Mar
04
2015
RavenPack

Adidas Sentiment Supports Optimists Ahead of Earnings

Hugh Taggart

Adidas shares have been on a tear since the beginning of the year and heading into Thursday’s earnings report there’s optimism that the sportswear maker will live up to its recent upbeat guidance and there’ll be an early CEO change.

But there are sceptics given the lagging performance of 2014 which saw profit warnings and shareholder pressure for change at the top. In a research report last week Susquehanna Financial Group said it was looking for continued signs of sales and margin improvement with the latter pressured by heightened competition in the Russian and North American markets. It also intimated an external appointment as CEO would be welcome.

Well, RavenPack sentiment appears to agree with the optimists. Sentiment momentum is positive with the 90-day RSI of sentiment heading higher since the turn of the year and the 14-day RSI holding well above the longer-term measure. See figure 1.

To be fair, however, relative sentiment strength on a 90-day view is not as positive as price momentum has been. See figure 2. So it’s conceivable that Adidas could have a lackluster response to results and guidance in line with expectations, but to keep the price momentum going would need to beat significantly and/or give healthy guidance and/or name a new CEO.

The sentiment Relative Strength Indicators are produced by finding the novelty-weighted sum of all event sentiment concerning the company each day and then calculating traditional 14-day and 90-day RSIs of this sum.

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