Earnings Season Highlights

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A collection of noteworthy post-earnings reactions
Published on Jan 13, 2021 at 9:57 AM
  • Buzz Stocks

Lowe's Companies, Inc. (NYSE:LOW) is the second0largest home improvement retail company, only trailing Home Depot (HD). The company recently unveiled its new strategy to drive market share acceleration, a “Total Home” strategy that would focus heavily on customer engagement, expand the online business, modernize installation services, improve localization efforts, and elevate their product assortment.

In addition to these new plans, the company’s Board of Directors recently authorized a new $15 billion common stock repurchase program. This repurchase program has no expiration date and adds to the previous program's balance, which was $4.7 billion as of Dec. 8.

What has this done for Lowe's stock? Well, since a Oct. 16 record high of $180.67, LOW has consolidated below the $170 level. Nevertheless, there's chart support in place at its 160-day moving average, and the stock remains up 80% in the last nine months. 

LOW Stock Chart

The retailer beat expectations on three of its last four of its earnings reports released in 2020. However, this only resulted in marginal post-earnings moves at best, and an 8.2% drop after its November quarterly report. Overall, in the last eight reports, LOW has averaged a 5.2% post-earnings move, regardless of direction.

Lowe's stock also has a forward dividend of $2.40 and a forward dividend yield of 1.44%. LOW’s last dividend was for $0.60 per share that was paid out to investors. The company have paid a dividend since 1980.

Lowe’s saw its revenue growth slow down over this past year, but the company had grown its top line by about $7 billion between 2017 and 2020. On the other hand, though, Lowe’s has struggled a bit more with its bottom line, losing over $1.3 billion in net income these past 12 months, bringing their its net profits to $2.9 billion. In addition, Lowe’s saw a significant decline in net income for the fiscal year 2019.

Nonetheless, Lowe’s has a solid upward trajectory for its revenue and net income, looking fairly sound from a fundamental perspective. Lowe's stock also has a very appealing forward price-earnings ratio of 17.99. This figure is down significantly from LOW's current price-earnings ratio of 23.91.

Published on Jan 13, 2021 at 9:33 AM
Updated on Jan 13, 2021 at 9:33 AM
  • Buzz Stocks

This Software Stock Has Massive Growth Potential

by Schaeffer's Digital Content Team

Cloudera, Inc. (NYSE:CLDR) is a Silicon Valley-based software company that provides a platform for data analytics and management products. The company primarily operates through two segments: subscription and services.

On the charts, Cloudera stock is up 20% in the last 12 months. A brief foray below $5 last March was followed by a channel of higher highs that culminated in a Dec. 23 two-year peak of $15.50. And while the shares have taken a breather since then, their ascending 20-day moving average has stepped up as support.

CLDR Stock Chart

Despite the stock's technical tenacity, analysts remain on the sidelines. Of the nine brokerages covering CLDR, six maintain "hold" or "sell" ratings. Plus, the consensus 12-month price target of $15.14 is a slim 6.6% premium to last night's closing perch at $14.19. This means the equity is ripe for a shift in analyst attention that could fuel tailwinds on the charts. 

As for the company's fundamentals, Cloudera stock carries a forward price-earnings ratio of 31.06, which is low for a company with such a high growth rate. Although Cloudera has slowed its revenue growth in the past 12 months, they've more than tripled its revenue the previous three years. In addition, the company’s balance sheet is exceptional. Cloudera carries almost $400 million in cash and just $205 million in debt. Overall, Cloudera has massive growth potential and limited risks for potential investors.

It's a prime time to buy premium on the equity's near-term options, too. CLDR's Schaeffer's Volatility Index (SVI) of 59% ranks in the 14th annual percentile, meaning short-term options are relatively cheap, from a volatility perspective.

Published on Jan 13, 2021 at 9:26 AM
  • Opening View
 
Published on Jan 13, 2021 at 7:00 AM
  • Indicator of the Week
    
Published on Jan 13, 2021 at 6:47 AM
  • Buzz Stocks

Today's Stock Market News & Events: 1/13/2021

by Schaeffer's Digital Content Team

Stocks spent most of Tuesday waffling at breakeven, though logging small gains by the end of the trading session. Investor optimism over a potential post-coronavirus economic recovery overshadowed the announcement of rising interest rates. Many big tech companies -- including Facebook (FB) and Alphabet (GOOGL) --cooled off on Monday, with traders and analysts now approaching the fast-growing sector with caution. 

