Previewing Earnings for Apple, Netflix, Microsoft & Others

Indie Research

Stocks tend to be most volatile around earnings season, when a good or bad report can make or break it. However, a good or even great earnings report doesn't necessarily translate into a huge pop for a stock.

During earnings season, BullMarket.com publishes a comprehensive 25- to 40-page Earnings Preview report for the week ahead each Friday.

Over the past year, BullMarket.com used the data it has collected to correctly predict investor reactions for approximately two-third of the stocks it's previewed.

In its latest earnings preview, BullMarket.com looks at several popular stocks still set to report results, including Apple (AAPL), Netflix (NFLX), F5 Networks (FFIV), Starbuck's (SBUX), and Microsoft (MSFT).

Here is just a tiny sample of what BullMarket.com wrote about Starbucks:

Starbucks has surpassed analyst EPS estimates six of the past eight quarters, missing the consensus once and meeting it once. During that time, the stock has risen the next day three of eight quarters. Seasonally, the stock has risen twice in the past four years.

Last quarter, Starbucks earned $359 million, or 46 cents per share, for its fiscal fourth quarter ended September 30th, compared to $358.5 million, or 47 cents per share, a year ago. The year-ago results benefited from a gain related to a real estate sale.

Revenue rose 11% to $3.36 billion.

Analysts expected profit of 45 cents per share on revenue of $3.39 billion. On a consolidated basis sales on a same store basis increased by 6%.

For fiscal 2013, the company guided for earnings of $2.06 to $2.15 per share. That's up from its previous outlook of $2.04 to $2.14 per share and above the $2.14 analysts expected. Starbucks also raised its quarterly dividend by 24% to 21 cents per share. ...

Outside of earnings, Starbucks has generally been performing very well and it has solid growth opportunities ahead via international expansion, especially in Asia and parts of Latin America. There is still coffeehouse growth potential in the U.S., management believes. The company is using classic strategies to drive this growth, including daypart expansion, remodeling older stores, and reward programs.

The company has also been pretty acquisitive recently, purchasing bakeryLa Boulange, juice company Evolution Fresh, and tea retailer Teavana. The domestic integration of these new brands likely won't come till the end of fiscal year 2014.

Europe remains an issue, but management isn't sitting on its hands waiting for improvement, instead borrowing from the playbook that helped right a foundering U.S. operation a few years ago, including closing underperforming locations.

On the positive front, the expectation of a more favorable commodity cost environment for both FY13 and FY14 bodes very well for margins. The company's move into the consumer channel (K-Cups, Via, etc.) is also a strategy we favor, especially given the strength of the Starbucks brand. K-Cups alone should add some nice growth. Once new offerings like Evolution Fresh gain traction in Starbucks' stores, you can expect management to push those into the CPG channel as well. Its new Verismo single serve system, which will make Starbucks-quality espresso beverages and brewed coffee, could also turn into a nice winner. ...

The full BullMarket.com earnings analysis includes a look at historical earnings data and EPS trends for the companies above and more; examines past investor reactions to earnings in various contexts; gives options activity analysis; reviews previous-quarter earnings; and gives an opinion on both what earnings will look like and how investors will react based on the aforementioned data points.

Just a few of the correct calls BullMarket.com made for Q4 so far were:

  • to be bullish on Intuitive Surgical (ISRG) ahead of earnings.
  • to be bullish on Cree (CREE) ahead of earnings.
  • to be bearish on Intel (INTC) ahead of earnings.
  • A daily investment service that is committed to creating long-term wealth for its members, BullMarket.com's Recommended List of stocks is up 104.9% from 2009-2012 versus a 57.9% return for the S&P, a 47.0% outperformance, topping the benchmark each year since the start of the Great Recession. Subscribers receive actionable market commentary, access to 40+ stock ideas on the Recommended List, and real-time trade alerts. Plus, sign up for a free trial today to view Bull Market's in-depth Special Reports - including its annual High Yield and MLP reports - and its timely Earnings Previews, which are published every Friday during the heart of earnings season. Get a Risk-Free Trial to Bull Market Today! (Please note returns are unaudited.)

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