How Will These Companies Perform In And Out Of Earnings?

by: David Ristau

Today, we are analyzing historical moves on various companies reporting earnings in the 3rd week of December during the period between December 17, and December 21. 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 10 years in the December earnings reporting period, giving us a fairly concise look at what they do historically over this period of time. The companies covered were Carnival Corporation (NYSE:CCL), Cintas Corporation (NASDAQ:CTAS), Actuant Corporation (NYSE:ATU), FedEx Corporation (NYSE:FDX), General Mills, Inc. (NYSE:GIS), Herman Miller Inc. (NASDAQ:MLHR), Jabil Circuit Inc. (NYSE:JBL), Scholastic Corporation (NASDAQ:SCHL), Nike Inc. (NYSE:NKE) and Piedmont Natural Gas Co. Inc. (NYSE:PNY).

At the end of the article, we have provided two trading ideas. We believe these ideas will allow you to use this information usefully.

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

From the chart above we can see that the average gains are excellent in the period directly prior to these companies' reporting dates. All except two companies analyzed showed gains above 2% for this period and only one out of the 10 companies showed negative gains. Positive results such as these can be due to investor-predicted gains during this holiday period. The company that showed the greatest gains one month before Q4 reported earnings was CCL with average gains of 6.14%. CCL was followed by ATU with average gains of 4.74%. We like CCL at the moment because with a week and half to the report date, its price has been stable giving us the hope that there will be some upside until then.

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

From the chart above we can see that the majority of average gains encountered one month prior to the reporting date are mainly gone. Only a hand full of companies are showing positive average gains one month after the reporting date with special mention going to JBL, ATU and SCHL that had gains of 3.15%, 2.54% and 2.20% respectively. We went one step further to analyze this company and all the company estimates show very little sales growth and growth in earnings for the Q4 reporting date. GIS is the only company with average gains that has predicted positive gains in sales growth and growth in earnings in Q4, thus it makes a good candidate for bull put spreads.

Trade #1: Pair Trade. CCL Long, PNY Short

Trade #2: GIS, Jan21 40/38 Bull Put Spread

Max Gain: 14%

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

Business relationship disclosure: The Oxen Group is a team of analysts. This article was written by Bruno Massinga, one of our writers. We did not receive compensation for this article (other than from Seeking Alpha), and we have no business relationship with any company whose stock is mentioned in this article.