Earnings Season Highlights

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A collection of noteworthy post-earnings reactions
Published on Nov 25, 2020 at 11:58 AM
Updated on Nov 25, 2020 at 12:02 PM
  • Midday Market Check
 
Published on Nov 25, 2020 at 10:42 AM
Updated on Nov 25, 2020 at 10:42 AM
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Can AMC Entertainment Stock Endure the Pandemic?

by Schaeffer's Digital Content Team

AMC Entertainment Holdings, Inc. (NYSE:AMC) is the largest movie theater chain in the world, and owns more than 1,000 theaters and over 11,000 screens in the US and Europe. Over the past week, AMC has been on a torrid bullish run of 32%. However, the company still remains one of the most negatively impacted by the coronavirus pandemic. The stock is currently trading down 39% year-to-date, even with this month's 83% gain. But considering its all-time low of $1.95 it hit on April 13, AMC is slowly pulling itself up by the bootstraps.

Two factors make AMC an intriguing play going forward. First, the stock remains heavily shorted. Short interest increased by 11% in the most recent reporting period, and the 23.89 million shares sold short now account for a whopping 45% of AMC's total available float. This makes the equity ripe for a short squeeze that could fuel even more tailwinds.

Secondly, now looks like an opportune time to get in on AMC's next move with options. The equity’s Schaeffer’s Volatility Index (SVI) of 163% stands in the low 20th percentile of its annual range. This means options players are pricing in relatively low volatility expectations at the moment. 

AMC Entertainment has missed expectations with a clean sweep on all four of its most recent earnings reports. However, all four of the post-earnings reactions have been to the positive, including a 14.7% pop back in August. The movie theater chain's next corporate report isn't until February 25, so perhaps some upbeat pandemic rhetoric can keep the wind at AMC's back.

The last dividend AMC paid was for $0.03 in the first quarter of 2020. Prior to the coronavirus pandemic, the company had paid dividends since 2014.

AMC Entertainment has been struggling to generate a consistent net income for many years now, largely due to a rise in the popularity of streaming services like Netflix (NFLX). AMC Entertainment regularly flipped from annual profitability to annual net losses. However, in recent years, the annual net loss years started to significantly outnumber the profitable years. Most recently, AMC Entertainment has fallen deep into the red with over $3.6 billion in net losses posted over the past twelve months.

The coronavirus pandemic has seemingly dealt a final blow to the AMC Entertainment business. The entire movie theater industry has been seemingly halted by COVID-19, which also means there won’t be new movie screenings any time soon. All of this coupled with the $11.34 billion in debt being carried by AMC Entertainment translates into a company is facing a massive uphill battle for survival.

Published on Nov 25, 2020 at 10:31 AM
  • Buzz Stocks
Drilling down to today's options activity, 36,000 calls have crossed the tape in just the first half hour of trading, which is five times the average intraday amount, and almost twice the number of puts exchanged.
Published on Nov 25, 2020 at 10:25 AM
  • Buzz Stocks

The shares of Canada Goose Holdings Inc (NYSE:GOOS) are struggling, following a double downgrade from BTIG to "sell" from "buy." The analyst cites a potentially difficult holiday season, with a warmer start to the winter deterring shoppers from buying the company's down coats and other cold-weather items. At last check GOOS is down 8.4% at $35.39. 

This comes one day after Canada Goose stock surged toward a fresh annual high of $39.23 -- piggybacking off a bull note from TD Securities. Prior to this, the security had  been consolidating just below the $36 level, which is, once again, acting as a ceiling on the charts. GOOS is struggling just below its year-over-year breakeven, though it sports a six-month gain of 68.4%.

Options bears are likely cheering today's drop, since in the options pits, puts are king. This is per GOOS' 10-day put/call volume ratio of 1.43 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which stands higher than 90% of readings from the past year, indicating a healthier-than-usual appetite for  long puts of late. 

This pessimism is carrying over into today's trading. Within the first hour, 902 calls and 1,649 puts have exchanged hands -- nine times the intraday average. The weekly 11/27 38.50-strike  put is the most popular, followed by the weekly 12/4 39.50-strike put. 

