Earnings Can Help Decide which Sector Trade or Avoid 

Tom Gentile

Posted in Big Picture

By: Tom Gentile on July 26th, 2022 • 3 mins read

Industrials like General Electric Company (NYSE: GE) and 3M (NYSE: MMM) reported earnings today.

General Electric Company (NYSE: GE) reported 2nd Quarter June 2022 earnings of $0.78 per share on revenue of $18.6 billion. The estimate was $0.38 per share on revenue of $17.9 billion.

3M (MMM) reported 2nd Quarter June 2022 earnings of $2.48 per share on revenue of $8.7 billion. The estimate was $2.41 per share on revenue of $8.8 billion = an earnings beat.

Yesterday Walmart, Inc. (NYSE: WMT) reported 1st Quarter April 2022 earnings of $1.30 per share on revenue of $141.6 billion. The estimate was $1.46 per share on revenue of $138.1 billion = a miss on earnings but a beat on revenue.

I could go on and on about many other companies and what their reported earnings are vs. expectations, but the point I want to make I can do with the two industries the companies given:  Industrial and Consumer Staples.

Both GE and MMM are Industrials. WMT is in the retail space, but it has a sector classification per the website www.sectorspdr.com as Consumer Staples.

Sector ETF’s

When out go to that website you can get a list of the 11 different Sector SPDR ETF’s. You can also get a percentage gain or loss performance reading over different time periods, 1-dat, 1-month, and Year-to-date for example.

When you are looking for areas in the market that is showing strength or weakness, this is a good place to start. I am sure there are many other sites that do similar things, but on this site one can track performance of the sector, get a list of the components of each sector ETF, or search up what sector a stock is in if you don’t know it.

Industrials vs. Consumer Staples

Using the three stock above is just a SMALL data sample as there are many more stocks in these sectors to researched.

I just used these three as a quick example to show a bit of differentiation of the two sectors. If one looks up more stocks earnings reports in these sectors the sentiment for each may be different.

The Point is. When you see earnings of stocks in one sector beating estimates and stocks ion another missing estimates you can search up the sector ETF they belong to and decide. Instead of trading those specific stocks one can see if the ETF is optionable.

Sector Tracker over 1-Month Performance

S&P 500 Sector Tracker over 1-Month Performance
Figure 1: 1-mo Sector ETF Performance

Consumer Staples is still positive over a month’s look back, but you can see Industrials are outpacing them.

App: Toms Option Tools

Market Insight articles may show images of lists of stocks meeting a variety of options parameters like Unusual Call and or Put activity or Expensive IV found on my app Toms Option Tools.

Other times I will have other charts may work to amplify my educational points. 

Those options data lists, however, can be found on my app Tom’s Option Tools. Use your device to search up and download this app and get free access to the Morning Reports section of the app.

Other parts of the app are available at a premium subscription rate, but the Morning Reports Lists are yours free.