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 Yum Brands (YUM), Chipotle Mexican Grill (CMG), Hain Celestial (HAIN), Panera Bread (PNRA), Shutterfly (SFLY), Yelp (YELP), Visa (NYSE:V), LeapFrog (LF), Akamai (AKAM), Baidu (BIDU), Nuance Communications (NUAN), and LinkedIn (LNKD).

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

Shutterfly has beaten EPS estimates seven of the last eight quarters, missing once. Over that period, the stock has risen the next session six of eight quarters. Seasonally, the stock has each of the last four years. ...

Last quarter, Shutterfly turned in very strong Q3 results, as revenue rose 29% to $98.5 million, coming in well ahead of the $91.6 million analyst consensus. Consumer revenues jumped 24% to $90.4 million, while enterprise revenues soared 109% to $8.1 million.

The company recorded a net loss of -$10.5 million, or -29 cents per share, versus a loss of -$10.0 million, or -29 cents per share, last year. Analysts had been looking for a loss of -40 cents.

Adjusted EBITDA was a loss of -$3.1 million, compared to a loss of -$3.3 million last year.

Transacting customers totaled 2.2 million, a 40% year-over-year increase, while orders rose 40% to 3.6 million. The average order value, however, fell -11% to $25.06, in part due to the less affluent customers acquired in the Kodak acquisition.

For Q4, the company forecast revenue to increase 14-18% to $300.0-$310.0 million. EPS is expected to come in between 94 cents and $1.02. Adjusted EBITDA is projected to be $96.5-$103.0 million. ...

Outside of earnings, we think Shutterfly has the best offerings in the fast-growing online photo space, and that it is taking shares. We also think it's getting more and more likely that the struggling Hewlett-Packard NYSE: HPQ) will look to divest Snapfish, with Shutterfly the most logical acquirer. Such a deal would greatly improve the competitive pricing landscape and further increase Shutterfly's scale advantage.

Shutterfly's biggest advantage over competitors, though, is that it has invested in its business and is the only major online photo company that prints in-house, which gives it a significant margin advantage over competitors that outsource their printing needs.

The company should continue to benefit from increased scale, possible international expansion, lower manufacturing costs, and new higher-margin products, like iPhone cases.

We also like some of its recent technology-based acquisitions, and think mobile represents a solid opportunity for the firm. ...

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 Q4 so far were:

  • to be bullish on Netflix (NFLX) ahead of earnings.
  • to be bullish on Qualcomm (QCOM) ahead of earnings.
  • to be bearish on Bank of America (BAC) 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.)

    Rates

    View Comments (1)