The Dow Jones Industrial Average (DJI - 31,068.69) added 60 points on Tuesday. The S&P 500 Index (SPX - 3,801.19) added 1.6 point, and the Nasdaq Composite (IXIC - 13,072.43) added on 36 points yesterday. The Cboe Volatility Index (VIX - 23.33) lost 0.8 point during yesterday's trading session.

The excitement continues as investors will unpack both CPI and core CPI data. In addition, the Federal Reserve's latest "Beige Book" report is due out, as is federal budget data.

The following companies are slated to release quarterly earnings reports today, January 13:

IHS Markit, Ltd. (NYSE:INFO -- $86.78) provides critical information, analytics, and solutions for various industries and markets worldwide. IHS Markit will report its fourth-quarter earnings of 2020 before the bell today.

Shaw Communications, Inc. (NYSE:SJR -- $17.75) operates as a connectivity company in North America. Shaw Comms will report its first-quarter earnings before the bell today.

Washington Federal, Inc. (NASDAQ:WAFD -- $28.59) operates as the bank holding company for Washington Federal Bank. Washington Federal will report its first-quarter earnings after the market closes today.

Here is a quick recap of how one of Tuesday's earnings reports played out:

KB Home (NYSE:KBH -- $33.71) operates as a homebuilding company in the United States. Earnings per share were down 14.50% over the past year to $1.12, which beat the estimate of $0.93. Revenue of $1,194,000,000 decreased by 23.41% from the same period last year, which beat the estimate of $1,140,000,000.

Looking ahead to tomorrow, investors can look forward to the release of initial and continuing jobless claims, while the import price index is on tap, too.

This is your friendly reminder that the U.S. stock market will be operating on a shortened schedule next week. The Nasdaq and New York Stock Exchange will both be closed on Monday, Jan. 18, in observance of Martin Luther King Jr. Day. A normal trading session will resume on Tuesday, Jan. 19, starting at 9:30 a.m. ET. 

All economic dates listed here are tentative and subject to change.

Published on Jan 12, 2021 at 4:27 PM
Updated on Jan 12, 2021 at 4:36 PM
  • Market Recap

The Dow ended the day with a modest 60-point pop, climbing into the black thanks to bank stocks, after a day spent waffling at breakeven. The S&P 500 and Nasdaq Composite also wound up staging mini rebounds near the end of today's session, as optimism over a potential post-coronavirus economic recovery overshadowed rising interest rates. Elsewhere, valuation concerns are still weighing heavy on investors' minds, and many big tech names -- including Facebook (FB) and Alphabet (GOOGL) --took a breather, with Wall Street approaching the fast-growing sector with newly found caution. 

Continue reading for more on today's market, including:

  • Banking giant nabbed fresh three-year highs ahead of its fourth-quarter earnings. 
  • Twitter isn't done cracking down on some users' accounts just yet.  
  • Plus, DAR poised for more record highs; the energy stock hitting rock bottom; and a primer in commodity options. 

The Dow Jones Industrial Average (DJI - 31,068.69) added 60 points, or 0.2% on Tuesday. Sixteen of the index members settled higher, with Dow (DOW) rising to the top with a 3.7% gain, while Merck & Co (MRK) paced the 14 losers with a 2.2% drop. 

Meanwhile, the S&P 500 Index (SPX - 3,801.19) was up 1.6 point or 0.04%, and the Nasdaq Composite (IXIC - 13,072.43) tacked on 36 points, or 0.3%.

Lastly, the Cboe Volatility Index (VIX - 23.33) lost 0.8 point, or 3.1%.

Closing Summary 0112

NYSE 0112

  1. The Center for Disease and Prevention (CDC) just extended its Covid-19 vaccination guidelines to extend eligibility to anyone 65 and older. Those with comorbid conditions, like diabetes, will also be eligible for the vaccine. (CNBC)
  2. Disney (DIS) said its Walt Disney World theme park would be getting rid of its "Magical Express" service -- a free shuttle bus that charted guests to and from Orlando International Airport -- starting in 2022. The park will also eliminate its "Extra Magic Hours" feature, which allowed Disney hotel guests to enter the park earlier than other visitors. (MarketWatch) 
  3. Surging food stock could be headed toward even more record highs.  
  4. Has this energy stock hit rock bottom?
  5. Why traders might want to consider trading commodity options

There were no earnings of note today.

UVOL 0112

Oil Touches Pre-Pandemic Levels, Gold Flounders 

Oil settled at its highest level since late-February, strengthening on the back of a weakening U.S. dollar, and last week's production cuts by Saudi Arabia. February-dated crude added 96 cents, or 1.8%, to settle at $53.21 per barrel, marking its sixth-straight daily gain. 

