This Week's Earnings Focus: AZO, CTRP, DECK

Auspicious Autozone (AZO)
AZO is expected to announce earnings on Tuesday before the bell. AZO is expected to bring in $1.62 EPS and $1.35 billion in revenues. They have beaten 2 out of the last 4 earnings, missed one and met one. AZO is run by a smart management team and is owned by Eddie Lampert’s hedge fund ESL Investments. AZO has shown historic volatility after earnings and this week should be no exception. Last time they reported on Dec. 4th, the stock surged from a closing price of $107 to $130 the next day with a sustained run during intraday trading of $13. AutoZone operates as a specialty retailer and distributor of automotive replacement parts and accessories. There is a thesis that with the recent softness in the economy and credit crunch, people are foregoing buying new autos and putting more effort into spiffing, maintaining and fixing the ones they have. AZO has a high target of $150 and a low target of $99 by analysts.

I expect volatility after the numbers, I do expect them to beat but also raise guidance for the year. You can strangle going into the numbers but you can also wait for after, as it has shown through past historical technicals that it moves volatile after the numbers too. On Feb. 12, Kevin Dann reported that he believes the rebate checks could have a positive impact on the automotive aftermarket retailers as the timing of the checks comes ahead of the important summer driving season. They believe AutoZone (AZO) and Pep Boys (PBY) may be the biggest winners.

Cool CTrip.com (CTRP)
CTRP announces earnings on Wednesday after the bell. They are expected to bring in $0.21 EPS and revenues of $46.01 million with high estimates at $48.18 million. The recent Chinese snowstrom could impact CTRP’s numbers in the short term but that is not a fundamental problem but a short term anomaly. CTRP does not show many gaps in its historical technicals after earnings but does show strong sustained directional movement after the numbers are released. I would expect the same here and playing afterwards could be lucrative. I do expect them to beat their numbers and raise for the year since China is going into the Olympics! Following are some analyst thoughts.

On Feb. 22nd, Smith Barney Citigroup reported that the Chinese airlines reported healthy traffic in January also saying that the data suggests a limited impact from the snowstorms and continues to recommend taking advantage of recent share weakness. They maintain a Buy rating.

On Feb. 4th, CTRP was upgraded to Buy from Neutral by Goldman Sachs raising the target to $67 from $50. Analyst Leah Hao said, “We expect Ctrip to continue to broaden its leadership position within the travel agency industry by taking share from smaller players, leveraging its solid service-oriented execution, expanding business aggressively while implementing disciplined cost controls. While the travel industry — particularly online travel — is extremely volatile and could be harmed if China’s gross domestic product falls, consolidation will continue and more than offset any economic downturn. Ctrip should “consistently” outperform investors’ expectations as travel volume grows and increases to international markets, particularly the U.S. and China.”

On Jan 25th, Piper upgraded CTRP to Buy from Neutral also citing valuation and industry checks that indicate an acceleration in China online travel in 2008 (hmm Olympics maybe?). Target to $68 from $63.

I like the channel checks (love GS research) and I like the ascending triangle on CTRP’s chart, I do expect to see upward movement going into the numbers on expectations and technicals.

Decked Out In Deckers (DECK)
DECK is one of my favorite retail plays for a long time and did not do me wrong when I profited handsomely from last earnings, my members remember. The only problem is that this time the cat is out of the bag although it is right where it was at last time they reported steller numbers and the fundamentals say higher. I still expect them to big beat and raise but due to the investing cycle, investors are not rewarding retail plays as much right now due to forward looking concerns about soft consumer spending. DECK is expected to beat the $2.29 EPS consensus and $177.91 million in revenues on Thursday after the bell. They have handily beat the last 4 times they announced and I don’t understand why analysts are so conservative besides the recent analyst comment from Wedbush. Everywhere I go I see people wearing Uggs (reminds me of the iPod), they are considered real hip by the younger free spending demographic consumer and DECK’s management is brilliant. I love DECK’s product portfolio and price points, as does my wife, who really turned me on to their winter catalog before their last earnings call. I had to wait 2 weeks before I could get some Uggs for my wife and children’s Uggs were completely sold out before Christmas. It is also a global story with billions of feet.

DECK has a high target of $180, and a low of $117 from analysts. DECK has a lovely float for volatility at 12.48 million shares and a 20% short interest (due to short sellers trying to cash in on the CROX thesis and consumer weakness thesis) with a 5.2 short ratio. Don’t believe the pessimism. DECK trailing P/E is at 36 yet revenue growth (YoY) is 57% and quarterly earnings growth (YoY) is at 86%. Case closed for my bullish thesis in my opinion on a fundamental basis. Here are the analyst comments:

On Feb. 21st, Wedbush expects DECK to handily beat the $2.29 consensus estimate next Wednesday on strong Ugg sales. Their estimate is $2.69. Wedbush reiterates a Buy rating and $144 target.
On Jan. 29th, Lazard maintained its Buy rating with a $180 target saying they believe Ugg demand is accelerating with each delivery. (um this is after xmas right?)

I do expect a gap up due to the stock charateristics and a earnings beat. I do expect them to raise and be bullish about company prospects going forward, if they do that they will be rewarded handsomely with a jump and a higher sustained price level going forward.

Biotechman estimates a conservative 35 multiple (due to July 2007 company guidance of 35% rev growth) times $5.75 (EPS est for 2008) to come to a $201.25 one year price target (as of ests. now, if they beat handily then you have to increase these numbers). What am I suppose to say, this is what the math says.

Technically, I do see an inverted head and shoulders in the short term since the start of the new year which points to a short term target of $140 due to the length of the neckline to the bottom of the head on Feb. 7th.

OTHER EARNINGS OF NOTE FOR THE WEEK:
Monday: JWN after the bell
Tuesday: AZO before, M before, FWLT before, CRDN before, TGT before, FMCN after the bell
Wednesday: NIHD before, LIFC before, SPW before, TOL before, CTRP after, MDR after, SEED after, FLS after, GMKT after, CRM after the bell
Thursday: FLR before, FRE before, SHLD before (volatile), DELL after, CMED after, BVN after, DECK after the bell
Friday: SEPR before the bell

Important Economic Numbers Due Out This Week With Consensus Estimates:
Monday: Existing Home sales consensus at 4.8 million before the bell
Tuesday: PPI @ 0.3%, Core PPI @ 0.2% before the bell, Consumer Confidence @ 82.5% 10am ET
Wednesday: Durable Orders @ -4.0% before the bell, New Home Sales @ 600K 10am ET, Crude Inventories @ 10:30 am
Thursday: GDP (the big momma) preliminary @ 0.8% for Q4 beffore the bell, Initial Claims @ 350K before the bell
Friday: Core PCE inflation @ 0.2% before the bell, Personal Income @ 0.2%, Personal Spending @0.2% both before the bell, Chicago PMI @ 50.0 9:45am ET, Michigan Sentiment @ 70.0 10am ET

Disclosure: None