Wolfe Research identified several large market-cap stocks vulnerable to earnings disappointments. The institutional broker uses an Earnings Quality (EQ) score ranging from 0 to 100 and screened companies with market values of at least $4 billion falling into the bottom quintile for earnings quality. Yum Brands received an EQ score of 10, flagged for M&A activity, a CFO change and the Taco Bell cyclospora outbreak. Nike scored 17, with a CFO change and a JPMorgan downgrade. Chewy received a particularly low score of 2, flagged for M&A activity, a CFO change earlier this year and GAAP versus non-GAAP earnings discrepancies ahead of its fiscal second-quarter earnings release on September 9.
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