Gold gave back its earlier gains to end with a marginal loss. February-dated gold shed, $6.60 or 0.4%, to settle at $1,844.20 an ounce, dropping as investors hopes over additional stimulus took attention away from the precious metal. Meanwhile, some are looking at the $1,800 mark as a key level to watch, predicting a bearish trend, should the commodity breach this level. 

Published on Jan 12, 2021 at 3:32 PM
  • Buzz Stocks
  • Earnings Preview

Netflix Inc (NASDAQ:NFLX) has seen a marked decrease of 9.4% in stock value since the start of the year. Nonetheless, the equity is still up approximately 69% from its March 17, annual low of $290.25, with potential support from its 80-day moving average curbing any additional pullbacks.  

Netflix is set to release its earnings and financials from the fourth quarter of 2020 after the close on Jan. 19, and investors are eager to see how the company concluded the year. Analysts anticipate that the company will report earnings per share (EPS) of $1.38 for Q4, a decrease when compared to its third-quarter earnings. Furthermore, NFLX outperformed Wall Street's expectations on just one of its four most recent earnings reports. That earnings beat was for the final quarter of 2019.

nflxtvchart

For the fourth quarter of 2019, NFLX beat expectations by a wide margin of 77 cents, with the streaming content provider reporting an EPS of $1.30. For the first quarter of 2020, the firm's EPS rose to $1.57, but failed to meet analysts' expectations. This time, the earnings miss was by a margin of $0.08. Netflix reported another slight increase in earnings for the second quarter of 2020, posting an EPS of $1.59. However, NFLX still missed expectations by a margin of $0.22. Finally, in its most recently reported quarter, Netflix stock reported earnings of $1.74 per share, missing expectation by a margin $0.40.

Netflix has more than doubled its annual revenue and just about quintupled its net income over the past three years. In total Netflix has generated nearly $24 billion in revenues and $2.8 billion in net profits these past 12 months. Overall, Netflix stock remains a good growth candidate for investors' portfolios amongst the other mega cap (worth more than $200 billion) companies. 

Published on Jan 12, 2021 at 2:53 PM
  • Quantitative Analysis
  • Editor's Pick

 

 
Published on Jan 12, 2021 at 1:31 PM
  • Intraday Option Activity
  • Earnings Preview
On the charts, a Jan. 6 bull gap sent PNC stock above the $156 level, putting it back at pre-pandemic trading levels. Furthermore, the equity is poised to close at its highest level since March of 2018. 
Published on Jan 12, 2021 at 12:27 PM
  • Midday Market Check

Stocks are struggling for direction this afternoon, as investors reacted to interest rates moving higher. Specifically, the benchmark 10-year note yield rose to its highest level since March, adding 1.2%, while the 30-year bond rate rose nearly 1.9%. Meanwhile, Wall Street is still hanging on to the possibility of further economic relief coming from a Democrat-controlled Congress and White House. And while this is keeping some of these losses in check, investors are concerned equity market valuations may have gone too far. In response, the Dow Jones Industrial Average (DJI) and S&P 500 Index (SPX) are trading just below the breakeven, while the Nasdaq Composite (IXIC) has also plunged into the red, reversing this morning's modest gains. 

Continue reading for more on today's market, including:

  • Major bank stock rises after cutting business ties with Trump.
  • Secondary stock offering sends ZM higher.
  • Plus, options bulls blast Ford stock; drilling stock rises after Citigroup bull note; and Postal Realty Trust stock falls on underwritten public offering.

MMC 0112

One stock seeing notable options activity today is Ford Motor Company (NYSE:F), last seen up 4.3% to trade at $9.69, after the automaker said it would close its manufacturing operations in Brazil, and take pre-tax charges of about $4.1 billion. The news elicited a price-target hike from J.P. Morgan Securities to $11 from $10. Today's options activity shows that 349,000 calls and 63,000 puts have crossed the tape so far, which is five times the intraday average. Most popular by far is the January 2021 10-strike call, followed by the February 10 call. The security is pacing for its highest close since July 2019, toppling a recent ceiling at the $9.50 mark. In the last nine months, F has added roughly 83%.

Near the top of the New York Stock Exchange (NYSE) today is offshore drilling contractor Transocean LTD (NYSE:RIG), up 14.6% at $3.18 at last check. The bull gap came after the stock received a price-target hike from Citigroup to $3 from $1.30. Shares have struggled on the charts over the past year, dropping to an Oct. 30, all-time-low of 65 cents, after two failed rally attempts in June and August. However, the equity is now getting support from the 30-day moving average, and has tacked on 298.8% in the last three months. 

