Wolfe Research is watching these stocks to miss the mark on earnings. In a June 26 note, strategist Chris Senyek outlined the firm’s criteria for companies picked to significantly undershoot earnings expectations. Wolfe primarily focused on sectors spanning materials, health care, consumer discretionary and staples, technology and industrials. “Our quarterly earnings quality (EQ) score is an objective way to identify potential accounting related short ideas and as a risk tool to avoid potential blow-ups in the portfolio,” Senyek said. “Our EQ Score ranks companies within sector on a score of 0-100 using seven financial ratios along with sentiment and valuation metrics to find potential underperforming stocks.” CNBC pulled six stocks from the Wolfe list across a range of sectors. Rivian made the list with an earnings quality score of just 3. The stock is part of the bottom 20% of companies in terms of earnings quality. RIVN YTD mountain Rivian stock has added more than 38% from the start of the year. Rivian has added more than 38% from the start of the year. Earlier this month, the company reported second-quarter vehicle deliveries that beat expectations . The electric-vehicle maker will report quarterly results Aug. 8. Analysts polled by FactSet are forecasting an adjusted loss of $1.42 per share. Shockwave Medical , meanwhile, fits on the Wolfe list due to issues pertaining to cash flow constraints and research and development amortization. Shockwave has an earnings quality rating of 4 out of 100. The company will next report quarterly results Aug. 7. Analysts polled by FactSet are forecasting an adjusted 83 cents per share. SWAV YTD mountain ShockWave Medical stock. The stock has added more than 37% in 2023. Morgan Stanley upgraded Shockwave Medical recently and highlighted potentially better outpatient reimbursements from the Centers for Medicare & Medicaid Services. In consumer staples, Dick’s Sporting Goods is on the Wolfe list with a rating of 9 out of 100. Wolfe says Dick’s is boosting its free cash flow by reverse factoring its accounts payable, which is a looming headwind for the company. Dick’s will report quarterly results Aug. 23 and analysts forecast adjusted earnings of $3.78 per share. DKS YTD mountain Dick’s stock has added nearly 15% from January. Other stocks that made the list are Lucid Group, MP Materials and Valvoline. — CNBC’s Michael Bloom contributed reporting.
