By Neal Rau
Earnings season is almost over but some important names are still set to release. The following combined fundamental and price-based analysis is designed to help investors manage risk in these companies both before and after earnings are released.
The following Companies report earnings on November 14.
Brooks Automation, Inc. (BRKS) is expected to earn $0.04 per share when the company reports earnings on Thursday November 14 before the bell, which would be $0.04 less than the same quarter a year ago. The company has exceeded analyst expectations in five of the last eight quarters, missing estimates last quarter by a penny. Last quarter earnings per share decreased 78.57% to $0.03 in the quarter versus EPS of $0.14 in the year-earlier quarter. Even worse was revenue, which decreased 15.91% to $118.1 million from the year-earlier quarter. Shares have rebounded 10% from the lows in late August, and up about 5% in the last month. Should investors buy shares ahead of the earnings report on Thursday?
Price matters, and right now Shares of BRKS are getting close to a test of long-term resistance. Even if the company is able to beat estimates on Thursday, it does not mean the stock will continue to rise, as the stock has already moved higher. According to the real-time trading report, published by Stock Traders Daily, shares are currently getting close to testing 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 BRKS a sell/short at resistance, with risk controls in place if resistance breaks higher.
Children's Place Retail Stores, Inc. (NASDAQ:PLCE) is scheduled to report earnings on Thursday November 14 before the market open. Analysts' estimates are for the company to earn $1.86 per share versus the $1.60 per share that it earned in the same quarter a year ago. Children's Place Retail Store's e-commerce business grew 33% year-over-year and the company's E-commerce contributed 58% to total sales growth for the its most recent quarter, totaling $50.5 million in e-sales. Should investors buy, sell or hold shares going into Thursday's earnings report?
Shares of PLCE have fallen over 10% from the yearly highs, but the stock remains above support, as defined in our real time report. If shares move slightly lower and test 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, we caution investors to be patient and not to chase the stock ahead of an earnings report.
E Commerce China Dangdang Inc. (ADR) (DANG) is expect to report a loss of $0.12 per share when the company reports its quarterly earnings on Thursday November 14, in the same quarter a year ago the company lost $0.24 per share. On October 21, 2013, Dangdang pre-released that its third quarter revenue would be in the range of $249M-251M, instead of $260M that it previously forecasted. Shares of DANG have nearly doubled YTD, however the stock is down over 30% from the 52-week highs. Should investors buy, sell or hold at current levels?
Investors need to be aware of price, and based on the Stock Traders Daily real-time trading report for DANG, the stock is trading near long-term support. We are buyers near support, and would use support as our risk control. If support holds, we would expect a move higher and an eventual test of resistance. By definition we prefer to buy near support levels when they are tested because that allows us to maximize our return, our target is resistance and we want to get the complete oscillation from support to resistance, but it also helps us control risk, and that is the most important part.
Kohl's Corporation (KSS) is expected to earn $0.86 per share on Thursday November 14, which would be $0.05 better than the $0.91 per share the company earned in the same quarter a year ago. The company announced its biggest-ever Black Friday event, kicking off at 8 p.m. Thanksgiving Day, which is earlier than ever before. The stock is up 32% YTD and up 10% in the last month. Should investors buy, sell or hold into earnings on Thursday?
Price is the most importing thing to consider right now. Smart money has been selling KSS at long-term resistance over the past five years. Even if the company beats estimates on Thursday, it does not mean the stock will continue to rise, as the five-year chart shows. The stock is trading just below long-term resistance. According to rule, we are sellers at resistance, and as long as the stock remains below resistance, we expect lower levels and a test of support. Based on the real-time trading report published by Stock Traders Daily, KSS is a sell/short at resistance, with risk controls in place if resistance breaks higher.
Although earnings season can bring with it a host of surprises, the simple approach may sometimes be the best choice, and our attempt here has been to provide a straightforward data-driven look-ahead analysis to prepare investors for the earnings report that lies ahead. Good trading!
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 listed herein for writing this article.