Rallies from Walgreens, PVH and McCormick could be a good sign for earnings season, Cramer says

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Stocks that rallied Tuesday in response to 'less than stellar' quarterly reports could bode well for earnings season, CNBC's Jim Cramer said.

PVH guided for 3%-4% revenue growth, which was above the 2.9% expected by Wall Street. The company reported earnings growth of 10%, above the 8.9% consensus number. Cramer said it was a good quarter that was "comfortably" better than expected, but these figures sent PVH's stock up almost 20% Tuesday.Walgreens' rally was also "totally baffling," Cramer said, because it reported an adjusted operating income of $1.2 billion that missed consensus estimates.

Similarly, shares of McCormick popped almost 10% after the company posted 5% net sales growth. Cramer said the figure was "not bad," but that the company achieved it with 11% growth from pricing actions and a 3% decline in volume and mix. Despite what might appear to be lackluster numbers, Cramer said he thinks these companies' shares likely rose because investors were "thrilled just to see they finally aren't getting their butts kicked."

Cramer said he thinks these companies are representative of the broader market. He said companies have been struggling in recent years because of inflation across the supply chain, and now that expectations have been tamped down, the market can rally in response to less impressive figures.

 

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