Which Stocks Look Ready to Sink and Surge 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 Hain Celestial (HAIN), Intuit (INTU), Home Depot (HD), Best Buy (BBY), Target (TGT), Toll Brothers (TOL), Hewlett Packard (HPQ), Dollar Tree (DLTR), Gap (GPS), and Autodesk (ADSK).

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

Best Buy has beaten analyst EPS estimates four of eight quarters over the past two years, missing the consensus four times. During that span, the stock has risen the next session two of eight quarters. Seasonally, the stock has risen once in the past four years.

Last quarter, the electronics retailer reported a net loss for the three months ended May 4th after paying preferred dividends of -$81 million, or -24 cents per share. It reported a profit of $158 million, or 46 cents per share, last year.

Excluding restructuring costs and costs related to selling its stake in Best Buy Europe, it earned 36 cents per share for its fiscal first quarter, which was two cents better than the analyst consensus estimate.

Revenue fell nearly -10% to $9.38 billion, excluding European revenue. Including revenue from its European joint venture, revenue totaled $10.8 billion, the company said. Wall Street was looking for 10.67 billion.

Sales on a same-store basis slipped by -1.1%. Domestic revenue, excluding the additional week last year, declined 2.2% to $7.98 billion. The decline was driven by the loss of revenue from 49 large format stores that were closed last year and the comparable store sales decline.

CEO Hubert Joly said sales were hurt by the shift of the Super Bowl into the prior quarter, and the decision to reduce sales in some non-core businesses. The Super Bowl usually drives TV sales. ...

Outside of earnings, there are a lot of issues swirling around Best Buy. The company has been hurt by the "showroom" effect that leads some customers to browse in its stores but buy elsewhere, often online. The home electronics industry has also suffered from a lack of "must-have" products to drive traffic and sales. More aggressive pricing to protect market share, including a price- matching guarantee, meanwhile, have hurt margins.

On the bright side, the company has been able to remain solidly free cash flow positive. It also recently sold its 50% stake in Best Buy Europe for $775 million, which looks like a good price. The company has also been cutting costs while making investments to boost its website and online capabilities, as well as in- store service. ...

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 Tesla's (TSLA) results.
  • to expect a positive reaction to Priceline.com's (PCLN) results.
  • to expect a negative reaction to First Solar's (FSLR) results.
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