Jim Cramer, CNBC, said that stocks' rally Tuesday following "less-than-stellar" quarterly results could be a good sign for earnings season.
Cramer cited McCormick as an example, along with PVH and Walgreens.
Cramer stated that although all three stocks "roared", none of them were "all the great" on Tuesday.
Jim Cramer, CNBC's Jim Cramer, said that stocks that rose Tuesday as a result of "less-than-stellar" quarterly reports may be a good sign for earnings season.
Cramer cited three companies as examples that have reported in the last 24 hour: Spice Company
, Calvin Klein and Tommy Hilfiger parent company
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Cramer stated that all three stocks had "roared", but the reports are "disappointing".
PVH forecasted a revenue growth of 3%-4%, above the 2.9% Wall Street expected. The company's earnings grew by 10%, which was above the consensus estimate of 8.9%. Cramer called it a "comfortably better" quarter than was expected. However, these numbers sent PVH stock up nearly 20% on Tuesday.
Cramer stated, "That's a truly astounding gain. It's as if there was a takeover offer for goodness sake."
Cramer called Walgreens' rally "totally bizarre" because the company reported an operating profit of $1.2 billion, which was below consensus expectations. Walgreens shares rose 2.7% on Tuesday, despite the fact that they missed consensus estimates.
McCormick's shares also soared almost 10% when the company reported a 5% increase in net sales. Cramer called the number "not bad", but said that it was achieved by the company with an 11% increase in pricing and a 3% decrease in volume and mix.
Cramer believes that despite the lackluster performance of these companies, their shares rose because investors "were thrilled to see they weren't getting kicked in the butts anymore."
Cramer believes that these companies represent the market as a whole. He said that companies have struggled in recent years due to inflation in the supply chain. Now that expectations have been dampened, the market will respond positively to the less impressive numbers.
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