Earnings Season Highlights

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A collection of noteworthy post-earnings reactions
Published on Dec 16, 2020 at 8:52 AM
  • Buzz Stocks

Robinhood Traders Love GoPro Stock; Should You?

by Schaeffer's Digital Content Team

GoPro, Inc. (NASDAQ:GPRO) is most well-known for its action camera products, but has also developed its own mobile app and video-editing software. At its peak in popularity, GoPro stock reached an all-time high of $93.85, but has since fallen off in quite the dramatic fashion. But does this mean the wearable tech maker is at an intriguing entry point?

GoPro stock continues to rank amongst Robinhood’s 100 Most Popular Stocks being traded on the commission-free broker platform. GoPro announced that it had officially surpassed the 670,000 subscriber mark due to strong e-commerce sales at the end of November, and the company anticipates further significant growth again throughout this month. This solidified the company's potential for ongoing subscription revenue.

GoPro stock has more than doubled in value in 2020, with the two most recent pullbacks contained by its 30-day moving average. Yet despite the steady gains, analysts remain on the sidelines, with four of the five analysts in coverage maintaining "hold" or "strong sell" ratings. 

GPRO Stock Chart

GoPro stock reported earnings on the third quarter of 2020 last month, and GPRO outperformed expectations by a margin of $0.14 cents, or a whopping 233%. GoPro reported an earnings per share of $0.20 for the third quarter.

Let's break down GPRO's fundamentals from a longer-term perspective. GoPro has scaled down its operations and, seemingly, its ambitions over the past decade. The company’s focus on reducing expenses has allowed GoPro to improve its net income significantly, despite a lack of significant revenue growth. Although GoPro has posted a net loss of $15 million in the past twelve months, the company is now within reach of profitability when compared to the $419 million in net losses the company took in 2016. Overall, it is unclear just how much GoPro will be able to squeeze out in profits by just cutting costs, but there may be potential in the newly launched GoPro Plus subscription service.

Now may be an attractive time to take advantage of the security's next move with options. The stock's Schaeffer's Volatility Index (SVI) of 73% sits in the 8th percentile of its annual range, meaning GPRO is now pricing affordably priced premiums.

Published on Dec 16, 2020 at 8:00 AM
  • Indicator of the Week
    
Published on Dec 16, 2020 at 7:24 AM
  • Buzz Stocks

Today's Stock Market News & Events: 12/16/2020

by Schaeffer's Digital Content Team

Stocks surged yesterday, as investor optimism also surged on news that the Senate may actually reach an agreement on the new stimulus package before the end of 2020. To increase overall investor sentiment further, the Food and Drug Administration (FDA) said data showed Moderna's (MRNA) COVID-19 vaccine met emergency use expectations on Tuesday. 

The Dow Jones Industrial Average (DJI - 30,199.31) bounced up 337.8 points on Tuesday. The S&P 500 Index (SPX - 3,694.62) climbed 155 points and The Nasdaq Composite (IXIC - 12,595.06) was up 62.2 points yesterday. The Cboe Volatility Index (VIX - 22.89) lost 1.8 point during yesterday's trading session.

The Fed meeting will wrap up today and investor attention will shift to retail sales data, as well as the Markit manufacturing and services Purchasing Managers' Index (PMI). The National Association of Home Builders' (NAHB) index is also scheduled to come out today, and so is business inventories data. Rounding out the day today will be an announcement from Fed Chair Jerome Powell. 

For your convenience, we have rounded up the companies slated to release earnings today, December 16:

The Toro Company (NYSE:TTC -- $92.56) designs, manufactures, and markets professional and residential equipment worldwide. Toro will report its fourth-quarter earnings before the bell today.

ABM Industries, Inc. (NYSE:ABM -- $41.10) provides integrated facility solutions. ABM Industries will report its fourth-quarter earnings after the market closes today.

Herman Miller, Inc. (NASDAQ:MLHR -- $40.33) engages in the research, design, manufacture, and distribution of office furniture systems, seating products, other freestanding furniture elements. Herman Miller will report its second-quarter earnings of 2021 after the market closes today.

Lennar Corporation (NYSE:LEN -- $73.87) operates as a homebuilder primarily under the Lennar brand. Lennar will report its fourth-quarter earnings after the market closes today.

Here is a quick recap of how yesterday's earnings calls played out:

MTS Systems Corporation (NASDAQ:MTSC -- $58.24) supplies test systems, motion simulators, and sensors. Earnings per share increased 156.76% year over year to $0.95, which beat the estimate of $0.28. Revenue of $215,055,000 decreased by 4.03% year over year, which beat the estimate of $203,150,000.

