Which Stocks Look Ready to Pop and Drop with 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 25- to 40-page Earnings Preview report for the week ahead each Friday.

In its latest earnings preview, BullMarket.com looks at several popular stocks, including Zillow (Nasdaq:Z), Nuance (NUAN), Michael Kors (KORS), Monster Beverage (MNST), Groupon (GRPN), Green Mountain Coffee Roasters (GMCR), Priceline.com (PCLN), Linn Energy (LINE), Tesla Motors (TSLA), and First Solar (FSLR).

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

Zillow has topped analyst EPS estimates each quarter since it IPO'd in July 2011. Over that period, the stock has risen the next session four of seven quarters. Seasonally, the stock fell last year.

Last quarter, Zillow's revenue rose 71% to $39 million as it benefited from the improved housing market, which topped expectations.

The company posted a net loss of -$3.7 million, or -11 cents per share, in the first quarter, compared with a net profit of $1.7 million, or 6 cents per share, a year earlier.

Analysts had projected revenue of $37.4 million and a -13-cent net loss per share, excluding come costs.

Fifty-five percent of visits to Zillow occur on mobile devices, which jumps to over 60% on weekends.

"In April alone, more than 241 million homes were viewed on Zillow Mobile, or 93 homes per second.

Average monthly revenue per subscriber, or ARPU, was $259 in the quarter, and represented a -2% decrease from last year and -3% decrease sequentially from the prior quarter.

Zillow raised its forecast to a range of $178 million to $182 million, up from a prior forecast of $165 million to $170 million. That was higher than the $172 million Street consensus. ...

Outside of earnings, Zillow is in the early stages of its growth strategy as it has been investing heavily in adding new products to its list of offerings. It can also be expected to increase spending on internal product development, expanding its sales force and beefing up existing services to maintain its first-mover advantage. Given that scenario, we would not expect consistent profits in the near term but there should be strong revenue growth. The pace of its growth will be a major determinant of how positively investors view the name.

A strong housing market is one of the lynchpins of the economy and it is finally on the path to recovery. People still need a place to live and there will always be a resale and rental market. Zillow has built a highly regarded and viable Web property in a fairly short period of time and has a very long growth pathway. It is another "marketplace" website linking potential buyers to sellers, which is a model that works well on the Internet. It is particularly well suited to mobile devices.

Its expanding mortgage service offers another growth opportunity. The company does, however, face increased competition from Trulia (TRLA), which went public last year....

Over time it is inevitable that comps will slow as Whole Foods gets bigger but it still holds a unique position in the grocery industry. Its customers visit the store for the quality of the food it sells, much of it organic, and for the ambiance of the stores. It appeals to a higher demographic that is willing to pay higher prices, but those customers are also certainly happy for a deal when available. We don't see management's new value-oriented pricing effort driving those customers away while it should draw in new ones. ...

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 Q2 so far were:

  • to expect a positive reaction to Facebook's (FB) results.
  • to expect a positive reaction to LinkedIn's (LNKD) results.
  • to expect a negative reaction to Coach's (COH) results.
  • 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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