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.

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, including Macy's (NYSE:M), Jack in the Box (JACK), Deere (DE), Cisco (CSCO), The Gap (GPS), Wal-Mart (WMT), Nordstrom (JWN), and Dick's Sporting Goods (DKS).

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

Nordstrom has beaten analyst EPS estimates five of the past eight quarters, missing the consensus twice and meeting once. Over that period, the stock has risen the next session two of eight quarters. Seasonally, the stock has risen once in the last four years.

Last quarter, Nordstrom reported that its net income for the three months ended February 2nd rose to $284 million, or $1.40 per share, from $236 million, or $1.11 per share, a year ago. Wall Street was looking for EPS of $1.35.

Sales increased by 13% to $3.7 billion, which was in line with the Street view.

Net income for the full year increased by 8% to $735 million, or $3.56 per share, from $683 million, or $3.14 per share. Sales grew by 12% to $12.1 billion.

Sales on a same-store basis in the fourth quarter grew by 6.3% on a consolidated basis. Comparative-store sales at Nordstrom's namesake department stores grew by 2.2%. If sales of its direct online channel are included, Nordstrom brand same-store sales increased by 6.1%. The top-performing merchandise categories included Men's Apparel, Cosmetics, Kids' Apparel, and Women's Apparel. The strongest regions were the South and Midwest. ...

Outside of earnings, Nordstrom's investments in building its "multi-channel" retail strategy that marries its e-commerce activity to its full-price and off-price stores have clearly been paying off with strong sales growth, even if it has crimped margins and profits a bit in the short term. Longer term, though, it is the right strategy, and as some investment costs start to wane, margins should begin to improve.

The long-term drivers for Nordstrom remain in place. Despite a very strong sales performance recently, Nordstrom has a lot of levers to pull over the next several years to drive growth, such as the continued improvement in its women's business that began in Q3; an accelerated rollout of its Rack concept; improved returns following its investments in its e-commerce platform and loyalty program; its move into Canada; the opening of a new flagship store in NYC in 2018; and a better performance in California. ...

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 Q1 so far were:

  • to be bullish on Green Mountain (GMCR) ahead of earnings.
  • to be bearish on Baidu (BIDU) ahead of earnings.
  • to be bullish on Whole Foods (WFM) 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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