Nordson Corporation (NASDAQ:NDSN -- $199.72) engineers, manufactures, and markets products and systems to dispense, apply, and control adhesives, coatings, polymers, sealants, biomaterials, and other fluids. Earnings per share decreased 11.17% year over year to $1.59, which beat the estimate of $1.53. Revenue of $558,525,000 declined by 4.60% from the same period last year, which beat the estimate of $556,680,000.

Looking ahead to tomorrow, the stock market schedule is showing no signs of slowing down, featuring the Philadelphia Federal Reserve Manufacturing Index, as well as building permits and housing starts data. The usual initial and continuing jobless claims data will also be released on Thursday. All economic dates listed here are tentative and subject to change.

Published on Dec 15, 2020 at 6:57 AM
Updated on Dec 16, 2020 at 7:18 AM
  • Buzz Stocks

Today's Stock Market News & Events: 12/15/2020

by Schaeffer's Digital Content Team

Stocks were all over on Monday. After jumping to record highs yesterday as the rollout of Pfizer's (PFE) and BioNTech's (BNTX) COVID-19 vaccine commenced in the U.S., the Dow slipped into the red by the end of Monday's trading session. The potential for further virus-related restrictions weighed on investors' minds. A bipartisan group of lawmakers is expected to propose a $908 billion stimulus package soon. The rising number of COVID-19 cases made headlines, after the U.S. death toll broke the 300,000 record this weekend.

The Dow Jones Industrial Average (DJI - 29,861.55) fell 184.8 points, or 0.6% on Monday. The S&P 500 Index (SPX - 3,647.49) dropped 16 points and the Nasdaq Composite (IXIC - 12,440.04) was up 62.2 points on Monday. THe Cboe Volatility Index (VIX - 24.72) increased 6.05% during Monday's trading session.

Today will be a much busier and more event-driven day for investors, with the Federal Open Market Committee (FOMC) two-day meeting kicking off. Industrial production and capacity utilization data are also due out. In addition, the import price and Empire State manufacturing indexes are on tap for today. As for earnings, there will be another small handful released today. 

For your convenience, we have rounded up the companies slated to release earnings today, December 15:

American Outdoor Brands, Inc. (NASDAQ:AOUT -- $14.07) provides outdoor products and accessories for rugged outdoor enthusiasts. American Outdoor Brands will report its second-quarter earnings of 2021 after the market closes today.

Nordson Corporation (NASDAQ:NDSN -- $199.72) engineers, manufactures, and markets products and systems to dispense, apply, and control adhesives, coatings, polymers, sealants, biomaterials, and other fluids. Nordson will report its fourth-quarter earnings after the market closes today.

Looking ahead to tomorrow, the Fed meeting will wrap up, and investor attention will shift to retail sales data, as well as the Markit manufacturing and services Purchasing Managers' Index (PMI). The National Association of Home Builders' (NAHB) index is also scheduled to come out on Wednesday, and so is business inventories data. Rounding out the day will be an announcement from Fed Chair Jerome Powell. All economic dates listed here are tentative and subject to change.

Published on Dec 15, 2020 at 10:39 AM
Updated on Dec 15, 2020 at 5:42 PM
  • Buzz Stocks

What to Make of PENN's Impressive Chart Performance

by Schaeffer's Digital Content Team

Penn National Gaming, Inc. (NASDAQ:PENN) is an American company that operates 41 different gaming and racing properties in 19 states throughout the country. Penn National Gaming provides live sports betting services, as well slot machine entertainment. Quite a few Penn National Gaming facilities operate under the Hollywood Casino brand.

On Monday, Dec. 14, Penn National Gaming stock closed the trading session with a solid 6% increase. At one point during market hours yesterday, Penn National Gaming stock pushed up to a record high of $84.49. Though there was no singular reason for PENN stock price to jump 6% yesterday, there have been speculations about the move. The increased investor optimism surrounding the vaccine distribution this week may have just aligned perfectly with rising investor optimism around the legalization of sports betting in the United States.

PENNdaily

Physical casinos took a major hit earlier in 2020 with the government shutdowns resulting from the Covid-19 pandemic, and a lot of investors bailed on casino stocks like PENN. However, the news of an effective vaccine should, eventually, breathe new life into physical gambling business locations. When that happens, Penn National Gaming could begin profiting from both the benefit of their online gambling platforms in addition to its legacy revenue returning from gamblers coming back to physical casinos. Using this logic, investors must be wary of the timeline for when casinos will reasonably "return to normal."