Published on Nov 20, 2020 at 8:50 AM
Updated on Nov 25, 2020 at 10:05 AM
  • Earnings Preview
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Is Costco Stock a Buy or a Sell Ahead of December 2?

by Schaeffer's Digital Content Team

Members-only retailer Costco Wholesale Corporation (NASDAQ:COST) operates warehouses in eight different countries and is the second largest retailer in the world, trailing behind only Walmart (WMT). Costco Wholesale has made a lot of noise around COST stock recently, after announcing a special $10 per share dividend for its investors. The company will be paying approximately $4.4 billion to stockholders on December 11. The last day to buy the stock and be eligible for this dividend payment will be November 30*Costco stock has a forward dividend of $2.40 and a dividend yield of 0.73%. Costco Wholesale has paid investors a dividend since November of 2004. Costco stock’s special $10 dividend comes at a yield of 3.05%.

Furthermore, COST has had an excellent year, up 30% year-to-date carving out a channel of higher highs since its annual low of $271.28 on Feb. 28. Costco stock is currently just a chip-shot from its all-time high of $389.50 that was hit on Nov. 9.

 Using Schaeffer's historical database, we conduct proprietary research on each underlying equity and determined which of those underlying equities’ options have historically had underpriced or overpriced options. We rank each equity’s options relative to the others in our database, with scores ranging from zero to 100. COST stock currently sports a ranking of 20 out of 100 on the Schaeffer's Volatility Scorecard (SVS). Low SVS readings like this one point to COST stock having consistently realized lower volatility than their options have priced in -- pointing to possible premium-selling candidates. 

Costco Wholesale has beaten expectations on three of its four most recent quarterly earnings reports. In the fourth quarter of 2019, Costco Wholesale beat expectations by $0.02. In the first quarter of 2020, the company beat expectations by a margin of $0.04. And in its most recent quarter, Costco Wholesale reported an EPS of $3.04 instead of the expected EPS of $2.84, This represented a $1.15 increase in EPS compared to the previous quarter. For its upcoming earnings report, currently slated for after the market closes on December 10, Costco is expected to report a drop in its EPS down to $2.00.

Costco Wholesale has increased its total revenue by more than $10 billion over the past four years. That fact alone is probably one of the biggest drivers behind the company's ability to pay out special dividends. Nonetheless, this is not the first time Costco Wholesale has paid a special dividend. The company has done so on three separate occasions previously. Costco Wholesale paid $7 dividends in 2017 and 2012 and also paid out a $5 dividend to investors in 2015.

However, investors should not be blinded by the high yielding special dividend. Including the $10 dividend, Costco Whole will end the year paying $12.40 per share on Costco stock, which comes at a current yield of 3.78%. Costco Wholesale seems to pay a special dividend roughly every three years. Rough calculation would have Costco paying a 1%-1.5% yield for long-term shareholders, which isn’t bad but also isn't jaw-droopingly good, either. Nonetheless, these payouts are, without a doubt, a sign of how well the company is performing. Costco Wholesale's solid balance sheet allows them to offer special dividends without compromising too much of its available cash. An issue of concern for investors when considering Costco stock is that it has a sky-high price-earnings ratio of 42.38.

*Editor's Note: A previous version stated the date as December 2. We apologize for the error.

Published on Nov 25, 2020 at 9:24 AM
Updated on Nov 25, 2020 at 9:39 AM
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Published on Nov 25, 2020 at 9:33 AM
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A Deep Dive into Carnival Stock After a 30-Day Rally

by Schaeffer's Digital Content Team

Carnival Corporation & Plc (NYSE:CCL) operates 10 cruise-related brands and 104 total ships. Since the beginning of the pandemic, CCL, along with all other cruise stocks, has taken heavy blows to its business. Carnival stock was one of the first to feel the impact of COVID-19 with the travel restrictions, and continues to be measurably impacted.

As a result of the pandemic, Carnival stock has taken a not--so-surprising 60% haircut in 2020. But there's always a silver lining; the shares have almost tripled off their April 2 record bottom of $7.80. Manageable post-earnings reactions have helped CCL dig out of penny stock territory.

Using Schaeffer's robust historical database, we conduct extensive research on each underlying equity and determined which of those underlying equities’ options have historically had underpriced or overpriced options. In doing so, each stock is given a Schaeffer's Volatility Scorecard (SVS) ranking. CCL is currently sporting a ranking of 78 out of 100. A high SVS reading indicates that CCL stock has consistently delivered bigger returns than its options implied volatility (IV) levels have predicted, meaning it may be a strong candidate for premium-buying strategies going forward. 

As far as earnings go, Carnival has beat expectations on two of its four most recent quarterly earnings reports. For the company's fourth quarter of 2019, Carnival beat expectations by $0.12. In the first quarter of 2020, the company missed expectations by a margin of $0.05. Carnival reported a huge loss of -$3.30 and missed expectations by $1.04. in the second quarter of 2020 during the height of the pandemic. Yet in its most recent quarter, Carnival's losses were slimmer than expected by one penny. For Carnival's next earnings report, due out before the open on Dec. 18, the company is expected to report a loss of $1.88.

