Second Round of Software Earnings Reports Set for Next Week
The most actively traded software ETF is the iShares North American Tech-Software ETF (NYSE: IGV). The fund trades just over a million shares per day and has total assets of approximately $5 billion. The fund has seen a tremendous run up since the March low, rallying over 70%.
The rally has stalled a little in recent weeks with the IGV trading between $280 and $300 for most of the last seven weeks, going back to the beginning of July. The range-bound trading could come to a halt next week as there are nine different software companies set to report earnings results. Five of the companies set to report are among the top 10 holdings in the IGV.
Looking at the Tickeron scorecard we see that the overall group ranking is a “strong buy”. There are five “strong buy” ratings and four “buy” ratings.
The table below shows the nine stocks with the current consensus EPS estimate, where the estimate was three months ago, and what the company reported for EPS in the same time period last year. I also included the scorecard ratings for each individual company.
Granted these companies offer different kinds of software products. Some are application software firms and others are infrastructure oriented. Some investors might even argue that Veeva Systems (VEEV) is healthcare company more so than a software company.
Regardless of their classifications, we see that almost all of the companies are expected to see earnings improve compared to last year. Splunk (SPLK) and VMware (VMW) are the exceptions in this case. Intuit (INTU), Workday (WDAY), and Autodesk (ADSK) are expected to see the greatest increases.
Diving into the fundamental analysis scorecard, Intuit, Autodesk, Veeva, and Salesforce.com (CRM) have the best ratio of bullish signals to bearish signals. Intuit has two positive indicators and zero bearish signals. The other three all have three bullish signals and three bearish signals.
Conversely, Okta (OKTA) has the worst ratio of positive signals to negative signals with five negatives and zero positives. Splunk has one positive indicator and four negative indicators. Box Inc. (BOX) and Workday both have one positive signal and four negative signals.
Two specific areas of concern for the group as a whole are the Outlook Ratings and the P/E Growth Ratings. Seven of the nine get negative indications in the Outlook Rating category. Six of the nine get negative indications from the P/E Growth Rating category.
The technical analysis is much better for the group as a whole. Autodesk gets five positive signals and zero negative signals. Salesforce.com gets three bullish signals and only one bearish signal.
Splunk has the worst technical outlook with four bearish signals and only one bullish signal. Veeva gets four negative signals and two bullish signals.
There isn’t a single category where the majority of companies are seeing bearish signals. The worst two categories are MACD and Bollinger Bands where four different companies are getting bearish signals from those indicators.
Conversely, five of the nine companies are getting positive signals from the AROON indicator and four are getting bullish signals from the Moving Average Indicator.
The overall scorecard grades are good with five strong buy ratings and four buy ratings. Individual indicator scores are far more mixed as the companies head in to earnings reports.
All nine stocks are up over the last three months with Veeva leading the way with a gain of 36.5%. Autodesk is up 25%, Splunk has gained 21.2%, Workday has moved up 17.3%, and Salesforce has gained 17.1%. All five of those stocks are up more than the S&P 500.
The individual moves that occur after the earnings reports will likely be a mixture of gains and losses, but one thing is for certain—the volatility within the software industry is likely to increase dramatically next week.
IGV in downward trend: price dove below 50-day moving average on March 28, 2024
IGV moved below its 50-day moving average on March 28, 2024 date and that indicates a change from an upward trend to a downward trend. In of 39 similar past instances, the stock price decreased further within the following month. The odds of a continued downward trend are .
Technical Analysis (Indicators)
Bearish Trend Analysis
The Momentum Indicator moved below the 0 level on April 02, 2024. You may want to consider selling the stock, shorting the stock, or exploring put options on IGV as a result. In of 80 cases where the Momentum Indicator fell below 0, the stock fell further within the subsequent month. The odds of a continued downward trend are .
The Moving Average Convergence Divergence Histogram (MACD) for IGV turned negative on March 27, 2024. This could be a sign that the stock is set to turn lower in the coming weeks. Traders may want to sell the stock or buy put options. Tickeron's A.I.dvisor looked at 49 similar instances when the indicator turned negative. In of the 49 cases the stock turned lower in the days that followed. This puts the odds of success at .
The 10-day moving average for IGV crossed bearishly below the 50-day moving average on April 03, 2024. This indicates that the trend has shifted lower and could be considered a sell signal. In of 13 past instances when the 10-day crossed below the 50-day, the stock continued to move higher over the following month. The odds of a continued downward trend are .
Following a 3-day decline, the stock is projected to fall further. Considering past instances where IGV declined for three days, the price rose further in of 62 cases within the following month. The odds of a continued downward trend are .
The Aroon Indicator for IGV entered a downward trend on April 23, 2024. This could indicate a strong downward move is ahead for the stock. Traders may want to consider selling the stock or buying put options.
Bullish Trend Analysis
The RSI Indicator points to a transition from a downward trend to an upward trend -- in cases where IGV's RSI Oscillator exited the oversold zone, of 25 resulted in an increase in price. Tickeron's analysis proposes that the odds of a continued upward trend are .
The Stochastic Oscillator shows that the ticker has stayed in the oversold zone for 7 days. The price of this ticker is presumed to bounce back soon, since the longer the ticker stays in the oversold zone, the more promptly an upward trend is expected.
Following a 3-day Advance, the price is estimated to grow further. Considering data from situations where IGV advanced for three days, in of 360 cases, the price rose further within the following month. The odds of a continued upward trend are .
IGV may jump back above the lower band and head toward the middle band. Traders may consider buying the stock or exploring call options.
Fundamental Analysis (Ratings)
Notable companies
Industry description
Market Cap
High and low price notable news
Volume
Fundamental Analysis Ratings
The average fundamental analysis ratings, where 1 is best and 100 is worst, are as follows
General Information
Category Technology