Now that we have reviewed the outstanding gain in PENN stock price this year, let's dive into how Penn National Gaming stock has fared when stepping up to the earnings stage in 2020. It was not a pretty start. The company's reported earnings per share (EPS) dropped dramatically to -$5.26 to kick off 2020 in the first quarter, missing Wall Street's expectations by a massive margin of $5.17. However, following the first quarter, both the second and third-quarter reports beat expectations. Penn National Gaming beat earnings expectations by $0.42 in the second quarter and by $0.40 (or 75% in the third quarter.

Penn National Gaming has grown its revenue substantially in recent years. but has continued to struggle to replicate that growth rate on its bottom line. The company’s net income has been consistently inconsistent, ultimately resulting a net income loss, on average. Penn National Gaming also carries a pretty big debt load of $11.27 billion and just $1.87 billion in cash and cash equivalents.

Regardless, now may be an attractive time to take advantage of the security's next move with options. The stock's Schaeffer's Volatility Index (SVI) of 72% sits in the 8th percentile of its annual range, meaning PENN is now pricing affordably priced premiums.

 

 
Published on Dec 15, 2020 at 2:45 PM
  • Intraday Option Activity

Swiss-based semiconductor name STMicroelectronics NV (NYSE:STM) is taking small steps in an effort to bridge last week's bear gap. The stock is up 3.8% at $36.62 at last check, clearing the 40-day moving average, which kept a lid on the shares following its Wednesday drop. A closer look at the charts shows the $35 mark containing some of these losses, while the 60-day moving average also stepped in to provide some support. 

STM Dec 12

The consensus among options traders is that these two previously mentioned levels will hold as support in the coming months, too. In fact, there's been a massive uptick in bullish options activity today, with 39,000 calls across the tape so far -- eight times the intraday average -- compared to just 1,102 puts. The July 35 call is seeing plenty of action, as well as the January 2021 40-strike call, with positions being opened at the former. 

These bullish tendencies toward the chip stock have been the norm, per STM's 10-day call/put volume ratio of 27.03 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which stands higher than 60% of readings from the past year. This suggests an overwhelming number of calls have been picked up for every put during the past two weeks, and at a slightly quicker-than-usual clip. 

For those looking to speculate on STM's next move, options look like a good way to go. The security's Schaeffer's Volatility Index (SVI) of 44% is higher than just 16% of readings from the past year. This means options players are pricing in relatively low volatility expectations for STM at the moment. 

Published on Dec 15, 2020 at 12:11 PM
  • Analyst Update
 
Published on Dec 15, 2020 at 11:51 AM
  • Buzz Stocks

The shares of Deere & Company (NYSE:DE) are up 2.5% at $258.97 this morning, after Morgan Stanley lifted the stock's price target to $341 from $335. Oppenheimer also chimed in, initiating coverage with an "outperform" rating and a $296 price target -- which is nearly 15% higher than current levels. 

While the majority of analysts covering DE considered it a "buy" or better coming into today, five of the 13 brokerages following the stock still carried "hold" or worse ratings, leaving the door wide open for additional upgrades. Meanwhile, the 12-month consensus price target of $285.33 is a 10.1% premium to current levels. 

These bull notes should come as no surprise, though. DE has been steadily climbing up the charts over the past seven months, with pullbacks captured by the 30- and 50-day moving averages. The stock now sports a nine-month lead of 104.4%, and is trading within a chip shot of its Nov. 9 all-time high of $265.87

An unwinding of bearish bets in the options pits could propel DE higher, too. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), 1.03 puts have been picked up for every call during the past 10 days. This ratio stands in the slightly elevated 60th percentile of the stock's annual range, suggesting an unusual uptick in put buying.

Published on Dec 15, 2020 at 10:49 AM
  • Buzz Stocks

The shares of Planet Fitness Inc (NYSE:PLNT) are slipping today, down 1.9% at $74.70 at last check, after receiving some negative attention in The Wall Street Journal's Heard On The Street Column. The author said that the pandemic has seriously squashed Planet Fitness' business outlook, though this negative angle is not shared amongst the entire brokerage bunch, as at least two bull notes rolled out for PLNT yesterday.

More specifically, BMO and J.P. Morgan Securities hit the fitness center operator with price-target hikes, the biggest of which came from the former. BMO raised its price target to $80 from $70, alongside a repeated "buy" rating, and said it feels the pandemic will shutdown smaller operators and increase the company's market share. Coming into today, 10 of the 14 in coverage sported a "strong buy" rating, while the remaining four called it a "hold" or worse. However, the 12-month consensus price target of $73.71 is a 1.1% discount to current levels, signaling some price-target hikes in the near future could act as additional tailwinds.

On the charts, PLNT looked well on its way to recapturing pre-pandemic highs after it soared to $86.50 on Nov. 9 -- just shy of the equity's Feb. 19 annual high of $88.77. More recently, the shares have traded just above the $70 level, with support in place from the 20-day moving average. Meanwhile, Planet Fitness stock is hovering just above its year-to-date breakeven mark.

