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.

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 Zillow (Nasdaq:Z), Whole Foods (WFM), Disney (DIS), SodaStream (SODA), Groupon (GRPN), Green Mountain Coffee Roasters (GMCR), Priceline.com (PCLN), NVIDIA (NVDA), and Monster Beverage (MNST).

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 six quarters. Seasonally, the stock rose last year.

Last quarter, the online real estate information company reported better-than-expected results for the last three months of 2012.

Zillow said it earned $0.55 million, or 2 cents per share, compared with $0.92 million, or 3 cents per share, a year earlier, but revenue soared by 73% to $34.3 million. Management said its Marketplace category generated 78% of sales.

Wall Street was looking for a break-even quarter on $31.3 million in revenue.

The company said that the number of unique visitors to its site grew by 47% to 34.5 million.

"The fourth quarter turned out better than we expected. We achieved record revenue while executing a pricing model transition in our Premier Agent business, all during what's typically the seasonally slowest period of the year in housing," CEO Spencer Rascoff told analysts.

Average monthly revenue per user was $267 in Q4, essentially flat sequentially. Over 40% of our new sales were to existing agents buying more exposure across mobile and Web in their sales territories, which was slightly higher than in the third quarter, management said.

Revenue for the full year grew by 77% to $117 million. Marketplace revenue grew by 105% to $87 million. Its lineup of Premier Agent advertisers grew to 29,500 at the end of the year, up from 15,800 at the conclusion of 2011.

Full-year Display revenue grew 26% and exceeded $30 million for the year. EBITDA for 2012 was $25 million, up 112% year-over-year, and represented 22% of revenue.

The company guided for full-year revenue to grow to a range of $165 million to $170 million. ...

Outside of earnings, Zillow is in the early stages of its growth strategy and it has obviously 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. The expanding mortgage service offers another growth opportunity. The company does, however, face increased competition from Trulia (TRLA), which went public last year. ...

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 Netflix (NFLX) ahead of earnings.
  • to be bearish on Baidu (BIDU) ahead of earnings.
  • to be bullish on Coach (COH) 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.)

    View Comments (0)