by Ian Harvey
February 12, 2018
Options Trades to Consider Based on Expected Earnings Reports:
Tuesday, February 13
Chinese tech giant
Baidu Inc. (ADR) (NASDAQ:BIDU), the Google of China, will report after
the market closes. The consensus
earnings estimate is $2.10 per share on revenue of $3.43 billion, and the Earnings Whisper number is $2.21 per
share. Consensus estimates are for
year-over-year earnings growth of 31.25% with revenue increasing by 30.77%.
Baidu has beaten the Consensus Estimate in each of the trailing four
quarters, delivering an average positive surprise of 66.72%.
Last quarter, Baidu delivered a positive earnings surprise of 77.63%. Earnings of $3.89 per share surged 64.8% sequentially and 161% on a year-over-year basis.
Revenues increased 29% year over year and 14.6% sequentially to $3.53 billion, and also beat the Consensus Estimate of $3.46 billion. The year-over-year growth was driven by improving AI technology and mobile foundation.
Option trade to consider: Buy the BIDU MARCH 16 2018 230.000
CALL at approximately $6.45.
Weibo Corp (ADR) (NASDAQ:WB), a social media platform for people to create, distribute and discover
Chinese-language content, will report after the market closes. The consensus earnings estimate is $0.58 per share on revenue of $364.81
million, and the Earnings Whisper number is $0.60 per share. Consensus
estimates are for year-over-year earnings growth of 205.26% with revenue
increasing by 71.48%.
WB has strong momentum in the user base. During the
past year, the MAUs (monthly active users) jumped by 79 million to 376 million.
Roughly 92 are mobile. And as for the DAUs (daily active users), the
year-over-year increase was 33 million to 165 million.
Weibo is often referred to the Twitter of China. But
interestingly enough, Weibo is growing much faster and yet the valuation is
only a couple billion dollars higher.
What's more, there is lots of room for growth in
China, which should help keep WB stock on its bullish path. Just consider the
Option trade to consider: Buy the WB MARCH 16 2018 120.000 CALL at approximately $7.10.
Wednesday, February 14
Oil and gas pipeline company Williams Co. (WMB) will
announce its fourth-quarter numbers after the market closes. The consensus calls for earnings of $0.20 per share, versus $0.17 during
the same period last year.
Williams Companies' extensive natural gas exposure
raises its sensitivity to the commodity's price.
WMB stock hit resistance mid-January, and really took
a hit along with the overall market over the last week. With the recent
selling, the stock is in the lower end of its 52-week range, and has yet to
find a level of support. Technical indicators for WMB are bearish with a strong
The stock’s valuation remains a concern, with a P/E of
The company does not have a very good earnings track
record, posting negative earnings surprises the last nine quarters.
The company posted weaker year-over-year earnings from
the segment in the third quarter and the trend is likely to continue in the
fourth quarter owing to weaker drilling activities in Barnett shale and Eagle
Ford shale among others.
Also, the company is likely to be affected by lower
throughput volumes due to its divestments of Geismar Plant and Canadian assets.
Williams Companies' high profile gas project, the
Constitution Pipeline, has suffered from constant regulatory setbacks, is also
The high leverage metrics of the company (more than
71%) which further restricts the financial flexibility of the firm and limits
growth is of concern.
WMB shares are currently down 8.3% on the year.
Option trade to consider: Buy the WMB MARCH 16 2018 28.000 PUT at approximately $0.90.
Thursday, February 15
Retail software company Shopify Inc. (US) (NYSE:SHOP) will report before the market opens. The consensus earnings estimate is $0.05 per share on revenue of $207.99 million, and the Earnings Whisper number is $0.08 per share. Consensus estimates are for year-over-year revenue growth of 59.52%.
Overall earnings estimates have been revised higher since the company's last earnings release.
Shopify has topped consensus on both the top and bottom lines in each of the ten quarters since its 2015 IPO.
Torrid growth and an expanding user base have driven the stock steadily higher and should continue in Q4. The Street projects a 60% increase in revenue in the key holiday quarter, and 45% in 2018.
Shopify is benefiting from two big trends right now: the rise of cloud-computing software and the growth of e-commerce platforms. The company creates its own software and services for mostly small- and medium-sized business, which allows those companies to set up their own online stores, sell products directly on their site or through Facebook and Amazon , manage their employees, etc.
Shopify's subscription revenue jumped by 65% in the third quarter of 2017, and its merchant solutions segments sales popped 79%, both year over year; and overall sales increased by 72% as well. Shopify is also increasing sales of its high-end tier subscription as well, called Shopify Plus, and added Arby's and the Phoneix Suns NBA team to its client list in the third quarter.
Option trade to consider: Buy the SHOP MARCH 16 2018 125.000 CALL at approximately $6.40.
Friday, February 16
Newell Brands Inc. (NYSE:NWL), a marketer of consumer and commercial products, will report before the market opens. Oppenheimer reissued their hold rating on shares of Newell Brands in a research report released on Tuesday, January 30th. Oppenheimer also issued estimates for Newell Brands’ Q4 2017 earnings at $0.66 EPS, FY2017 earnings at $2.72 EPS, FY2018 earnings at $2.65 EPS, FY2019 earnings at $2.65 EPS and FY2020 earnings at $2.25 EPS.
A proxy fight at the upper echelons of Newell Brands has complicated the outlook for the consumer products company.
After Newell bought Jarden, Newell CEO Michael Polk forecast good times ahead. But the plan went awry, causing former Jarden CEO Martin Franklin to recruit an activist fund to try and oust Polk and Newell's entire board.
Newell Brands said on Friday that activist investors Starboard Value LP and Opportunity Master Fund Ltd want to nominate ten directors to its board of directors, seeking to replace the Sharpie pen maker's current slate.
Two analysts have rated the stock with a sell rating, thirteen have issued a hold rating and six have assigned a buy rating to the company. Newell Brands has an average rating of Hold.
shares are down 33.4% for the past year while the S&P 500 index has grown
23.5% for the period.
Option trade to consider: Buy the NWL MARCH 16 2018 26.000 PUT at approximately $1.00.
Beverage titan, The Coca-Cola Co (NYSE:KO), will report before the market opens. The consensus calls for earnings of $0.38 per share, up a penny from the same period last year. The stock sold off in the recent market correction, and shares are currently down 5.6% on the year.
Overall technical indicators for KO are bearish and the stock is in a strong downward trend. The stock has recent support above $43.00, and recent resistance below $46.50.
Coca-Cola stock has been the victim of quickly changing consumer tastes and, so far, its efforts to revive the public’s interest in soda have been lackluster at best.
People are turning away from soda and sugary drinks. Coca-Cola’s most recent earnings reports prove that people are buying fewer sugary drinks and most analysts believe that trend is going to continue.
KO’s most recent performance and expectations for the future don’t justify its current price tag. KO’s price-earnings ratio is a staggering 42.4. That’s nearly double PepsiCo’s 23.5 P/E ratio.
The firm’s earnings-per-share growth this year is only expected to be around 5% — so at the moment KO stock looks overvalued.
Option trade to consider: Buy the KO MARCH 16 2018 42.000 PUT at approximately $0.80.
An Important Note: That these suggestions for options trade considerations require investors/traders to use their own discretion as to when to enter or exit! As well, it is advisable to do further research and due diligence before executing your trade.
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