Ratings Movers as Tech Reports Earnings

As I mentioned two weeks ago, earnings seasons are some of my favorite times of the year. 

This is especially true for the fourth quarter since many companies also report full-year data at this time. 

I’ve found certain companies make more sense to me when I study their annual picture instead of each individual quarter. 

Since I joined the Weiss Ratings team, earnings season has also been about my checking how this influx of data has instigated recent ratings changes. 

Right now, we’re in the peak of earnings season … and I’ve got tech on my brain.

That’s probably because this week investors will see earnings from: 

  • Alphabet (Nasdaq: GOOG)
  • PayPal Holdings (Nasdaq: PYPL)
  • Meta Platforms (Nasdaq: FB)
  • Amazon.com (Nasdaq: AMZN)

It’s going to be an incredibly busy week, including other big names like Starbucks (Nasdaq: SBUX), AbbVie (NYSE: ABBV), Waste Management (NYSE: WM) and T-Mobile US (Nasdaq: TMUS).

Yesterday alone, there were 131 companies that reported! And another 208 today.

Of course, I’ll be spending the next few days trying to keep up. 

I like to check in on my personal holdings, plus everything on my watch list. Then I like to check in on companies that stand to benefit from any macro trends that I’m following. 

I know that we still have earnings on the horizon for many companies in the sector. But today, I decided to head to the screener and check in on information technology.

After I added that sector to my search, I cleared out all my other criteria and added just one: ratings change. I wanted to see if anything had recently seen a change in ratings … for the good or the bad. 

Let’s look at a few. 

The Sliders

Microsoft (Nasdaq: MSFT) is a company that doesn’t need any introduction. Computers, gaming, enterprise software. It’s a tech giant through and through. 

But on Tuesday, the company saw an earnings change.

The company slid from an “A-” to a “B+” just one week after its fiscal year 2022 earnings conference call. This downgrade comes after operating cash flow declined 40.99% to $14.48 billion. Earnings per share (EPS) also declined from $2.71 to $2.48. 

Shares are down 8% in the last 60 days, but up 29% over the past year. Plus, it was one of the companies that managed to continue its dividend payment to shareholders uncut and uninterrupted through the pandemic. Its 62-cent quarterly payment is a yield of around 0.74%.

Nokia (OTC: NOKBF) is a company that may not be on everyone’s radar, but it’s on mine. The company is mostly known for its obsolete, incredibly durable phones equipped with the game “Snake.” 

Now the company is in the mobile infrastructure business. It creates a lot of the infrastructure pieces that were needed for the upgrade to 4G and 5G. 

And back in 2020, it was announced that the company was picked by NASA to build the first-ever cellular network on the moon. I think it’s a cool company … but that doesn’t mean I think it’s a safe investment.

The company is no stranger to the “Hold” and “Sell” range. It spends its time simply bouncing back and forth between them. And a quick look at the five-year chart confirms the volatility expected with those lower ratings.

 

“Safe” is not the word I would describe for money invested in these shares.

Nokia had recently popped back into the “Hold” range in December, but last week it was downgraded from a “C-” to a “D+.”

Shares are up 0.59% over the past 60 days, and up 31% over the past year. 

The Climbers

Apple (Nasdaq: AAPL) is another company that needs no introduction. Computers, phones, headphones, cars. If an item is tech-related, Apple followers want one that integrates into the Apple landscape. 

The company keeps growing, expanding and continuing to make money hand over fist. 

It’s really no surprise that the company has spent the majority of its time in the “Buy” range since 2014. There have been three instances where it has slid to a “C+” briefly ... yet it hasn’t seen a slip since 2020. 

On Monday, Apple was upgraded from an “A-” to an “A.” This is a grade that the company hasn’t seen since 2018. 

The change comes after operating cash flow increased 132.5%, earnings before interest and taxes (EBIT) increased 74.4% and EPS increased from $1.22 to $2.10.

Shares are up 15% over the past 60 days, and up 29% over the past year. 

Just like Microsoft, Apple continues to pay its shareholders its normally scheduled uninterrupted, increasing dividend payments. 

Its current quarterly payment of 22 cents is an annual yield of 0.5%.

Intuit (Nasdaq: INTU) is a name you may not recognize. It’s the company behind QuickBooks, Credit Karma and TurboTax, to name a few. Many individuals and small businesses rely on these products to support their financial well-being. 

Since 2016, the company has managed to stay in the “Buy” range but does occasionally slip into “Hold” territory. In mid-January, Intuit saw a momentary slide to a “C+” … but just 15 days later, it was upgraded to a “B-.”

Shares are down 9% over the past 60 days, but up 45% over the past year.

The company continued to pay its dividend through the pandemic. Its current payout of 68 cents per share is 0.45% based on current prices. 

As I said earlier, we’re nowhere near done with earnings season. And I’m sure there will be many more ratings changes in just the next few days. 

Remember, if you have specific companies that you want to follow, the Weiss Ratings watch list will automatically send you an email alert if there are changes. 

And if you’d like to take a deeper dive into your investment strategy and learn about a way to potentially achieve big yields, you need to check out Dr. Martin Weiss’ Super Yield Strategy. For more info on that, click here now.

And, of course, if there are industries, sectors or companies of a certain market size that you want to look through, the Weiss Ratings stock screener is there to help. 

Best, 

Kelly Green 

About the Research Analyst

Kelly completed the Series 7 and 66 securities licenses, and has worked in the financial publishing industry for eight years, specializing in income and options. She contributes regularly to the Weiss Ratings Daily Briefing.

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