The last dividend Carnival paid was for $0.50 in the first quarter of 2020, pre-pandemic. Prior to the COVID-19 outbreak,  the company had consistently paid dividends since 2004.

At this point and from a mostly fundamental perspective, long-term investors likely should not expect CCL stock price to jump back up to its pre-pandemic levels in the short-term. Carnival stock likely won’t be able to produce positive earnings per share until late 2021 or 2022. Optimistically, Carnival revenue should be able to reach back up to previous levels some time in 2022. Overall, CCL does have the potential to bounce back above a $40 in stock price over the next 4-5 years.

However, Carnival now also carries a massive $26.35 billion in debt and just $8.18 billion in cash. Investing in CCL at this time is just a bet that the entire travel industry will resume and thrive at some point down the line. Carnival stock is a potential long-term play for investors that are patient enough to hold while waiting for the company to recover.

Published on Nov 25, 2020 at 9:24 AM
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  • Analyst Update
The earnings and revenue beat inspired no fewer than six analysts to raise their price targets, including J.P. Morgan Securities and Raymond James to $85
Published on Nov 25, 2020 at 9:19 AM
  • Indicator of the Week
    
Published on Nov 24, 2020 at 8:00 AM
Updated on Nov 25, 2020 at 8:25 AM
  • Buzz Stocks
  • Editor's Pick

Autodesk Stock Ambitious After Earnings Last Night

by Schaeffer's Digital Content Team

Software company Autodesk, Inc. (NASDAQ:ADSK) is striving to become one of the largest software companies in the world with its variety of products. Autodesk targets niche consumers with products designed for architecture, animation, engineering, construction, education, entertainment and much more.  Autodesk stock is currently up 41% year-to-date, more than doubling since hitting its two-year low of $125.38 on March 18. And while the shares are off their Nov. 9 record high of $276.68, their 30-day moving average has stepped up as support.

Autodesk reported earnings after the closing bel yesterday, and has beat earnings expectations on all four of its most recent quarterly reports.  In the third quarter of 2019, Autodesk beat earnings expectations by $0.06.  In the fourth quarter of 2019, Autodesk  beat expectations by a margin of $0.03. The company dropped its reported EPS for ADSK to $0.85 in the first quarter of 2020, but still managed to beat earnings expectations by $0.05. Most recently, Autodesk reported an increase in earnings for the second quarter of 2020, beating its earnings target by 9%. The company reported an EPS of $0.98 instead of the expected EPS of $0.90. For its upcoming third-quarter earnings report tonight, Autodesk's adjusted fiscal third-quarter earnings of $1.04 topped its 96 cent estimate. As a result, ADSK is higher in pre-market trading this morning.

Autodesk reached profitability recently, which has caused a massive spike in its stock. However, Autodesk stock had already been on a significant bullish run since 2016. This run can partially be attributed to the company’s various endeavors finally producing some revenue and net income growth. However, its massive price-earnings ratio of 157.92 of would suggest the company still has long ways to go. Nonetheless, Autodesk has serious ambition which explains the type of excitement it has received thus far from investors.

Furthermore, Autodesk can be expected to bring its price-earnings ratio down as it ramps up its revenue and net income. The company's current forward price-earnings ratio is 48.31. In addition, Autodesk holds $1.52 billion in cash and only carries $2.08 in total debt, which is impressive for a growth company like Autodesk.

Overall, it is unlikely that we will see Autodesk stock trading at a lower price five years from now, regardless of whether it achieves all its big ambitions or not, from a fundamental perspective. On the flip side, Autodesk stock’s potential upside is massive if the company can execute. 

Published on Nov 25, 2020 at 7:29 AM
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Today's Stock Market News & Events: 11/25/2020

by Schaeffer's Digital Content Team

Yesterday was a historic day for the Dow, as the index surpassed the 30,000 level for the first time ever. The primary catalysts for the record-breaking event was the latest round of positive vaccine news, strengthening investor sentiment surrounding a speedy economic recovery, as well as the Trump administration's approval to begin the transition process for President-elect Joe Biden. The Dow Jones Industrial Average (DJI - 30,046.24) tacked on 455 points yesterday. The S&P 500 Index (SPX - 3,635.41) rose 57.8 points  for the day on Tuesday. The Nasdaq Composite (IXIC - 12,036.79) gained 156.2 points for the day yesterday. The Cboe Volatility Index (VIX - 21.64) fell 1 point, or 4.5% for the day.

