Schaeffer's Trading Floor Blog

Earnings on Deck: Exxon Mobil Corporation, MasterCard Inc, and LinkedIn Corp

Previewing XOM, MA, and LNKD ahead of their upcoming earnings reports

by 4/30/2014 10:17 AM
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The earnings confessional remains as busy as ever, with a slew of notable names reporting this week. Among those still left to unveil their quarterly figures are oil-and-gas concern Exxon Mobil Corporation (NYSE:XOM), credit card issue MasterCard Inc (NYSE:MA), and professional networking site LinkedIn Corp (NYSE:LNKD). Here's a quick look at these names as earnings approach.

  • Exxon Mobil Corporation (NYSE:XOM) will report first-quarter earnings before the open tomorrow. The blue chip has fallen short of the Street's per-share profit projections in three of the past seven quarters, averaging a one-week post-earnings loss of 1.3%. Options traders seem to be gambling on an earnings win for XOM. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 50-day call/put volume ratio of 1.72 sits just 12 percentage points from an annual high. In other words, option buyers have picked up XOM calls over puts at a faster-than-usual clip during the past 10 weeks. Likewise, the equity's Schaeffer's put/call open interest ratio (SOIR) of 0.60 stands lower than 97% of all other readings from the past year, pointing to a bigger-than-usual call bias among short-term speculators. After tagging a record high of $102.57 in Tuesday's session, the shares of XOM are down 0.3% at $101.10. However, the stock's 14-day Relative Strength Index (RSI) sits in overbought territory at 71, suggesting a pullback may have been in the cards.

  • MasterCard Inc (NYSE:MA) will also unveil its first-quarter figures before the open tomorrow. While the company has matched or exceeded analysts' bottom-line estimates in seven of the past eight quarters, the equity averages a loss of 1% in the subsequent session, and dropped 6.1% in the week after its last turn in the earnings spotlight. On the charts, MA has surrendered 13.8% in 2014, and was last seen at $72.06. The stock has underperformed the broader S&P 500 Index (SPX) by nearly 10 percentage points during the past three months, yet boasts 18 "buy" or better ratings, compared to nine "holds" and not a single "sell." Meanwhile, the stock's SOIR of 1.03 sits in the 26th percentile of its annual range, suggesting short-term options players are more call-biased than usual. Another earnings disappointment tomorrow could trigger downgrades and/or a mass exodus of option bulls -- both potential catalysts to the downside.

  • Finally, LinkedIn Corp (NYSE:LNKD) will report first-quarter earnings after the close tomorrow. The company's last two turns in the earnings limelight weren't pretty, with the shares dropping 9.1% and 14.2% in the subsequent week, respectively. Nevertheless, option buyers have been scooping up LNKD calls over puts at an accelerated clip during the past two weeks, as the security's 10-day ISE/CBOE/PHLX call/put volume ratio of 1.61 stands in the 80th percentile of its annual range. Short-term speculators are paying up for their contracts, too, as the stock's Schaeffer's Volatility Index (SVI) of 70% sits just 7 percentage points from an annual peak. In the same optimistic vein, LNKD sports 20 "buy" or better endorsements, compared to 11 "holds" and not one "sell," despite surrendering more than 30% in 2014 and touching a annual low of $143.26 earlier this week. This sentiment backdrop leaves the door wide open for a backlash among option bulls and/or a wave of negative analyst attention, should the company suffer another earnings disappointment.

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