Earnings Season Highlights

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A collection of noteworthy post-earnings reactions
Published on Jan 14, 2021 at 8:19 AM
  • Buzz Stocks
  • Earnings Preview

Consumer lending and bank stock Ally Financial Inc. (NYSE:ALLY) is fresh off a Jan. 13 record high of $41.99. This comes a day after Ally announced a common stock repurchase plan of up to $1.6 billion in 2021. In the company’s press release, Ally Financial stated that it would begin repurchasing shares during the first quarter of this year. ALLY won't fade from the spotlight, either, with the financial giant set to report earnings before the open on Friday, Jan. 22.

Ally Financial stock outperformed expectations on three of past four earnings reports. For the fourth quarter of 2019, ALLY beat expectations by a margin of $0.02 and reported an earnings per share (EPS) of $0.95. For the first quarter of 2020, ALLY significantly missed Wall Street's earnings expectations by a margin of $1.14. Ally Financial reported a major earnings comeback for the second quarter of 2020, reporting an EPS of $0.61 and beat expectations by a margin of $0.33. Finally, in the most recently reported quarter, Ally Financial reported earnings of $1.25 per share, beating analysts' expectation by a margin of $0.57. For its upcoming earnings report due out next week, ALLY is anticipated to report an EPS of $1.03.

ALLY declared a quarterly cash dividend of $0.19 per share of the company's common stock, payable on Feb. 12, to stockholders of record on Feb. 1. Ally Financial also has a forward dividend of $0.76 and a forward dividend yield of 2.03%. The company has paid dividends to stockholders since 2016.

ALLY has almost quadrupled since its March 18 record bottom near $10. It's been quite the V-shaped rally for the stock since then, with the channel of higher highs guided higher by its ascending 40-day moving average. Year-over-year, the equity is up 30%. 

Even with earnings looming, it's a prime time to buy premium on the ALLY's near-term options. The security's Schaeffer's Volatility Index (SVI) of 42% ranks in the 13th annual percentile, meaning short-term options are relatively cheap, from a historical volatility perspective. What's more, Ally stock has been a strong performer for premium buyers over the past year, based on its Schaeffer's Volatility Scorecard (SVS) of 96 out of 100. In other words, ALLY has shown a tendency to make bigger-than-expected moves during the past 12 months, relative to what its options have priced in.

ALLY Stock Chart

Published on Jan 14, 2021 at 7:27 AM
  • Buzz Stocks

Today's Stock Market News & Events: 1/14/2021

by Schaeffer's Digital Content Team

Stocks were, for the most part, able to shake off Wednesday's flat trading day to finish the day with solid gains, as investors were digesting news of sliding interest rates against surging pandemic numbers, along with the pending turmoil in Washington.  Making headlines was yesterday's vote to impeach President Donald Trump, which was passed by the House after market hours. 

The Dow Jones Industrial Average (DJI - 31,060.47) lost 8.2 points on Wednesday. The S&P 500 Index (SPX - 3,809.84) added 8.7 points and the Nasdaq Composite (IXIC - 13,128.52) added 56.5 points. The Cboe Volatility Index (VIX - 22.21) lost 4.8% during yesterday's trading session.

Today, investors can look forward to the release of initial and continuing jobless claims, while the import price index is on tap, too. Plus, there is a solid list of earnings reports being released, as earnings season is just heating up.

The following companies are slated to release quarterly earnings reports today, January 14:

Aphria, Inc. (NASDAQ:APHA -- $10.00) cultivates, processes, produces, markets, distributes, and sells medical cannabis. Aphria will report its second-quarter earnings before the bell today.

BlackRock, Inc. (NYSE:BLK -- $779.75) is a publicly owned investment manager. BlackRock will report its fourth-quarter earnings of 2020 before the bell today.

Delta Air Lines, Inc. (NYSE:DAL -- $40.45) provides scheduled air transportation for passengers and cargo. Delta Air Lines will report its fourth-quarter earnings of 2020 before the bell today.

