Which Stocks Look Ready to Surge or Sink After 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.

In its latest earnings preview, BullMarket.com looks at several popular stocks, including Intuitive Surgical (ISRG), Intel (INTC), IBM (IBM), eBay (EBAY), Kinder Morgan (KMP), Chipotle Mexican Grill (CMG), Bank of America (BAC), and Google (GOOG).

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

Kinder has topped the analyst EPS consensus twice in the past eight quarters, missing six times. During that span, the stock has risen the next session six of eight quarters. Seasonally, the stock has risen two times in the last four years. ...

Last quarter, the partnership's Q2 net income increased to $1 billion from $132 million in the same quarter of 2012. Earnings per share increased to $1.41 per unit compared with a 53-cent loss a year ago. The results were aided by KMP's $3.2 billion purchase of Copano Energy.

Revenue grew to $3.02 billion from $2.01 billion a year earlier.

Distributable cash flow (DCF) rose 38% to $505 million, or $1.22 per unit. Kinder Morgan raised its distribution forecast, saying it now expects to pay $5.33 per unit this year, 5 cents higher than its previous forecast.

KMP acquired Copano's pipelines and conduits from its parent, Kinder Morgan Inc. (KMI), which added the assets when it bought El Paso Corp. last year. Profit in the gas pipeline division more than doubled to $566 million from $238 million, according to the statement

The Natural Gas segment more than doubled its segment earnings before DD&A and KMP said it expects it to exceed its plan for the year. The growth is driven by the dropdown of Tennessee Gas Pipeline and El Paso Natural Gas and by the Copano acquisition that closed on May 1st....

All in all, we think Kinder is a solid MLP with a strong track record. It consistently meets the distribution goals it sets out each year, and after hedges, only about 7% of its business is exposed to energy price fluctuations.

The recent short attack on Kinder is similar to the one on Linn (LINE), in that it attacks a non-GAAP measure of a stock with a large retail investor base, while making a lot of accusations. Kinder's maintenance CapEx as a percentage of EBITDA is pretty much middle of the pack for larger MLPs, though, giving off no red flags in that regard.

We think Kinder did a great job explaining the issue of pipeline safety and maintenance capital, which was a central issue of the short attack. As for the oil side of the business, the argument wasn't quite as strong, and similar to Linn it really is difficult to even come to a definition of what should be classified as maintenance capital versus growth capital in the oil and gas production business. However, while production from this side of the business has been pretty steady, revenue and segment earnings from the business have been going up for Kinder, helped by higher oil prices. ...

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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