Previewing Earnings for Facebook, Qualcomm, Skyworks, Fusion-IO & 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 Skywork Solutions (SWKS), Qualcomm (QCOM), Fusion-io (FIO), Facebook (FB), Potash (POT), Mastercard (MA), and Enterprise Products Partners (EPD).

Here is just a tiny sample of what BullMarket.com wrote about Fusion-IO:

Fusion-io has topped analyst EPS estimates each quarter since it IPO'd in 2011. Over that period, the stock has risen the next session three of six quarters. Seasonally, the stock fell last year. ...

Last quarter,the maker of computer storage memory platforms said earnings for its fiscal first quarter fell to $3.9 million, or 4 cents per share, from $7.2 million, or 7 cents per share, a year ago. The year-earlier quarter included an income tax benefit that increased earnings.

Adjusted profit excluding items equaled 14 cents per share, double what Wall Street was expecting.

Revenue grew by 59% to $118.1 million from $74.4 million a year ago, which also was ahead of the $111 million expected by analysts.

Core revenue grew by 3% sequentially as Fusion-io said it prioritized shipments to key customers. We saw strength in EMEA and APAC, driven by partners Hewlett-Packard, IBM and Dell. It said its public sector business also strengthened.

Its gross margin was 59.5%, exceeding the high end of its target range. The sequential improvement was a result of product mix favoring higher configuration products, as well as NAND cost improvements, management said.

Fusion-io kept its full-year outlook for revenue to grow 45% to 50% from a year ago to $521 million to $539 million. The midpoint of the guidance is slightly below the $532 million that analysts predicted at the time. ...

Outside of earnings, Fusion-io has an intriguing technology that is gaining traction among enterprise clients. What helps separate the company from some others in the emerging memory space is its melding of software and hardware into one solution.

That said, the emerging memory space is rife with former high flyers that have crashed and burned. Whether Fusion-io's solutions prove to be differentiated enough as not to become commoditized in the future like other emerging memory players is the big question; although the melding of the software with hardware does help on this front.

The company's recently announced ioScale product line, meanwhile, will look to displace disk storage in hyperscale datacenters. The product should be a nice growth driver, with Facebook (FB) set to use the new platform. However, its lower price point could impact margins.

The company has a pretty high customer concentration, with Facebook and Apple (AAPL) two of its biggest customers. However, that business can be volatile. On the negative front, gross margins need to be watched, as they fell from 63% in FQ1 to 52% in FQ3, but they bounced back to near 60% last quarter. ...

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 Netflix (NFLX) ahead of earnings.
  • to be bullish on Cree (CREE) ahead of earnings.
  • to be bearish on Bank of America (BAC) 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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