First Republic Bank, Inc. (NYSE:FRC -- $161.25) provides private banking, private business banking, real estate lending, and wealth management services. First Republic Bank will report its fourth-quarter earnings of 2020 before the bell today.

Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM -- $119.56) manufactures and sells integrated circuits and semiconductors. Taiwan Semi will report its fourth-quarter earnings of 2020 before the bell today.

Progress Software Corporation (NASDAQ:PRGS -- $47.47) develops business applications. Progress Software will report its fourth-quarter earnings of 2020 after the market closes today.

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

IHS Markit, Ltd. (NYSE:INFO -- $86.78) provides critical information, analytics, and solutions for various industries and markets worldwide. Earnings per share rose 10.77% over the past year to $0.72, which beat the estimate of $0.67. Revenue of $1,107,000,000 decreased by 1.16% year over year, which missed the estimate of $1,110,000,000.

Shaw Communications, Inc. (NYSE:SJR -- $17.75) operates as a connectivity company in North America. Earnings per share were unchanged year over year to $0.24, which beat the estimate of $0.22. Revenue of $1,040,000,000 declined by 2.35% year over year, which beat the estimate of $1,010,000,000.

Closing out this week, tomorrow is completely jam packed. Retail sales, industrial production, and capacity utilization data is all due out. In addition, the Empire state and producer price indexes latest data are slated to be reported. Lastly, preliminary consumer sentiment index data and business inventories reports are set to be released.

Please note 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 13, 2021 at 4:38 PM
Updated on Jan 13, 2021 at 4:49 PM
  • Market Recap

With the exception of the Dow, stocks were mostly able to shake off Wednesday's static trading to finish the day with solid gains, as Wall Street weighed sliding interest rates against surging pandemic numbers, and the turmoil brewing in Washington. After days of sitting near its March highs, the benchmark 10-year note yield shed over 6 basis points to 1.1%, while the 30-year bond yield also dropped.

The Dow tried to come back near the end of the session, propped up on an unexpected surge from index-member Intel (INTC), following news of its CEO's resignation. The blue-chip index eventually pared these gains, however, to settle just south of breakeven. The headlines gave the tech-heavy Nasdaq Composite a boost as well, while the S&P 500 also finished the session with a win.

Also making headlines is this afternoon's vote to impeach President Donald Trump, which was passed by the House just before 4:30PM EST, making Trump the first ever president to be impeached twice. 

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

  • The streaming stock to nab a lofty bull note from Nielsen.  
  • Urban Outfitter's dim holiday sales created a buzz among bears. 
  • Plus, why PTON could be a good resolution for bulls; Visa nabs slew of bull notes; and breaking down Lowe's new "Total Home" approach. 

The Dow Jones Industrial Average (DJI - 31,060.47) lost 8.2 points, or 0.03% on Wednesday. Intel (INTC) led the 15 gainers with a nearly 7% pop, while the 15 losers were paced by IBM (IBM), which fell 1.8%. 

Meanwhile, the S&P 500 Index (SPX - 3,809.84) closed up 8.7 points or 0.2%, and the Nasdaq Composite (IXIC - 13,128.52) tacked on 56.5 points, or 0.4%.

Lastly, the Cboe Volatility Index (VIX - 22.21) lost 1.2 point, or 4.8%.

Closing Summary 0113

NYSE 0113

  1. CVS Health (CVS) is set to hire thousands of pharmacists and pharmacy technicians, as it prepares for government approval to start administering the Covid-19 vaccination in its pharmacy locations across the U.S. (CNBC)
  2. Apple (AAPL) announced it plans on investing $100 million toward racial-justice goals, which will include a $25 million investment toward the launch of the Propel Center -- an organization that supports students and faculty at historically black universities. (MarketWatch) 
  3. Workout stock option bulls should resolve to buy in 2021.
  4. Visa enjoyed several analyst bull notes today, despite abandoned merger. 
  5. Here's what investors need to know about Lowe's new "Total Home" approach.  

Earnings 0113.

