How Are These Companies Going To Perform Into And Out Of Earnings?

by: David Ristau

Today, we are analyzing historical moves on various companies reporting earnings in the third week of earnings season. For the companies investigated, we looked at the average movement one month prior to reported earnings and the average movement one month after reporting dates. For each company, we looked at these movements over the past ten years* in the July earnings reporting period, giving us a fairly concise look at what they do historically. The companies covered were Eaton Corporation (ETN), Crane Co. (CR), Affiliated Managers Group Inc. (AMG), Biogen Idec Inc. (BIIB), Arrow Electronics Inc.(CMG), Linear Technology Corp. (LLTC), Varian Medical Systems Inc. (VAR), Altera Corp. (ALTR), CA Technologies (CA) and The Hershey Company (HSY).

Below you can find the average movement that these companies had one month prior to their July reporting date for the past 10 years.

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Based on this data, we can see that the top performing companies one month prior to the reported earnings are Managers Group Inc. and Biogen Idec Inc . Affiliated Managers Group Inc. shows the best results for this summer period. 5 out 7 times over the past 7 year AMG has shown an increase in stock price one month before earnings, and its largest decline was 7%. Since June 23, the stock is up about 7%, so it may have made its move. BIIB is pretty flat in that time period, so we may still see some more upside for them into earnings.

Below you can find the average movement that these companies had one month after their July reporting date for the last 10 years.

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From this data we can see that after earnings Varian Medical Systems Inc. and Altera Corp. are the best performing companies for earnings. VAR has increased 66% of the time while ALTR has increased inconsistently, but it has just made very sizeable moves. The most consistent company is Biogen for one month later, and their average is weak due to one very bad move out of seven. Hershey has never lost more than 4.5%, so that is a place to look as well.

Trade #1: HSY, Aug18 Bull Put Spread, 70/65 Bull Put Spread

Trade #2: VAR, Long

*Data collected for AMG, BIIB, and VAR went back 7 years, 8 years, and 9 years respectively, and not the standard 10 years.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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