Schaeffer's Trading Floor Blog

Earnings on Deck: Nokia Corporation (ADR), Twitter Inc, and Herbalife Ltd.

Previewing NOK, TWTR, and HLF ahead of their upcoming earnings reports

by 4/28/2014 11:19 AM
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The earnings reports continue to roll in this week, with a handful of notable names still on deck. Among them are Finnish phone maker Nokia Corporation (ADR) (NYSE:NOK), microblogging titan Twitter Inc (NYSE:TWTR), and nutritional supplements provider Herbalife Ltd. (NYSE:HLF). Here's a quick look at these names as earnings approach.

  • Nokia Corporation (ADR) (NYSE:NOK) -- which is selling its global handset business to Microsoft Corporation (NASDAQ:MSFT) -- will report first-quarter earnings before the open tomorrow. The company has matched or exceeded the Street's consensus bottom-line estimate in each of the past seven quarters, yet the stock averages a one-week post-earnings loss of 4.8%. Against this backdrop, short interest on the equity surged 12.7% during the past two reporting periods; however, less than 1% of NOK's float is dedicated to short interest. Analysts are in the bears' corner, as just five out of 20 brokerage firms have doled out "buy" or better endorsements. Meanwhile, despite earnings on the horizon, the stock's Schaeffer's Volatility Index (SVI) of 47% sits just 7 percentage points from an annual low, implying that NOK's short-term options are inexpensive right now, historically speaking. At last check, Nokia shares are 1.1% lower at $7.19, bringing their year-to-date deficit to 11.3%.

  • Twitter Inc (NYSE:TWTR) will unveil its first-quarter figures after the close tomorrow. Following its only other trip to the earnings confessional, the stock dropped 24.2% in the subsequent session. Ahead of tomorrow's event, calls are the options of choice on the long side, as the stock sports a 10-day call/put volume ratio of 1.27 on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). However, short interest accounts for 14.1% of TWTR's total available float -- representing nearly four sessions' worth of pent-up buying demand, at the stock's average pace of trading -- suggesting some of those calls may have been bought as hedges. Whatever the motive, TWTR's short-term options are relatively pricey right now, as the security's SVI of 89% stands in the 73rd percentile of its annual range. Elsewhere, just four analysts offer up "strong buy" recommendations, compared to 12 "holds" and eight "sell" or worse ratings. In early trading, Twitter Inc is fractionally lower at $41.58, bringing its 2014 decline to 34.7%.

  • Finally, Herbalife Ltd. (NYSE:HLF) will release its first-quarter earnings after the close today. The company -- which is under investigation by federal and state regulators for being a "pyramid scheme," and is the focus of a soon-to-be released documentary by activist investor Bill Ackman -- has topped analysts' per-share profit projections in each of the past eight quarters. Nevertheless, HLF averages a one-week post-earnings loss of 4.1%. Amid all of the activist drama and ahead of earnings, options players have picked up HLF puts at a near-annual-high clip, as the stock's 10-day ISE/CBOE/PHLX put/call volume ratio of 1.85 stands higher than 99% of all other readings from the past year. Likewise, the equity's Schaeffer's put/call open interest ratio (SOIR) of 1.62 registers in the 85th percentile of its annual range, implying that short-term speculators are more put-heavy than usual right now. Furthermore, short interest jumped 14.9% during the last two reporting periods, and now accounts for more than one-third of Herbalife's total available float. At last check, HLF has added 1.2% to flirt with $58.54, but remains more than 25% lower year-to-date.

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