March 11, 2021

COVID-19 one year later: Stock Market Movers and Shakers

by Jharonne Martis.

The COVID-19 pandemic changed many things, including the way business is conducted. One year ago, several businesses asked their U.S. employees not to come into the office and work from home — for two weeks. However, since that announcement, most employees have not returned to the office.

The pandemic has certainly influenced stock market winners and losers. Exhibits 1 and 2 show the S&P 500 top and bottom 10 stock price movers.

Consumers were avoiding public transportation amid the pandemic, and that trend helped car sales. Health and wellness are also a top priority, so many decided to buy a “green” car and help de-carbonize the economy. As a result, Tesla has been the biggest S&P 500 stock mover from a year ago (Exhibit 1).

Meanwhile, consumers stuck at home looked for entertainment at ViacomCBS. This stock outperformed the broader market because of robust demand for its streaming services during the pandemic.

Exhibit 1: S&P 500 Top Stock Price Performers over the last 52 weeks

Source: Refinitiv Eikon

Meanwhile, utility stocks have not been immune to the pandemic and have been struggling with reduced electricity consumption, which caused their stock prices to plummet. Because of the restrictions on nonessential businesses, electricity consumption and power demand fell shortly after the country went in lockdown. As a result, several utility companies were the weakest stock price performers since the pandemic started (Exhibit 2).

Exhibit 2: S&P 500 Bottom Stock Price Performers over the last 52 weeks

Source: Refinitiv Eikon

Russell 1000

Consumers stuck at home also spent money improving the stay-at-home experience. Consequently, Wayfair was the biggest stock price gainer within the Russell 1000 (Exhibit 3).

Many corporations are discussing permanent working-from-home conditions. Accordingly, shoppers have been buying office and home furniture to improve the stay-at-home experience. This has boosted sales at Lovesac, Tempur Sealy, Wayfair and Williams Sonoma.

Looking forward to Q1 2021 performance, Wayfair is likely to beat expectations and post a positive surprise. The StarMine SmartEstimate is a weighted average of analyst estimates, with more weight given to more recent estimates and more accurate analysts. Our studies have shown that when the SmartEstimate differs from the consensus (I/B/E/S mean) by more than 2%, the company is likely to post subsequent earnings surprises directionally correct 70% of the time. This percentage difference is referred to as Predicted Surprise (PS%).

For Q1 2021, the SmartEstimate data shows investors can expect positive surprises from Wayfair, with an EPS mean forecast of $0.21 a share. The retailer has a 43.7% Predicted Surprise % and there’s a five-star rated analyst with a very accurate rating that published a Bold Estimate, which is different (in this case higher) than the consensus estimate. The analyst expects Wayfair to report earnings of $1.19 a share, well above the mean.

Exhibit 3: Russell 1000 Biggest Stock Price Movers: March 2020-2021

Source: Refinitiv Eikon

Within the Russell 1000, the weakest performing stocks are a mix of biotechnology and utilities firms suffering from company specific issues (Exhibit 4).

Exhibit 4: Russell 1000 Weakest Stock Price Movers: March 2020-2021

Source: Refinitiv Eikon

Russell 3000

Within the Russell 3000, Wall Street bets pushed “meme stocks” like GameStop through the roof (Exhibit 5):

Exhibit 5: Russell 3000 Biggest Stock Price Movers: March 2020-2021

Source: Refinitiv Eikon

Retail and consumer stocks

When looking just at retail and consumer stocks within the Russell 1000, ETSY and Peloton especially benefited. Consumers were looking for things to do during the pandemic, and also bought cars to go on outdoor activities.  As a result, the stocks below had the biggest stock prices moves over the past year.

Exhibit 6: Consumer Discretionary/Staples: Russell 1000 Biggest Stock Price Movers: March 2020-2021

Source: Refinitiv Eikon

Within the Russell 1000 Consumer Staples/Discretionary sectors, companies that were asked to close their doors during the pandemic saw the biggest stock price declines. Not surprisingly, Coca-Cola’s and Pepsi’s stock prices struggled, given all the restaurants closed for dine-in service.

Exhibit 7: Consumer Discretionary/Staples: Russell 1000 Weakest Stock Price Movers: March 2020-2021

Source: Refinitiv Eikon

StarMine ARM Model – bullish and bearish

The StarMine Analyst Revisions Model (ARM) is highly predictive of both the direction of future revisions and price movement. The higher the score, where 100 is the highest, suggests that analysts polled by Refinitiv are likely to revise earnings estimates upward.

When looking at StarMine ARM scores over the past six months, there are retailers whose ARM scores have remained in the top decile with scores of 90 and higher, out of a possible 100.  L Brands has consistently maintained an ARM score of 100, over the “look back periods” of 30, 90 and past 180 days, while its stock jumped nearly 150% from a year-ago (Exhibit 8). The pandemic has caused a strong demand for hand sanitizers, and benefited L Brands’ profit and stock price.

Consumers are also purchasing mattresses. Online bedding sales surged, causing Tempur Sealy’s revenue to spike 19.03%, and a record 148.15% growth in earnings in the first quarter of 2020. As various economies have reopened, the retailer is now seeing an improvement in its wholesale channels. Additionally, the company said bedding sales rocketed 125% due to global e-commerce sales in the second quarter of 2020. As of Q4 2020, the company said that 20% of its total sales are derived from online purchases. Analysts polled by StarMine continue to be bullish on the stock (Exhibit 8).

Exhibit 8: StarMine ARM Model Top Decile Performers; 30, 90 and 180 days

Source: Refinitiv Eikon

The companies below are in the bottom decile when it comes to the StarMine ARM score, and were negative over all three lookback periods (30, 90 and 180 days). Analysts polled by Refinitiv are bearish on travel related companies, including Booking Holdings, Las Vegas Sands Corp., Hyatt Hotels, Royal Caribbean Cruises, Carnival Corp., Wynn Resorts and others, as consumers are still cautious about travel (Exhibit 9).

Exhibit 9: StarMine ARM Model Bottom Decile Performers; 30, 90 and 180 days

Source: Refinitiv Eikon


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