- Earnings season is officially over, yet there are still a few names reporting this week.
- Volatility following earnings releases is quite high at the moment, especially at smaller to medium-sized names.
- Please consider the risks when investing in shares over earnings names, only hold a position if you are a long term investor.
Earnings season is officially coming to an end, yet there are still some companies scheduled to release their earnings in the coming week.
Among the more prominent names to report their earnings this week are H&R Block (NYSE:HRB), Ulta Salon, Cosmetics & Fragrance (NASDAQ:ULTA), and Restoration Hardware (NYSE:RH). Next is a quick overview about what to expect from the earnings releases for each company.
The provider of tax preparation and banking services is scheduled to release its earnings on Wednesday, the 11th of June before the opening bell.
The past quarter is very important for the company which operates in a highly seasonal industry with of course Americans filing their taxes in recent months ahead of the April 1 deadline.
Analysts are expecting earnings to come in at $3.23 per share, up from a reported $2.54 per share last year. Sales are expected to increase by 13.2% to $2.49 billion. Shares of H&R Block have trailed the performance of competitor Intuit (NASDAQ:INTU) by a wide margin. Shares of H&R Block have been trading roughly flat over the past year, while its competitor saw its shares increase by roughly 35% over the same time period.
Given the importance of the tax season on H&R Block's full year results, volatility surrounding the earnings release is to be expected. Intuit reported its earnings about two weeks ago which were well received by the company with shares setting fresh highs in the wake of those results.
Ulta Salon, Cosmetics & Fragrance
Ulta Salon is set to report its quarterly earnings on Tuesday, the 10th of June. The beauty retailer which operates salons services and sells related products is expected to report a continuation of growth. Analysts are expecting the company to report earnings of $0.74 per share which would represent a 13.8% increase in earnings per share. Revenues are expected to jump by 20.1% to $699.9 million.
Over the past quarter shares of the company have been trading net flat. Shares of the company traded at highs of around $133 in November of last year but fell sharply after the company reported a disappointing set of earnings accompanied by a cautious guidance in December of last year. This has ¨reset¨ the expectations for the stock after strong momentum in the years of 2010 until 2012.
Typically the earnings releases of Ulta Results brings quite some volatility in the trading session following the announcement, which is something to be very aware of.
Restoration Hardware sells furniture, lighting, decor, outdoor, garden and other ¨lifestyle¨ products to the higher end of the market. The company is scheduled to release its earnings on Wednesday the 11th of June after the market close.
Restoration Hardware has only been public since the end of 2012. Shares have roughly doubled in the period from the public offering until the summer of 2013. Ever since, shares have traded in a $60-$80 price range.
Analyst are looking for earnings of $0.11 per share, which implies that earnings per share are expected to nearly double from the reported earnings of $0.06 per share last year. In its short life as a publicly traded company has the surprise to beat on consensus estimates. Revenues are expected to increase by 15.6% to $348.5 million.
Implications For Investors
The reaction of investors to earnings releases can result in quite some volatility. This is especially the case in technology, retail and highly-valued momentum stocks these days.
As matter of fact high volatility can be anticipated for all the three stocks mentioned above. H&R Block obviously relies on the quarter to make or break its entire fiscal year results given the importance of tax season.
Ulta Salon has seen its fair share of volatility of course, as just half a year ago its shares fell by more than a fifth in a single trading session following its earnings release and disappointing guidance.
Shares of Restoration Hardware have seen a lot of day-by-day volatility following earnings releases, but have traded in a relatively narrow trading range.
Please consider the risks when investing in companies when holding your positions over their earnings release unless you are a truly long-term investor with a long time horizon. Good luck!
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.