. This trickled down to earnings for a 39.8% boost from a year earlier.
All of this met analyst expectations and sent BMI up 5% back in July to keep it in its price pattern.
It is trading in a common triangle pattern, just like Walgreens. But instead of a descending triangle pattern, it is trading in a bullish ascending triangle pattern.
Take a look.
BMI Is Bullish
This pattern has a rising support line in green, running up to a horizontal resistance level in red.
Many times, they end up being continuation patterns, which simply means BMI will continue in the same direction it was trading in before the pattern formed. Since the chart is lower on the left, we can see that prices were trending higher.
With the triangle pattern lasting the entire year, it’s ultimately going to break out at some point in the coming weeks. And there’s no better time than on an earnings announcement.
If it closes above $110 per share, then it’s off to the races from there. Keep a close eye on this one this week. I have a feeling it will make a big move.
Chad Shoop is an options expert for Banyan Hill Publishing. He is the editor of three leading newsletters: Quick Hit Profits, Automatic Profits Alert and Pure Income. His content is frequently published on Investopedia and Seeking Alpha. Check out his YouTube Channel to see his latest market insights.
Investing has consumed my life since college. While double majoring in finance and economics at the University of North Carolina at Greensboro, I founded the university’s economics club, joined the finance club and participated in the Chartered Financial Analyst research competition to represent our school.