Schaeffer's Trading Floor Blog

Earnings on Deck: Cisco Systems, Inc., Deere & Company, and SodaStream International Ltd

Previewing CSCO, DE, and SODA ahead of their upcoming earnings reports

by 5/13/2014 12:32 PM
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Although we're on the back end of first-quarter earnings season, a slew of noteworthy names are still waiting to report. Among the companies scheduled to report tomorrow are big-cap tech concern Cisco Systems, Inc. (NASDAQ:CSCO), farm equipment manufacturer Deere & Company (NYSE:DE), and at-home beverage maker SodaStream International Ltd (NASDAQ:SODA). Here's a quick look at these names as earnings approach.

  • Cisco Systems, Inc. (NASDAQ:CSCO) will report fiscal third-quarter earnings after the close tomorrow. The blue chip has topped analysts' per-share profit predictions in each of the past seven quarters, averaging a one-week post-earnings gain of 0.7%. While the brokerage bunch is optimistic -- 18 out of 27 analysts offer up "buy" or better endorsements -- options players have been upping the bearish ante. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 10-day put/call volume ratio of 0.72 stands higher than 81% of all comparable readings from the past year. In other words, speculators have been buying to open CSCO puts, relative to calls, at a faster-than-usual clip during the past two weeks. However, even on earnings eve, the stock's short-term options remain attractively priced. The security's Schaeffer's Volatility Index (SVI) of 21% sits just 16 percentage points from an annual nadir, suggesting CSCO's short-term contracts are inexpensive right now, from a historical perspective. At last check, the shares were down 1.3% at $22.88.

  • Deere & Company (NYSE:DE) will unveil its fiscal second-quarter figures before the open tomorrow. While the company has bested the Street's bottom-line estimates in six of the past eight quarters, DE averages a one-week post-earnings loss of 2.9%. Analysts are wary when it comes to the stock, with just three offering up "strong buy" opinions, compared to nine "holds" and seven "sell" or worse suggestions. In fact, the consensus 12-month price target on the equity stands at $88.30, representing a discount to DE's current perch at $93.13. On the charts, the security touched a new annual high of $94.89 earlier this month, and has outperformed the broader S&P 500 Index (SPX) by nearly 6 percentage points during the past 60 sessions. Should Deere top analysts' earnings expectations tomorrow, a flood of upbeat analyst attention could propel the shares even higher.

  • Finally, SodaStream International Ltd (NASDAQ:SODA) will report first-quarter earnings in pre-market trading tomorrow. Historically, the firm has topped analysts' per-share projections in five of the past seven quarters, translating into a one-week post-earnings gain of 0.8%, on average. Options traders are picking up SODA calls at an accelerated clip, as the equity's 10-day ISE/CBOE/PHLX call/put volume ratio of 2.11 ranks in the 76th percentile of its annual range. However, some of those calls may have been purchased as hedges, as short interest accounts for nearly one-third of the stock's total available float. At midday, SODA has surrendered 3.7% to linger near $40.15, after The Coca-Cola Company (NYSE:KO) upped its stake in rival Keurig Green Mountain Inc (NASDAQ:GMCR).

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