Today is an incredibly busy day for investors. Initial and continuing jobless claims data is slated to be released. Meanwhile, durable goods and core capital goods orders data are on tap, as well, while new home sales will be reported later on. Rounding out the day, personal income, consumer spending, core inflation, and the consumer sentiment index data are all due out. Investors will unpack the Case-Shiller national home price index, as well as the consumer confidence index.  We will also see a handful of earnings today including Deere (DE) before the market opens for the day ahead of the holiday tomorrow.

For your convenience, we have rounded up the schedule of companies slated to release earnings today, November 25:

Deere & Company (NYSE:DE -- $261.51)
manufactures and distributes various equipment worldwide. Deere will report its fourth-quarter earnings before the bell today.

Frontline Ltd. (NYSE:FRO -- $7.40)
engages in the seaborne transportation of crude oil and oil products worldwide. FRO is current down by 5.2% year-to-date. Frontline will report its fourth-quarter earnings before the bell today.

Here’s a quick recap of how yesterday’s earning reports played out compared to expectations:

Abercrombie & Fitch, Co. (NYSE:ANF -- $22.69) operates as a specialty retailer. Earnings per share rose 230.43% over the past year to $0.76, which beat the estimate of ($0.04). Revenue of $819,653,000 declined by 5.07% year over year, which beat the estimate of $739,360,000.

American Woodmark, Co. (NASDAQ:AMWD -- $104.70) manufactures and distributes kitchen cabinets and vanities. Earnings per share rose 7.07% year over year to $1.97, which beat the estimate of $1.88. Revenue of $448,583,000 up by 4.81% year over year, which missed the estimate of $451,680,000.

Analog Devices, Inc. (NASDAQ:ADI -- $137.07) designs, manufactures, and markets integrated circuits (ICs), algorithms, software, and subsystems. Earnings per share increased 21.01% over the past year to $1.44, which beat the estimate of $1.32. Revenue of $1,526,000,000 rose by 5.75% from the same period last year, which beat the estimate of $1,440,000,000.

Anaplan, Inc. (NYSE:PLAN -- $62.25) provides a cloud-based connected planning platform. Earnings per share were up 37.50% year over year to ($0.05), which beat the estimate of ($0.10). Revenue of $114,875,000 higher by 28.48% year over year, which beat the estimate of $109,560,000.

Best Buy Co., Inc. (NYSE:BBY -- $122.04) retails technology products in the United States, Canada, and Mexico. Earnings per share rose 82.30% over the past year to $2.06, which beat the estimate of $1.70. Revenue of $11,853,000,000 higher by 21.39% from the same period last year, which beat the estimate of $11,000,000,000.

Burlington Stores, Inc. (NYSE:BURL -- $230.00) operates as a retailer of branded apparel products. Earnings per share decreased 81.29% year over year to $0.29, which beat the estimate of $0.16. Revenue of $1,667,000,000 declined by 6.45% year over year, which beat the estimate of $1,530,000,000.

Chico's FAS, Inc. (NYSE:CHS -- $1.77) operates as an omnichannel specialty retailer of women's private branded casual-to-dressy clothing, intimates, and complementary accessories. Earnings per share decreased 950.00% year over year to ($0.42), which missed the estimate of ($0.15). Revenue of $351,416,000 declined by 27.50% year over year, which missed the estimate of $374,970,000.

Dick's Sporting Goods, Inc. (NYSE:DKS -- $58.81) operates as a sporting goods retailer. Earnings per share rose 286.54% over the past year to $2.01, which beat the estimate of $1.01. Revenue of $2,412,000,000 up by 22.94% year over year, which beat the estimate of $2,230,000,000.

Dollar Tree, Inc. (NASDAQ:DLTR -- $97.61) operates discount variety retail stores. Earnings per share were up 28.70% year over year to $1.39, which beat the estimate of $1.15. Revenue of $6,177,000,000 up by 7.50% from the same period last year, which beat the estimate of $6,120,000,000.

Dycom Industries, Inc. (NYSE:DY -- $78.23) provides specialty contracting services. Earnings per share were up 20.45% year over year to $1.06, which beat the estimate of $1.05. Revenue of $810,256,000 declined by 8.35% from the same period last year, which missed the estimate of $817,690,000.

