Previewing Earnings for Monster Beverage, NVIDIA, 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 20- to 30-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, including Monster Beverage (MNST), NVIDIA (NVDA), Nordstrom (JWN), Fusion-io (FIO), and J.C. Penney (JCP).

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

Fusion-io has topped the EPS consensus each quarter since it went public. During that time, the stock has risen the next session two of four quarters. Seasonally, the stock traded virtually higher the next session after it reported earnings last year.

Last quarter, the company reported record revenue of $94.2 million for its fiscal third quarter, up 40% from the year-ago quarter and 12% sequentially to top the analyst consensus estimate of $85.6 million.

Its adjusted net income of 6 cents a share was 4 cents above the consensus estimate of analysts polled by Thomson Reuters but down from 11 cents a year ago.

Revenue from Facebook (FB) and Apple (AAPL) represented approximately 55% of total revenue in the third quarter compared to 57% in the prior quarter and 72% in the quarter ended March 2011. Revenue from these customers increased 8% sequentially.

Gross margin was 52.1%, a 100 basis point increase from the prior quarter. This was better than management expected as the company streamlined its supply chain for ioDrive2 and expanded the product across multiple market segments, which it said led to a more blended product mix. ...

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 it's 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 has a pretty high customer concentration, with Facebook and Apple two of its biggest customers. However, that business can be volatile. The recent deal with Cisco (CSCO), meanwhile, is a big win. On the negative front, gross margins need to be watched, as they fell from 63% in FQ1 to 52% in FQ3. ...

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 recent correct calls BullMarket.com made for Q2 were:

  • to be bullish on SodaStream (SODA) ahead of earnings.
  • to be bullish on LinkedIn (LNKD) ahead of earnings.
  • to be bearish on Facebook (FB) 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 33.3% from 2008-2011 versus a -14.4% return for the S&P, a 47.7% 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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