Schaeffer's Trading Floor Blog

Earnings on Deck: Intel Corporation, The Coca-Cola Company, and Johnson & Johnson

Previewing INTC, KO, and JNJ ahead of their upcoming earnings reports

by 4/14/2014 2:36 PM
Stocks quoted in this article:

Blue chips are heading to the earnings confessional this week, with tech concern Intel Corporation (NASDAQ:INTC), beverage behemoth The Coca-Cola Company (NYSE:KO), and health care conglomerate Johnson & Johnson (NYSE:JNJ) slated to report. Here's a quick look at these names as earnings approach.

  • Intel Corporation (NASDAQ:INTC) will report first-quarter earnings after the close tomorrow. The company has matched or topped analysts' per-share profit projections in six of the past eight quarters, yet Wall Street remains wary. Seventeen out of 29 covering analysts rank INTC a "hold" or worse, and the average 12-month price target of $25.42 represents a discount to the stock's current perch of $26.64. In the same vein, the stock's 10-day put/call volume ratio of 1.13 on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) stands just 4 percentage points from an annual high. In other words, option buyers have picked up INTC puts over calls at a much faster-than-usual clip during the past two weeks. Likewise, short interest represents seven sessions' worth of pent-up buying demand, at the security's average pace of trading. Another solid earnings showing from Intel tomorrow could translate into upbeat analyst notes, a mass exodus of option bears, and/or a short-squeeze situation -- all potential contrarian catalysts to the upside.

  • The Coca-Cola Company (NYSE:KO) will unveil its first-quarter figures before the open tomorrow. The firm has matched or exceeded the Street's bottom-line estimates in each of the past eight quarters, averaging a one-week post-earnings gain of 0.3%. Despite its solid earnings history, KO's short-term option players are more put-heavy than usual right now, as the stock's Schaeffer's put/call open interest ratio (SOIR) of 1.05 stands higher than 73% of comparable readings from the past year. However, despite Coca-Cola's earnings on the horizon, its short-term options remain relatively affordable. The security's Schaeffer's Volatility Index (SVI) of 14% sits just 5 percentage points from a 12-month nadir, suggesting short-term options are attractively priced right now, from a historical perspective. In afternoon trading, KO is 0.3% higher at $38.74, but remains 6.3% lower year-to-date.

  • Finally, Johnson & Johnson (NYSE:JNJ) is scheduled to report first-quarter earnings ahead of the bell tomorrow. The blue chip has topped bottom-line estimates in each of the past eight quarters, averaging a gain of 0.7% in the week after reporting. Ahead of tomorrow's earnings report, the speculative crowd has been growing more bearish, as the stock's 10-day ISE/CBOE/PHLX put/call volume ratio of 1.08 sits in the top quartile of its annual range. Analysts, meanwhile, are split when it comes to JNJ. Nine brokerage firms have doled out "buy" or better endorsements, with another six offering up tepid "hold" ratings. Just today, Jefferies downgraded the stock to "hold" from "buy," a session after Johnson & Johnson said it won't develop an anti-wrinkle cream to rival Allergan, Inc.'s (NYSE:AGN) Botox. At last check, JNJ is fractionally higher at $96.93.

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