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Which Stocks Look Ready to Pop and Drop with Earnings Next Week?

the BullMarket.com Staff

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 Cree (CREE), NetApp (NTAP), Macy's (NYSE:M), Deere (DE), Cisco (CSCO), Wal-Mart (WMT), Nordstrom (JWN), and Dick's Sporting Goods (DKS).

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

NetApp has beaten analyst EPS estimates six of eight quarters over the past two years, missing once and meeting forecasts once. Over that stretch, the stock has risen the next session five of eight quarters. Seasonally, the stock has risen two times in the last four years.

Last quarter, the storage equipment company's reported profit for the quarter ended April 26th slipped from a year earlier but was in line with estimates. The company also increased its share repurchase program and announced it would begin paying a dividend.

NetApp reported net income of $173.8 million, or 47 cents per share, down -4% from $180.7 million, or 47 cents per share, for the same period last year. Share repurchases in the past year aided earnings per share.

Adjusted earnings were 69 cents per while revenue rose by 1% to $1.72 billion.

Analysts were expecting adjusted earnings of 68 cents per share on revenue of $1.76 billion.

Q4 deferred revenue increased by $134 million from Q3. Branded revenue was up 9% from Q3 and 3% year over year, while OEM revenue declined -19% sequentially and -18% from Q4 a year ago. ...

Outside of earnings, companies may delay or rethink some spending, but ultimately they will need the additional storage capacity. NetApp's storage products are well regarded, especially among midmarket customers.

NetApp had some operational issues last year, not delivering on some product launches as expected and having to push them back. However, its new ONTAP 8.2 storage operating system and 3200 series hardware appear to be gaining traction and helping stem the tide of market share loss to storage leader EMC (EMC).

Financially the company is in good shape and the stock is still relatively inexpensive at around 9x the current FY 2015 EPS (ending April) consensus of $3.09 excluding its net cash position of about $13. It is also starting to return cash to shareholders in the form of a big buyback and its first dividend, a 15-cent quarterly payout. ...

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 Facebook's (FB) results.
  • to expect a positive reaction to Michael Kors (KORS) results.
  • to expect a negative reaction to First Solar's (FSLR) results.
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