UVOL 0113

Oil Snaps Win Streak as Product Inventories Rise

Oil broke its six-day win streak on Wednesday. This drop came after the Energy Information Administration reported a slight drop in crude inventories, but an increase in gasoline inventories by 4.4 million barrels last week -- exceeding expectations. February-dated crude lost 30 cents, or 0.6%, to settle at $52.91 per barrel.

Gold, meanwhile, closed at a one-week high as political tumult and the latest inflation report gave investors a reason to turn back to the safe haven. February-dated gold added $10.70 or 0.6%, to settle at $1,854.90 an ounce.

Published on Jan 13, 2021 at 3:35 PM
Updated on Jan 13, 2021 at 3:38 PM
  • Quantitative Analysis

 

 
Published on Jan 13, 2021 at 2:36 PM
Updated on Jan 13, 2021 at 3:27 PM
  • Buzz Stocks
  • Analyst Update
 
Published on Jan 13, 2021 at 10:24 AM
Updated on Jan 13, 2021 at 2:21 PM
  • Buzz Stocks
 
Published on Jan 13, 2021 at 10:31 AM
Updated on Jan 13, 2021 at 11:50 AM
  • Options Recommendations

Following an upbeat November earnings report and purchase of Precor, stay-at-home workout staple Peloton Interactive Inc (NASDAQ:PTON) broke out from a steep falling wedge, and nabbed support from its 20-day moving average. In addition, the shares gapped above the $145 level, which is five time the equity's initial public offering (IPO) price. With the gap filled and support at the +400% year-over-year level in place, alongside the 140-strike peak put level, now seems like a good time to bet on PTON's next move higher.

In the options pits, there's been an unusual penchant for puts. In fact, Peloton stock sports a 10-day put/call volume ratio of 1.17 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio ranks in the elevated 96th percentile of its annual range, indicating a much healthier-than-usual appetite for puts. Echoing this, the security's Schaeffer's put/call ratio (SOIR) of 1.35 also stands in the 96th percentile of the past 12 months, suggesting short-term options traders have rarely been more put-biased.

Meanwhile, short interest is building, rising 11.4% over the last two weeks. Currently, the 15.75 million shares sold short account for 6.4% of the stock's available float. A rally could force new shorts to cover.

Lastly, options are relatively cheap at the moment. This is per PTON's Schaeffer's Volatility Index (SVI) of 59%, which ranks in the lowest percentile of readings from the past year, indicating options players are pricing in low volatility expectations at the moment. Our recommended call has a leverage ratio of 4.4, and will double in value on a 24.6% rise in the underlying security.

Subscribers to Schaeffer's Weekend Trader options recommendation service received this PTON commentary on Sunday night, along with a detailed options trade recommendation -- including complete entry and exit parameters. Learn more about why Weekend Trader is one of our most popular options trading services.

Published on Jan 13, 2021 at 11:12 AM
  • Buzz Stocks
stock
Published on Jan 13, 2021 at 10:25 AM
  • Buzz Stocks
  • Analyst Update
 
Published on Jan 13, 2021 at 10:20 AM
  • Buzz Stocks

The shares of American Tower Corp (NYSE:AMT) are lower this morning, last seen down 0.2% to trade at $214.47, amid news that the real estate investment trust (REIT) agreed to buy Spanish telecom company Telefonica's (TEF) European and Latin American mobile phone masts for $9.4 billion. The U.S.-listed shares of TEF, meanwhile, are up 9.8% to trade at $4.88.

It's been a rocky road downward for AMT, which is now off over 21% from its July 29, all-time high of $272. While it looked like the $215 mark would come in as a floor for REIT's December pullback, the equity just breached that level during yesterday's session, and is now set for a second session just below it. 

Nonetheless, option traders haven't been more bullish than in the past year. This is per American Tower stock's 50-day call/put volume ratio of 3.75 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which stands higher than all other readings from the last 12 months. 

Analysts reflect this optimism, with 10 of the 14 in coverage calling the security a "buy" or better, while the remaining four say "hold." Plus, the 12-month consensus price target of $280.41 is a 30.6% premium to current levels. Should AMT keep sliding under the $215 level, it could spark a round of downgrades and/or price target cuts. 

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.


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