Previewing Earnings for Priceline.com, LinkedIn, Yelp, First Solar & 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 Priceline.com (PCLN), First Solar (FSLR), Yelp (YELP), Hain Celestial (HAIN), OpenTable (OPEN), Blue Nile (NILE), and LinkedIn (LNKD).

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

First Solar has beaten analyst EPS estimates four of the past eight quarters, missing the consensus four times. Over that period, the stock has risen the next session two of eight quarters. Seasonally, the stock has risen twice in the last four years. ...

Last quarter, the maker of thin-film solar modules reported an 81% increase in profit after it recognized revenue from large-scale installations. The company shifted its strategy towards building solar farms for utilities over selling panels for installation by other firms.

The company said its net income was $111 million, or $1.27 a share, compared with $61.1 million, or 70 cents a share, a year earlier. Excluding restructuring charges, earnings were $1.65 a share, 71 cents more than the analyst consensus estimate.

Sales grew by 80% to $957.3 million. Most of First Solar's growth will come from its development unit, a strategy that is insulating it from falling panel prices, according to Chief Executive Officer Jim Hughes. ...

Outside of earnings, it's difficult to remember but in 2008 this was a $300-plus stock that investors were tripping over themselves to buy. Early on, First Solar's advantage was that its thin-film panels were cheaper to produce than the comparable silicon-based panels made by its competitors. The cost advantage stemmed in large measure from a silicon shortage at the time that drove up material costs.

As far back as 2007, we pointed out that the silicon shortage would ultimately fade and along with it First Solar's advantage over Chinese solar panel makers. In fact, in May 2007 we wrote: "Looking out two years, the picture grows a bit murkier as the silicon shortage will loosen its grip on the industry and silicon solar cell makers are poised to improve the efficiency of their cells further. Meanwhile, emerging solar cell technologies may relieve First Solar of the low- cost crown... Over the long term, the factors noted above will diminish the advantages that First Solar currently holds."

This scenario started playing out at the beginning of 2009, and it has been a rough ride for the stock since. In response, First Solar has moved towards an EPC (Engineering, Procurement and Construction) model, but newer projects have tended to be higher risk and lower margin than in the past. ...

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 Q3 were:

  • to be bullish on Akamai (AKAM) ahead of earnings.
  • to be bullish on Facebook (FB) ahead of earnings.
  • to be bearish on Deckers Outdoor (DECK) 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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