Which Stocks Look Ready to Pop and Drop with Earnings This 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 Herbalife (HLF), Coach (COH), 3D Systems (DDD), Whole Foods (WFM), SodaStream (SODA), Mastercard (MA), OpenTable (OPEN), LinkedIn (LNKD), and Enterprise Products Partners (EPD).

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

Whole Foods has beaten analyst EPS estimates seven of the past eight quarters, meeting the consensus once. Over that period, the stock has risen the next session five of eight quarters. Seasonally, the stock has risen three of the last four years.

Last quarter, the company said it earned $142 million, or 76 cents a share, for its fiscal second quarter ended April 14th. A year ago, it reported $118 million in net income, equal to 64 cents per share. Sales grew by 13% to $3.03 billion.

Wall Street was looking for EPS of 73 cents on $3.04 billion in revenue.

Whole Foods said its sales on a comparative-store basis grew by 6.9% and identical store sales, excluding four relocations and one expansion, were up by 6.6%.

The gross margin came in at 36.4%, which was an improvement of 6 basis points and was driven by occupancy leverage. Cost of goods sold was flat.

Based on the results to date, Whole Foods increased its EPS guidance for the year to a range of $2.86 to $2.89, up from $2.83 to $2.87. The Street was already at the high end of the previous range. The guidance did not reflect a planned stock split. ...

Outside of earnings, Whole Foods is a strong company that will continue to benefit from the public's embrace of natural and organic foods. Whole Foods already does very well with the Baby Boom generation because as its members age they have become more health conscious. It also does well with younger buyers who were raised eating natural foods and thus aren't converts.

Whole Foods remains one of the best operators in the grocery space and it still has a long runway to reach the 1,000 or so stores it believes the U.S. can support. Recent openings of smaller stores in smaller cities have produced solid sales, validating management's belief that it can compete in those markets.

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 Apple's (KO) results.
  • to expect a negative reaction to NetFlix's (NFLX) results.
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