Schaeffer's Trading Floor Blog

Earnings on Deck: Groupon Inc, First Solar, Inc., and The Walt Disney Company

Previewing GRPN, FSLR, and DIS ahead of their upcoming earnings reports

by 5/5/2014 12:16 PM
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The earnings confessional remains jam-packed this week, with Pfizer Inc. (NYSE:PFE) the most recent casualty. Among those still on deck to report are mass discount provider Groupon Inc (NASDAQ:GRPN), alternative energy issue First Solar, Inc. (NASDAQ:FSLR), and blue-chip entertainment titan The Walt Disney Company (NYSE:DIS). Here's a quick look at these names as earnings approach.

  • Groupon Inc (NASDAQ:GRPN) will report first-quarter earnings after the close tomorrow. The company has matched or exceeded analysts' per-share profit projections in seven of the past eight quarters, yet the stock averages a one-week post-earnings loss of 4.4%. In fact, the equity surrendered a total of 17.1% in the five sessions after reporting last quarter. Against this backdrop -- and considering GRPN has underperformed the S&P 500 Index (SPX) by 35 percentage points during the past three months -- short-term options players are more put-centered than usual right now. The stock's Schaeffer's put/call open interest ratio (SOIR) of 0.70 stands higher than 80% of all other readings from the past year. Analysts, on the other hand, are split, with 10 doling out "buy" or better endorsements, compared to 13 with "hold" or worse ratings. At last check, GRPN has backpedaled 1.2% to $7.01, bringing its year-to-date deficit to 40.4%.

  • First Solar, Inc. (NASDAQ:FSLR) will also unveil its first-quarter figures after the close tomorrow. The company has exceeded the Street's bottom-line estimates in four of the past seven quarters, resulting in an average one-week post-earnings gain of 3.8% for FSLR. While options traders have shown an affinity for short-term calls lately -- the stock's SOIR of 0.60 stands just 14 percentage points from an annual nadir -- analysts remain wary. In fact, just four brokerage firms offer up "strong buys," compared to eight tepid "holds" and two "sell" or worse suggestions. Likewise, the consensus 12-month price target of $63.67 represents a discount to FSLR's current perch of $67.99.

  • Finally, The Walt Disney Company (NYSE:DIS) will report fiscal second-quarter figures after the close tomorrow. The blue chip has matched or topped analysts' per-share profit predictions in each of the past eight quarters, resulting in an average one-week post-earnings gain of 1% for DIS. In the week following its last report, in fact, the stock soared 8.6%. The shares are up 1% to $81.09 at last check, thanks to an early upgrade to "buy" from "hold" at Topeka. However, there's still plenty of room on the bullish bandwagon. The average 12-month price target of $84.92 stands within a chip-shot of DIS' current price, leaving the door wide open for price-target hikes in the wake of a solid earnings showing. Furthermore, short interest represents nearly a week's worth of pent-up buying demand, at the stock's average pace of trading, meaning a post-earnings short squeeze could be in the cards.

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