Hormel Foods Corporation (NYSE:HRL -- $50.03) produces and markets various meat and food products. Earnings per share fell 8.51% year over year to $0.43, which missed the estimate of $0.44. Revenue of $2,420,000,000 decreased by 3.28% year over year, which missed the estimate of $2,590,000,000.

The J.M. Smucker Company (NYSE:SJM -- $116.05) manufactures and markets food and beverage products worldwide. Earnings per share rose 5.75% year over year to $2.39, which beat the estimate of $2.23. Revenue of $2,034,000,000 up by 3.88% year over year, which beat the estimate of $2,010,000,000.

LexinFintech Holdings Ltd. (NASDAQ:LX -- $8.30) operates as an online consumer finance platform for young professionals in the People's Republic of China. Earnings per share were down 40.74% year over year to $0.32, which beat the estimate of $0.27. Revenue of $464,539,000 rose by 4.15% from the same period last year, which missed the estimate of $473,450,000.

Medtronic plc (NYSE:MDT -- $110.97) develops, manufactures, distributes, and sells device-based medical therapies. Earnings per share were down 22.14% over the past year to $1.02, which beat the estimate of $0.80. Revenue of $7,647,000,000 decreased by 0.77% from the same period last year, which beat the estimate of $7,100,000,000.

Tiffany & Co. (NYSE:TIF -- $131.48) designs, manufactures, and retails jewelry and other items. Earnings per share increased 70.77% year over year to $1.11, which beat the estimate of $0.66. Revenue of $1,008,000,000 decreased by 0.69% from the same period last year, which beat the estimate of $980,710,000.

Titan Machinery, Inc. (NASDAQ:TITN -- $18.98) owns and operates a network of full-service agricultural and construction equipment stores. Earnings per share increased 31.82% year over year to $0.58, which beat the estimate of $0.35. Revenue of $360,872,000 declined by 0.02% year over year, which beat the estimate of $329,340,000.

American Eagle Outfitters, Inc. (NYSE:AEO -- $18.18) operates as a specialty retailer that provides clothing, accessories, and personal care products. Earnings per share fell 27.08% year over year to $0.35, which beat the estimate of $0.34. Revenue of $1,032,000,000 decreased by 3.19% from the same period last year, which beat the estimate of $1,030,000,000.

Autodesk, Inc. (NASDAQ:ADSK -- $257.25) operates as a software design and services company worldwide. Earnings per share were up 33.33% year over year to $1.04, which beat the estimate of $0.96. Revenue of $952,400,000 rose by 13.02% year over year, which beat the estimate of $942,240,000.

Dell Technologies, Inc. (NYSE:DELL -- $69.38) designs, develops, manufactures, markets, sells, and support IT hardware, software, and services solutions worldwide. Earnings per share were up 16.00% year over year to $2.03, which beat the estimate of $1.40. Revenue of $23,521,000,000 rose by 2.59% from the same period last year, which beat the estimate of $21,850,000,000.

The Gap, Inc. (NYSE:GPS -- $26.06) operates as an apparel retail company worldwide. Earnings per share were down 52.83% year over year to $0.25, which missed the estimate of $0.32. Revenue of $3,994,000,000 declined by 0.10% year over year, which beat the estimate of $3,820,000,000.

HP, Inc. (NYSE:HPQ -- $21.19) provides personal computing and other access devices, imaging and printing products, and related technologies, solutions, and services. Earnings per share were down 294.74% over the past year to ($0.74), which beat the estimate of ($0.80). Revenue of $208,267,000 decreased by 67.91% from the same period last year, which beat the estimate of $201,980,000.

Nordstrom, Inc. (NYSE:JWN -- $23.44) provides apparels, shoes, cosmetics, and accessories for women, men, young adults, and children. Earnings per share decreased 72.84% year over year to $0.22, which beat the estimate of ($0.06). Revenue of $3,089,000,000 decreased by 20.22% year over year, which missed the estimate of $3,100,000,000.

VMware, Inc. (NYSE:VMW -- $148.94) provides software in the areas of hybrid cloud, multi-cloud, modern applications, networking and security, and digital workspaces. Earnings per share increased 11.41% over the past year to $1.66, which beat the estimate of $1.43. Revenue of $2,864,000,000 higher by 16.61% year over year, which beat the estimate of $2,810,000,000.

Looking ahead to tomorrow, the market will be closed for the day in observance of Thanksgiving, and closed for a half-day on Friday (open from 9:30 a.m. ET until 1:00 p.m. ET). There are no further earnings reports due out this week after the market opens today, and there will be no major economic data released during the half-day trading session on Friday.

Published on Nov 24, 2020 at 4:29 PM
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