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Three earnings reports deserve a second look among the flood of profit announcements that have been landing in recent days.
Shares of Corteva, Aptiv, and Trane have all recorded significant moves since the companies reported their latest financials. Each result has something to say about a different part of the economy, offering perspectives that can help investors navigate the market in 2024.
Let’s begin, metaphorically, in the cornfields of Iowa. Corteva, which sells seeds and agricultural chemicals, reported decent fourth-quarter numbers. Management told investors to expect $3.5 billion to $3.7 billion in earnings before interest, taxes, depreciation, and amortization, or Ebitda, in 2024—a range whose midpoint is a hair better than the consensus call on Wall Street.
Still, Corteva stock was up 18% in late trading Thursday, while the
S&P 500
and
Nasdaq Composite
gained 0.7% and 0.8%, respectively.
“It was just about 3 months ago when we recall scratching our heads trying to figure out why Corteva shares traded off 8.5%,” says Fermium analyst Frank Mitsch. That stock reaction also followed an in-line quarter.
“Listen, we’re not naive to think the market always makes perfect rational sense,” Mitsch said.
In the case of agriculture, the market has been reacting to fear that lower crop prices would mean lower earnings across the value chain. Through late trading Thursday, corn prices were down about 11% over the past six months.
Deere
stock was off 9%. Shares of Corteva peer
FMC
were down 33%.
Corteva’s guidance allayed those fears, sending
FMC
stock up 9.3% in late trading.
Moving from corn to cars, shares of auto-parts supplier
Aptiv
have fallen about 4% since the company reported earnings on Wednesday. Fourth- quarter earnings per share came in at $1.40, beating expectations by about 7 cents, but sales missed estimates.
Aptiv is a key supplier of equipment for autonomous driving and vehicle electrification. Its guidance for 2024 assumes sales growth of about 7% sales despite flat global auto production. That sounds good, but in the past, Aptiv outgrew the overall auto market by about 8 to 10 percentage points a year.
The stock-price performance, in response to the fact that growth is expected to outpace the auto industry by a smaller margin, is more evidence that investors are still resetting their expectations for electric vehicles. The going has been tough for EVs so far in 2024. Through late trading Thursday,
Tesla
shares were down 24% year to date.
The news from
Trane Technologies,
a big player in heating, ventilation, and air conditioning, takes us from cars to cooling. Trane reported better-than-expected fourth-quarter earnings and said it expects earnings per share of $10.00 to $10.30 in 2024. Wall Street was projecting about $10.
Orders rose 12% year over year in the quarter. It was all “good enough,” wrote TD Cowen analyst Gautam Khanna in a Thursday report. He rates Trane stock Buy and has a $235 price target for the shares.
Things are good in the HVAC business right now. Companies and homeowners are interested more in efficiency, which is good for players in the sector. Trane’s results are likely why
Carrier Global
stock was up 1.4%.
Honeywell,
which has some businesses similar to Trane’s, also reported earnings. While earnings and management’s forecasts were all in line with expectations, the stock was down almost 3% in late trading Thursday.
That is a completely normal reaction based on the stock’s history. It’s a signal that not much of what
Honeywell
had to say surprised investors.
Not every stock tells a story.
Write to Al Root at [email protected]
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