We love to golf around here, even though we lose a lot of golf balls. But we're not the only ones.
Garmin $GRMN designs and manufactures a variety of fitness smartwatches. This includes a watch for golfers.
The technology is super cool. It's like having a caddie on your wrist.
They've programmed damn near every golf course in the world into this device. This shows golfers various things like distances to greens, hazards, and doglegs.
In addition, they embedded swing-tracking technology into the watch. This analyzes swing speed, tempo, club path, and more.
The bottom line is that this company is doing something right, and the market is noticing.
On Wednesday, they reported a double beat, and the reaction was super positive. The stock rallied over 12% and had a reaction score of 5.3.
The fitness segment (which includes the watches) is growing revenues by 32% Y/Y. This is extraordinary growth.
It wasn't just about the last quarter's results. The management team raised its forward guidance and increased the dividend by 20%.
The market loved everything about this report, and the reaction reflects that.
Let's talk about what else happened 👇
Here are the latest earnings reactions from the S&P 500:
*click the image to enlarge it
As you can see, Garmin had the best earnings reaction on Tuesday, and Celanese had the worst.
Arista Networks was the largest company to report. It reported a double beat but fell 6.4% with a reaction score of -3. The reaction was quite negative.
Now, let's dig into the data and talk about some of the best and worst earnings reactions 👇
GRMN hit the 161.8% extension level after its earnings report:
As you can see, Garmin resolved a multi-year accumulation pattern last year after its Q4 earnings report. That was the second-best earnings reaction ever.
Since then, the price has continued trending higher toward our first target from the prior consolidation. It has been a fabulous uptrend for those involved.
We think GRMN will continue trending higher toward the 261.8% extension level.
ADI had its 2nd best earnings reaction since 2009:
Analog Devices reported a double beat and rallied 9.7%. Its reaction score was 4.4.
The company reported revenue and earnings near the high end of its guided range, and the market loved it.
However, the guidance issued by the management team was even better than the quarter they reported.
In addition, they announced an 8% increase in the quarterly dividend and authorized an additional $10B for share repurchases.
You'll be hard-pressed to find anything negative about this report.
If ADI is above 245, the path of least resistance will shift from sideways to higher.
CDNS had its worst earnings reaction since Q4 2013:
Cadence Design Systems reported a double beat but fell nearly 9%. Its reaction score was -5.
The company is facing several headwinds, which are causing a deceleration in revenue growth.
These headwinds have also led the management team to issue weaker-than-expected revenue guidance.
A double whammy!
We expect CDNS to continue churning sideways for the foreseeable future.
CE had its 3rd worst earnings reaction ever:
Celanese reported a double beat but collapsed by over 20%. Its reaction score was -9.5.
The company's sales declined by 10% in Q4 of 2024, and the management team expects this weakness to persist.
This earnings report was a complete disaster, and the stock is being punished for it.
On a relative basis, the stock is resolving a distribution pattern that dates back to the GFC. New all-time lows versus the broader market suggest further downside in absolute terms.
If CE slips below 55, the floodgates will open to more downside.
