By Neal Rau
Earnings season is just getting underway, and a few very important earnings releases are coming over the next few days. We have conducted an analysis of these companies in order to provide investors with a summarized earnings analysis (both past and present), but also, and more importantly, a price-based observation that might be better suited for investors who are anticipating price action after earnings are released.
Of course, we already know that stocks sometimes do the exact opposite of what we might expect after earnings. A stock might fall after it beats estimates, or increase after a miss, so although an evaluation of earnings data is clearly important, a close look at the recent decisions of smart money is as well.
This combination of simple earnings data and price-based analysis can help investors not only understand earnings results, but also anticipate the stock's move after earnings are released.
The following Companies report earnings on October 15 2013.
Omnicom Group Inc. (OMC) will publish its third quarter 2013 results on Tuesday, October 15, 2013. The company is expected to post EPS of $0.81 versus $0.74 the same quarter a year ago. The recent merger with Publicis, located in France gives Omnicom much better access to worldwide opportunities. The stock is up about 23% YTD, however shares have pulled back about 6% over the last 3 weeks. Is this a buying opportunity ahead of earnings?
Investors need to be aware of price, and based on the Stock Traders Daily real-time trading report, the stock is moving closer to long-term support, but isn't there yet. If the stock continues to move lower, and tests long-term support, we would be buyers near support. If support holds, we would expect a move higher and an eventual test of resistance. We would only be buyers near support as a result, and we see no reason to buy now.
CSX Corporation (CSX) is expected to report $0.43 EPS for the third quarter on Tuesday October 15 after the close, which is a penny less that the EPS from the same quarter a year ago. The company has beaten analyst expectations in seven of the last nine quarters. Analysts have expressed concern recently about both the domestic and foreign coal industries, as a result, the stock has received recent downgrades. However, shares are up over 30% YTD and not far off the 52-week highs. Is this a good time to buy shares of CSX?
Stock price matters and right now the stock is near a two year high, and close to a test of long-term resistance. If the stock tests resistance, and remains below resistance, as defined in our real time trading report, Stock Traders Daily expects lower levels and a test of support. That would make CSX a sell/short at resistance, with risk controls defined as a break above resistance.
Intel Corporation (INTC) will be reporting its Q3 quarterly results on Tuesday October 15 after the market close. The company is expected to post $0.54 EPS, which is $0.04 less than the same quarter a year ago. Intel missed expectations by a penny in each of the two previous quarters. Nokia Corporation's (NOK) decision to sell its handset business to Microsoft Corporation (MSFT) was a negative for Intel, as most of Nokia's low cost handsets rely on integrated baseband processors from Intel, a business that will likely wind down by end of 2014. Shares of INTC have fallen 11% off the highs back in June. Should investors be buying shares of INTC after the pullback?
Based on the Stock Traders Daily real-time trading report, the stock is moving closer to long-term support, but it is not there yet. If the stock continues to move lower and successfully tests long-term support, we would be buyers near support. If support holds, we would then expect a complete oscillation back to resistance, but if it breaks, we would be sellers of that position. It does not make sense to buy INTC ahead of earnings at current levels based on price. We would only be buyers near long-term support.
Yahoo! Inc. (YHOO) is expected to report its third quarter financial results on Oct.15 after the market close. Yahoo expects to earn $0.33 EPS, according to analysts. The consensus estimate would be a decrease of 5.7 % from both last year as well as the second quarter of 2013 when it earned 35 cents a share. Quarterly revenues are expected to fall 0.6 % to $1.08 billion versus $1.09 billion a year-ago. In the second quarter of 2013, Yahoo reported revenue of $1.08 billion. Investors might be looking past the quarterly numbers to get a glimpse at Yahoo's metrics for ecommerce giant Alibaba, which it owns a 24% stake in, and has been a catalyst for the recent run. Shares of YHOO are up over 110% YTD, and up over 30% since July 1. Is YHOO still a buy at these levels?
Shares of YHOO have had an amazing run, however, even if YHOO posts better than expected numbers, it does not mean the stock will continue to rise, as stock price matters. The stock is trading at its highest levels since 2006, and it is close to testing long-term resistance. If the stock tests long-term resistance, and remains below resistance, as defined in our real time trading report, Stock Traders Daily expects lower levels and a test of support. That would make YHOO a sell/short at resistance, with risk controls in place if resistance breaks higher.
Navigating earnings can be tricky, sometimes investor's earnings expectations are correct, but the stocks actually do the opposite of what they think it should have done after earnings, so our opinion based on price can help make investors make more well-rounded and sound investment decisions.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Business relationship disclosure: By Neal Rau for Stock Traders Daily and neither receives compensation from the publicly traded companies mentioned herein for writing this article.