Previewing Earnings for Oracle, Nike, Lululemon, Tiffany & 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 a special earnings preview March supplement, BullMarket.com looks at several popular stocks, including Nike (NKE), lululemon (LULU), Tiffany (TIF), Darden Restaurants (DRI), Dollar General (DG), and Oracle (ORCL).

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

Nike has beaten analyst EPS estimates six of eight quarters over the past two years, missing forecasts twice. Over that stretch, the stock has risen the next session four of eight quarters. Seasonally, the stock has risen twice in the last four years. ...

Last quarter,Nike turned in a solid fiscal second quarter, topping Wall Street's expectations. Demand for its products was strong in North America, its largest and most mature market, as orders for delivery from December 2012 through April 2013, reported by Nike as its "futures" orders, were up by 14% in the region. China remained a challenging market but it wasn't deteriorating as many analysts feared.

"Our Q2 numbers show the right kind of momentum as we head into the back half of the year," CEO Mike Parker said on the earnings call. "Nike Inc.'s second quarter revenues were up 7%. Excluding changes in currency, revenues were up 10%. And that growth was well balanced across all brands, key Nike Brand categories and nearly all geographies. Gross margin was down 30 basis points, better than projected, and diluted earnings per share growth outpaced revenue growth, up 11% to $1.14."

Nike said it earned $384 million, or $1.14 a share, from continuing operations for the quarter that ended November 30th. That was down from $469 million, or $1.03 per share. Share repurchases in the past year helped to boost EPS. The results easily beat the $1.00 per share analyst consensus estimate.

Revenue rose by 7% to $5.96 billion, which was shy of the $6.01 billion analyst consensus.

Nike Brand grew by 11%, while the company's other businesses grew 6%. On a currency neutral basis, Nike Brand futures orders increased 7% driven by a 4-point increase in units and a 3-point increase in average price per unit. Futures were higher for all geographies except China, which declined -7%, reflecting management's attempt to tightly manage the inventory going into the marketplace.

Gross margin declined by -30 basis points to 42.5%. The company said margin was aided by higher prices and lower material costs, but those were more than offset by higher labor costs and unfavorable currencies. ...

Outside of earnings, the Nike Swoosh is arguably among the world's most famous brands, certainly in the top five in our estimation. Investors have worried about Nike's business in Europe and China for several quarters but last quarter's results suggest those regions are at least stabilizing.

Meanwhile, there is always another high-profile sports event around the corner that the company can use to sell its products. Basketball in particular has been a strong category for the company. Meanwhile, some of the technological advances that the company is intertwining with its products with Nike+, including the launch of Nike+ Basketball and Nike+ Training, are very intriguing and could be a nice growth driver.

Strip out its $3.56 per share in net cash and Nike trades at about 17x next year's EPS consensus of $3.01. ...

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 Adobe (ADBE) ahead of earnings.
  • to be bearish on Akamai (AKAM) 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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