RIG 30 Day

Near the bottom of the NYSE today is Postal Realty Trust Inc (NYSE:PSTL), last seen down 4.5% to trade at $15.40, after pricing its upsized follow-on underwritten public offering of 3.25 million shares of its Class A common stock at $15.25 per share. The security has been trading sideways on the charts for much of the past year, after falling to a March 23 all-time-low of $10.84. Shares are now struggling with overhead pressure at the $17 mark, and longer term Postal Realty Trust stock carries a 7.1% year-over-year deficit.

Published on Jan 12, 2021 at 11:27 AM
  • Buzz Stocks
  • Earnings Preview

Has Halliburton Stock Hit Rock-Bottom?

by Schaeffer's Digital Content Team

Halliburton Company (NYSE:HAL) is an American multinational oil corporation and one of the world's largest providers of products and services to the energy industry. The company has more than 40,000 employees and represents 140 nationalities in more than 80 countries. Halliburton also owns hundreds of subsidiaries, affiliates, branches, brands, and divisions worldwide.

Halliburton stock remains far off its peak, but has recovered substantially from its nine-year lows tapped back in March of 2020. However, Halliburton stock is currently trading down approximately 10% from its 52-week high of 24.52. So far in 2021, HAL stock has increased 8% year-to-date.

HAL will attempt to keep an impressive earnings beat streak alive on Jan. 19 when the company reports its fourth quarter earnings for 2020. Currently, Wall Street expects Halliburton stock to report an earnings per share (EPS) of $0.14, which marks a slight increase over the previous quarter. For reference, HAL beat expectations on earnings on four-for-four earnings reports released recently.

For the fourth quarter of 2019, HAL beat expectations by a margin of $0.03. The company reported an EPS of $0.32. For the first quarter of 2020, Halliburton stock decreased its reported EPS slightly down to $0.31, but still managed to beat analyst earnings expectations by a margin of $0.07. HAL reported another decrease in earnings for the second quarter of 2020. The company reported an EPS of $0.05 and beat expectations by a margin of $0.16. In the company's most recent quarterly report, Halliburton stock reported earnings of $0.11 per share. The company also beat expectation by a margin of $0.03.

The company also has a forward dividend of $0.18 and a forward dividend yield of 0.89%. HAL’s last dividend payment made to shareholders was for $0.045 per share. Halliburton has paid a dividend to shareholders since 1972.

Despite the company's consistent earnings performance, Halliburton seems to be in an overall decline. In just the past 12 months, Halliburton decreased its revenue by $6 billion and its net income by $3.2 billion. The company’s total net losses have added up to $4.36 billion this past year alone. Furthermore, Halliburton doesn’t seem to be much better off with its balance sheet. The company has over $10 billion in debt and just $2.1 billion in cash. The fundamentals are not strong with this one, investors.

Regardless, the security's Schaeffer's Volatility Scorecard (SVS) sits at a 99 out of 100, meaning HAL has exceeded option traders' volatility expectations during the past year.

Published on Jan 12, 2021 at 11:00 AM
  • Strategies and Concepts

The primary difference between a futures contract and a commodity option contract is that a futures contract obligates a trader to buy or sell the underlying commodity. Along with this, commodity options require the payment of premiums, whereas futures contract does not. Commodity options also provide traders with limited risk, something that futures contracts do not guarantee.

As far as a margin account is concerned in commodity options trading, only the writer, or seller, of the option has to maintain a margin account. Alternatively, both parties signing a futures contract are required to maintain a margin account. A margin account can be understood as a means of storing collateral required prior to trading commodity options.

The commodity options market has high-reward potential, but trading options on commodities is also a high-risk endeavor that should only be taken with proper education and support from a professional. The biggest advantage that a trader will benefit from while engaging in trading commodity options is the protection offered from the risk of price fluctuations of the commodity. The commodity derivatives market is highly volatile. It can be impacted by not only the country's internal circumstances, but is very often also impacted by global circumstances as well. In such a market, a trader may have an opportunity to earn substantial profits, but the risk of taking on a significant loss always looms as a possibility this this type of trading. Through trading commodity options, traders can hedge the pricing risks in both directions.

Especially during times of high inflation, commodity options trading will not only secure a trader's portfolio, but will also allow a trader to take large profits from each trade. The most profitable commodities traded in the U.S. are oil, steel, and soybeans. If you are a confident equity options trader, there are plenty of stocks and ETFs that allow you to trade the commodities market without having to step outside of the world of equities.


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