Schaeffer's Trading Floor Blog

Earnings on Deck: Hewlett-Packard Company, Target Corporation, and Trina Solar Limited (ADR)

Previewing HPQ, TGT, and TSL ahead of their upcoming earnings reports

by 5/20/2014 2:01 PM
Stocks quoted in this article:

Earnings season is winding down, but -- as evidenced by today's slide in the retail sector -- we haven't seen the last of the potential market-moving reports. Among the companies scheduled to report tomorrow are big-cap tech concern Hewlett-Packard Company (NYSE:HPQ), retailer Target Corporation (NYSE:TGT), and alternative energy issue Trina Solar Limited (ADR) (NYSE:TSL). Here's a quick look at these names as earnings approach.

  • Hewlett-Packard Company (NYSE:HPQ) will report fiscal second-quarter earnings after the close tomorrow. The firm has matched or topped analysts' bottom-line earnings estimates in each of the past eight quarters, resulting in an average one-week post-earnings gain of 3.2% for HPQ. On the charts, the shares have advanced 17.2% in 2014, and were last seen at $32.80. In fact, the equity has outperformed the broader S&P 500 Index (SPX) by more than 8 percentage points during the past three months. Nevertheless, 12 out of 21 analysts maintain "hold" or worse opinions, and the consensus 12-month price target of $34.45 is just a hair's breadth north of HPQ's current price. Should the company once again best earnings expectations, a flood of upgrades and/or price-target hikes could add fuel to the stock's fire.

  • Target Corporation (NYSE:TGT) -- which just announced a management shake-up -- will take its turn in the earnings confessional before the open tomorrow, with the retailer slated to release its first-quarter figures. The company has exceeded analysts' per-share profit predictions in four of the past seven quarters, translating into a one-week post-earnings uptick of 0.7%, on average, for the shares. While analysts are skeptical -- just five out of 19 offer up "strong buy" opinions -- options players have been upping the bullish ante. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 10-day call/put volume ratio of 2.24 stands higher than 86% of all comparable readings from the past year. In the same vein, the stock's Schaeffer's put/call open interest ratio (SOIR) of 0.68 rests just 3 percentage points from an annual low, suggesting short-term speculators have rarely been more call-biased during the past 12 months. At last check, TGT was following its retail brethren into the red, down 2.5% at $56.81.

  • Finally, Trina Solar Limited (ADR) (NYSE:TSL) will report first-quarter earnings before the opening bell tomorrow. While the China-based firm has fallen short of analysts' per-share profit projections in five of the past eight quarters, the stock averages a one-week post-earnings gain of 3.3%, largely thanks to a 15.9% pop in the five sessions after its last report. Ahead of tomorrow's event, speculators are purchasing TSL calls over puts at a rapid-fire rate, as the equity's 10-day ISE/CBOE/PHLX call/put volume ratio of 8.41 stands just 12 percentage points from an annual peak. However, short interest grew nearly 20% during the past two reporting periods, and now accounts for more than 18% of TSL's total available float. Against this backdrop, it's possible that some of the recent call buying -- especially the out-of-the-money variety -- is attributable to short sellers looking to hedge their bearish bets in the event of a post-earnings rally. In early afternoon trading, TSL was 3.4% lower at $10.30, bringing its year-to-date deficit to 24.6%.
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