The reopening story is now getting very real, at least for Wall Street.
The latest earnings reports are chock-full of companies reporting earnings above expectations, and most importantly, raising guidance.
Take steel maker Nucor, which reported what CEO Leon Topalian called the “most profitable quarter in our Company’s history” on improved pricing and margins. “We expect earnings for the second quarter of 2021 to exceed our first quarter results, setting a new record for quarterly earnings. Most of the end-use markets we serve remain strong and inventories remain lean across supply chains. We believe the current favorable demand environment will continue through the rest of 2021,” he wrote to investors.
Another large industrial, iron ore mining company Cleveland-Cliffs, raised full-year EBIDTA (cash flow), also on expectations of higher prices.
Whirlpool reported net sales growth of 24%, beat earnings expectations by more than 30%, raised full-year guidance by 18%, raised the dividend, and announced an increase in share buybacks.
Homebuilder D.R. Horton reported a significant earnings beat and raised full-year revenue guidance.
In health, HCA Healthcare raised full-year guidance, joining other providers UnitedHealth and Tenet Healthcare.
One exception to the earnings bright spots: railroads.
Union Pacific was the latest railroad to miss on earnings, following Kansas City Southern and CSX, which also missed. The inability to model bad weather may be the explaining factor: “The Q1 EPS shortfall largely reflects the winter storm disruption,” Baird analyst Garrett A. Holland wrote in a note to clients. “The 2021 outlook is intact and may prove conservative as economic activity strengthens.”
Headwinds for stocks: High prices and ‘peak everything’
And yet, the market, as every analyst and strategist has noted, is not cheap. Stocks have had significant run-ups in anticipation that companies would indeed be raising guidance, including these companies:
