Which Stocks Look Ready to Pop or Drop After Earnings Next Week?

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.

In its latest earnings preview, BullMarket.com looks at several popular stocks, including Cisco (CSCO), Sotheby's (BID), Dick's Sporting Goods (DKS), MarkWest Energy (MWE), NetApp (NTAP), Macy's (NYSE:M), Nordstrom (JWN), and Wal-Mart (WMT).

Here is just a tiny sample of what BullMarket.com wrote about Dick's Sporting Goods:

Dick's Sporting Goods has beaten analyst EPS estimates four of the past eight quarters, missing the consensus twice and meeting it twice. Over that period, the stock has risen the next session five of eight quarters. Seasonally, the stock has risen three times in the last four years. ...

Last quarter, Dick's profit jumped by 57% year over year to $84.2 million, or 67 cents per share, for the three months ended August 3rd. A year earlier it reported $53.7 million, or 43 cents per share, but that quarter was reduced by a -$32.4 million impairment charge related to Dick's investment in JJB Sports. It also recorded a smaller impairment charge in the most-recent quarter.

Excluding the recent charge, Dick's said it would have earned 71 cents per share. Wall Street was looking for 74 cents and management had guided for 75 to 77 cents.

Revenue climbed 6% to $1.53 billion, but that also fell short of analyst projections of $1.57 billion. Sales on a consolidated same-store basis slipped by -0.4%; Golf Galaxy's same-store sales were particularly weak, down -6.1%. Dick's had forecast consolidated growth of 2% to 3%.

Dick's adjusted its outlook for the current year. It now expects to report $2.60 to $2.65 per share in profit, which reflects more subdued expectations for the second half of the year. Wall Street was looking for $2.83 per share at the time, but that has since dropped to the midpoint of guidance at $2.63. ...

Outside of earnings, we've always viewed Dick's as a solidly managed company and think it has a solid runway for expansion. Largely based in the eastern half of the country, Dick's still has a lot of room for growth in the West. We like how it has identified locations for smaller format stores in smaller markets, which is another growth opportunity. We also think the store-within-a- store concept with brands like Nike and Under Armour is a solid concept that should help drive same-store sales.

The company is increasing investments in its e-commerce capabilities as online sales are becoming a more meaningful part of the total. Like other retailers, Dick's is trying to avoid becoming a showroom for Amazon.com (AMZN). However, while the e-commerce channel is growing in importance, some of the core products Dick's offers are difficult to sell online, like sneakers for growing teens that need to be fitted.

Dick's is also starting to open standalone outdoor specialty stores under the "Field & Stream" brand. While the opening of the separate Field & Stream stores will cannibalize some sales of outdoor gear at Dick's, overall we think it's a good move. Management thinks it can grow Field & Stream into a $750 million business over the next several years, with the growth coming primarily from opening new stores. ...

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 so far were:

  • to expect a positive reaction to Google's (GOOG) results.
  • to expect a negative reaction to Tesla's (TSLA) results.
  • to expect a positive reaction to 3D Systems (DDD) results.
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