Seeking Alpha
Long/short equity, contrarian, newsletter provider, research analyst
Profile| Send Message|
( followers)  

By Neal Rau

Prepare for earnings in a comprehensive manner by reviewing both the expectations and the recent decisions of smart money. We have done that for these companies scheduled to report soon.

The following companies report earnings on October 29, 2013:

Nokia Corporation (NYSE:NOK) is expected to report Q3 earnings before the market open. Analysts' estimates are for the company to earn $0.00, or break even for the quarter. In Q2, the company reported an operating loss of $151 million from revenues of $7.46 billion. The numbers missed analysts' estimates. Nokia sold about eight million phones between July and September, which is almost triple the amount it sold in the same period a year ago. Nokia will also release its phablet, which will run the new Windows operating system. Some people think the company may never be the leader in smart phone sales again, however it looks like it is making progress based on the impressive recent phone sales. The stock is up 84% YTD and trading at the highest level in two years. Should investors buy, sell or hold into earnings?

Based on the real-time trading report published by Stock Traders Daily, NOK is close to a test of long-term resistance, and right before earnings. Even if the company beats estimates on Tuesday, it does not mean the stock will continue to rise. Smart money is likely to take profits near resistance before earnings, especially after such a big move up in share price. According to our rule, we are sellers at resistance, and as long as the stock remains below resistance, we expect lower levels and a test of support. That would make NOK a sell/short at resistance, with risk controls in place if resistance breaks higher.

JetBlue Airways Corporation (NASDAQ:JBLU) is scheduled to report earnings before the market open. The company is expected to report $0.22 per share, which would be a 69% increase versus the $0.13 JetBlue reported in the same quarter a year ago. JetBlue is going to be launching a premium brand next summer that will offer high-end seating for the New York to Los Angeles and New York to San Francisco routes. The company plans to offer slightly lower fares than competitors with newer and more modern planes. The stock is up 29% YTD and up over 11% in the last few weeks. Is JBLU still a good buy after the recent run up?

Based on the Stock Traders Daily real-time trading report, the stock has broken above long-term resistance, which is now converted support. That is a very bullish sign, and so far, converted support is holding, as long as that remains true, the rules that govern our strategies tell us to expect higher levels. However, converted support also acts as our risk control, and if converted support breaks lower, we would stop out of that long position. We are buyers at that converted support level, but caution buyers not to chase the stock. New long positions would only be advised near converted support, according to our real-time trading report for JBLU.

Pfizer Inc. (NYSE:PFE) is scheduled to report $0.56 per share when the company reports before the bell, which would be $0.03 better than the same quarter a year ago. Pfizer continues to invest heavily in research and development activities. The company owns many profitable patents, which should keep a steady flow of royalties coming in. The stock has been performing well, as it is up 23% YTD and up over 74% in the last 3 years. Is the stock still a good buy at current levels?

The company looks strong, but even if the company beats estimates on Tuesday, it does not mean the stock will continue to rise, as the chart shows that price matters. The stock is near a test of long-term resistance, and last time it tested long-term resistance back in April, the stock fell 11% within a month. Smart money will be watching resistance again, as the stock is getting close, and this time right before earnings. According to our rule, we are sellers at resistance, and as long as the stock remains below long-term resistance, we expect lower levels and a test of support. Based on the real-time trading report published by Stock Traders Daily, PFE is a sell/short at resistance, with risk controls in place if resistance breaks higher.

Pitney Bowes Inc. (NYSE:PBI) is expected to report earnings of $0.41 per share for its third quarter when the company reports before the market open, which would be $0.03 less than the same quarter a year ago. PBI recently disclosed that it expects to take $25 million charge in Q3. Last quarter PBI beat on EPS by $0.09, missed on revs, and guided FY13 EPS below consensus. However, the stock spiked on the news that Apollo Global Management would acquire Management Services Business from Pitney Bowes for ~ $400 million in cash. The stock is up 87% YTD, and trading close to the 52-week high. Should investors buy shares of Pitney Bowes ahead of earnings?

Based on the real-time trading report offered by Stock Traders Daily, shares of PBI are getting close to a test of long-term resistance, and as a rule we are sellers if resistance is tested (not there yet). If the stock does test long-term resistance and remains below resistance, we would expect a full oscillation back to support. However, resistance also acts as our risk control, and if resistance breaks higher, bullish signals would surface. We would be selling shares ahead of earnings if resistance, if those levels are tested, according to the PBI real-time trading report.

Navigating earnings can be tricky. Sometimes investors' 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 investors make more well-rounded and sound investment decisions.

Source: Ahead Of Earnings: NOK, JBLU, PFE, PBI