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 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 Apple (AAPL), IBM (IBM), Intuitive Surgical (ISRG), Google (GOOG), Cree (CREE), Netflix (NFLX), F5 Networks (FFIV), Check Point Software (CHKP), McDonald's (MCD), Starbuck's (SBUX), and Microsoft (MSFT).

Here is just a tiny sample of what BullMarket.com wrote about Google:Google 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 three of eight quarters. Seasonally, the stock has risen once in the past four years.


Last quarter,Google inadvertently released its third quarter results during trading hours instead of after the market closed as planned, which lead to some chaotic trading. Google doesn't like to give official guidance and then every few quarters it tends to throw in a surprise or two. In addition to the early release, it also didn't prepare the market for just how much Motorola would weigh on its results once its numbers were consolidated.

The company recorded a profit of $2.18 billion, or $6.53 a share, down from $2.73 billion, or $8.33 a share, for the year-earlier period. Adjusted EPS came in at $9.03, below the $10.65 consensus.

Total gross consolidated revenue surged 45% year over year to $14.1 billion. Traffic acquisition costs (TAC) were $2.8 billion, or 25.5% of total advertising revenue. Total revenue excluding TAC was $11.34 billion, below $11.86 billion consensus.

Google's standalone revenue grew 19% year over year to $11.5 billion, and was up 24% on a constant currency basis. Google website revenue climbed 15% to $7.7 billion, while network revenue rose 21% to $3.1 billion. Motorola contributed $2.58 billion in revenue, which was down -21% year over year from when it was a standalone company.

Total paid click growth surged, up 33% year over year, while aggregate cost per click (CPC) was down -15%, or -8% in constant currencies. ...

Outside of earnings, Google continues to be the dominant global player in search, even with minimal Chinese exposure. Meanwhile, its growing share of the online display advertising market and expanding presence in mobile make it a formidable and still fast-growing company. YouTube also looks like it has hit an inflection point, making it a meaningful contributor.

The Motorola deal is still a bit of a wildcard, and the smartphone maker was certainly a drag on Google's results last quarter. Motorola's patent portfolio helps protect Google's Android franchise, but it would be nice if Google actually monetized its smartphone OS platform.

On the downside, Google isn't exactly a shareholder friendly company. Its new Class C shares were structured solely to ensure co-founders Larry Page and Sergey Brin remain in charge. Google's management, it is fair to say, marches to its own beat regardless of what the Street thinks, but that goes back to the point that at the end of the day Page and Brin hold all the cards. As an investor you have to be comfortable with that.

Mobile is both an opportunity and a drain in the near-term because it isn't as profitable as traditional search. Investors haven't liked that cost per click (CPC) rates have been declining as a result of the shift towards mobile. ... 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 Q4 so far were:

  • to be bullish on eBay (EBAY) ahead of earnings.
  • to be bullish on Goldman Sachs (GS) ahead of earnings.
  • to be bearish on Intel (INTC) 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.)
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