Lastly, shorts are taking their leave, evident by the fact that short interest has fallen 27.1% in the last two reporting periods. The 6.53 million shares make up 8% of the stock's available float, or four days' worth of pent-up buying power.

Published on Dec 15, 2020 at 10:04 AM
Updated on Dec 15, 2020 at 10:21 AM
  • Intraday Option Activity
  • Buzz Stocks
It's more of the same today, with calls trading at double the average intraday amount. Leading the charge this morning is the November 155 call, where buy-to-open activity is suspected.
 
Published on Dec 15, 2020 at 9:19 AM
  • Buzz Stocks

When we last checked in with AutoZone, Inc. (NYSE:AZO), the stock was moving in the opposite direction one would expect after a blowout corporate report. Now the stock is in focus, with the auto parts retailer's annual stockholder meeting set to begin later today.

Auto-parts retailers are just another category of retail companies that have struggled throughout the Covid-19 pandemic. With the government shutdowns, specifically closing schools, offices, and gyms, less people are driving. Those that are still driving are putting significantly less miles on their cars, requiring less frequent repairs. But there is an upside; the economic woes that have hit individuals are likely leading drivers to keep and repair existing cars in lieu of purchasing new cars due to budget restrictions.

Despite an upgrade to "buy" from "hold" at Jefferies last Friday, AutoZone stock is still contending with its year-to-date breakeven level. And while there's support beneath at the stock's 200-day moving average, there's not much in store for contrarian tailwinds; most analysts already rate AZO a "buy," and a slim 2.3% of the stock's total available float is dedicated to short sellers.

AZO Stock Chart

AZO still seems to be a viable option for long-term investors. AutoZone stock currently trades at a price-earnings ratio of 15.08 and has shown amazing consistency and resilience in its net income and revenue growth. Although AutoZone's business isn’t growing at a rapid pace, the company has increased their revenue and profit numbers year after year. AutoZone has added more than $2 billion to its total annual revenue, and about $550 million in net profits since 2017. A big red mark comes when evaluating AutoZone's current balance sheet. AZO carries $8.04 billion in total debt with an equity of -$878 million.

Those looking to speculate on the stock may want to consider options. A post-earnings volatility crush means the security's Schaeffer's Volatility Index (SVI) of 28% is in the low 14thpercentile of its annual range. In other words, options players are pricing in relatively low volatility expectations right now.

 
Published on Dec 15, 2020 at 8:59 AM
  • Buzz Stocks

Turtle Beach Corporation (NASDAQ:HEAR) is a small market cap company that focuses on the manufacturing of gaming accessories. Turtle Beach produces gaming headsets for gaming consoles like the Xbox One, PlayStation 4, PC, Nintendo Switch, and mobile devices, and exploded in popularity at the peak of the "Fortnite" craze of 2018. However, it's deeper than that; company's history dates back to the 1970s at which time Turtle Beach developed various audio software packages and audio devices.

On its last earning report back in November, Turtle Beach reported an increase in revenue by 141% quarter-over-quarter and its net income significantly up to $17.8 million. In fact, Turtle Beach stock has outperformed earnings expectations on five-straight earnings reports. Most recently, in that same November earnings report, Turtle Beach stock reported an earnings per share of $1.04 which beat Wall Street's expectations by a significant $0.57.

Turtle Beach stock rode that post-earnings momentum to a Nov. 6 two-year high of $22.94, and is now up 130% year-to-date. After spending most of the spring and summer carving out a channel of higher highs, the shares have formed an extended bull flag pattern above the $16 area. 

The good news for options traders is that Turtle Beach premium is affordably priced at the moment. The equity’s Schaeffer’s Volatility Index (SVI) of 68% stands in the low 14th  percentile of its annual range. This means options players are pricing in relatively low volatility expectations at the moment.

HEAR Stock Chart

Turtle Beach stock as an outstanding price-to-earnings ratio of 8.32. The price-to-earnings ratio demonstrates what the market is currently willing to pay for HEAR based on its past or future earnings. However, that number should be anticipated to increase to a figure closer to HEAR's forward price-to-earnings ratio of 21.74.

Furthermore, HEAR looks to be on a path focused on growth. Turtle Beach has seen a few inconsistent years in terms of its revenue growth, but has doubled its sales since 2016 at the end of the day. Turtle Beach has also done extremely well as it pertains to the company's bottom line; it's gone from taking net losses of $87 million back in 2016 to now producing nearly $43 million in profit this year.

HEAR appears to be a very interesting, but speculative, play for investors willing to dabble with the red-hot small caps of 2020.

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