Which Stocks Look Ready to Surge and Sink 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 20- to 30-page Earnings Preview report for the week ahead each Friday.

Over the past two years, BullMarket.com used the data it has collected to correctly predict investor reactions for nearly two-third of the stocks it's previewed.

In its latest earnings preview, BullMarket.com looks at several popular stocks, including SodaStream (SODA - News), Blue Nile (NILE - News), priceline.com (PCLN - News), Nordstrom (JWN - News), Nuance (NUAN - News), NVIDIA (NVDA - News), STEC (STEC - News), and Cisco (CSCO - News).

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

Nordstrom, Inc. is a fashion specialty retailer that offers apparel, shoes, cosmetics and accessories for women, men and children. Nordstrom offers a selection of brand name and private label merchandise through various channels, such as its Nordstrom branded full-line stores and website and its off-price Nordstrom Rack stores. ...

Last quarter, Nordstrom recorded $236 million in net income, or $1.11 per share, for its fiscal fourth quarter that ended on January 28th. In the year-ago period, it reported $232 million in net income, equal to $1.04 per share.

The retailer rang up a 12.5% increase in sales to $3.17 billion, compared with $2.82 billion a year ago. Consolidated sales on a same-store basis grew by 7.1%. Analysts were looking for sales of $3.17 billion.

"Our regular price selling remains at historically high levels, which is indicative of the integrity of our pricing and the fashion and newness in our offering," President Blake Nordstrom said on a conference call with analysts. "We continue to challenge ourselves on inventory turns. In 2011, we reached 5.6 times, matching our all-time best in 2010 and a tribute to the high level of execution of our merchants."

The company's full-line stores performed well. Same-store sales for the Nordstrom division, which includes results for the full-line stores and its direct online business, grew by 9.8%. The South and Midwest were the strongest regions. Handbags, cosmetics, and designer labels across all segments were the top performers.

Sales in the direct online business rose 35% sequentially and were up 30% for the year.

The value-oriented Rack chain contributed a total sales increase of 17.7% along with a same-store sales gain of 2.2% for the quarter. ...

Nordstrom has topped EPS estimates five of the past eight quarters, missing estimates once and meeting twice. During that time frame, the stock has risen the next session two of eight quarters. Seasonally, the stock has risen two times in the past four years.. ...

Outside of earnings, we view Nordstrom as a best-in-breed retailer and continue to like how the company is at the forefront of embracing a multi-channel approach (department store, website with free shipping, off-price concept, and flash sale website HauteLook) and building up its infrastructure and technology.

While these investments will depress the bottom line in the near term, we think this is the right move for the long term, and the continued strong comp results are evidence that its strategy is working.

Meanwhile, we think the company still has solid growth prospects ahead. Its department store is still a destination spot that helps drive mall traffic; its Rack concept has solid expansion opportunities; and it is still benefiting from the pickup in spending of more affluent customers. ...

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.

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