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 Google (GOOG), Yahoo (YHOO), Coca-Cola (KO), Kinder Morgan Energy (KMP), Intel (INTC), eBay (EBAY), Microsoft (MSFT), Goldman Sachs (GS), and Mosaic (MOS).

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

Goldman has surpassed analyst EPS estimates seven of the past eight quarters, missing the consensus once. During that time, the stock has risen the next day four of eight quarters. Seasonally, the stock has risen three of the past four years.

Last quarter, Goldman reported a profit of $2.2 billion in the first quarter, or $4.29 per share, up from $2.1 billion, or $3.92 per share, a year ago. Revenue totaled $10.1 billion, up from $9.9 billion.

The reported results topped the analyst consensus estimates of $3.90 per share in profit on $9.7 billion in revenue.

Tangible book value (TBV) per share at the end of the quarter increased by about 3% to $138.62.

Cost controls helped Goldman's bottom line. Operating expenses totaled $6.72 billion, essentially flat with the year-earlier period. It accrued $4.34 billion for compensation and benefits, also relatively flat with last year, but the ratio of compensation expense to revenue was 43.0%, down from 44.0% last year. Goldman has cut about -1% of its workforce in the past year.

Looking at the segments, the Investment Banking unit reported $1.57 billion in net revenue, up 36% from last year and 12% from Q4. Fees from advisory services were flat at $484 million, but revenue from underwriting grew by 63% to $1.08 billion.

The Institutional Client Services segment reported $5.1 billion in total revenue, down -10% from last year but 18% better than in Q4 2012. This is revenue from trading on behalf of clients.

Net revenues from fixed income, currency and commodities (FICC) trading were $3.22 billion, -7% lower than last year but significantly better than the $2.04 billion in revenue reported for the seasonally weak fourth quarter. Net revenues were lower across most businesses, Goldman said.

Equity trading revenue fell by -15% to $1.92 billion. The decrease reflected significantly lower net revenues in derivatives compared with a strong year-ago quarter, partially offset by higher revenues in cash products. Commissions and fees declined due to lower market volumes.

Goldman produced net revenues of $2.1 billion from its Investing & Lending activities, which includes direct investing; investing Goldman does through funds; and lending activities.

The Investment Management unit reported $1.32 billion in revenues, 12% higher than a year ago and -13% lower than in Q4 2012. The increase in net revenues compared with last year was due to higher incentive fees and higher management and other fees. ...

Outside of earnings, Goldman has long been the premier investment bank. However, it's also been the poster child of anti-Wall Street sentiment as well, and like many financial firms, it has had to adjust to a changing regulatory landscape (with new rules such as Basel III, Dodd-Frank and the Volcker Rule) that came as a result of the financial crisis.

2013 thus far has been a slow year for M&A, but from a competitive standpoint, Goldman is still well positioned to benefit when M&A activity accelerates as it remains the world's top investment bank. There is regulatory risk, but we believe it can manage whatever rules the government ultimately puts in its path. ...

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.

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 (0)