Option Trade
Joy Global Inc. (NYSE:JOY) Puts 
Wednesday, September 02, 2015

**OPTION TRADE: Buy the JOY Oct 2015 22.000 put (JOY151016P00022000) at approximately $1.80. Place a protective stop loss at $0.70, and a pre-determined sell at $3.50.

by Ian Harvey

September 02, 2015

Introduction

Joy Global Inc. (NYSE: JOY), a manufacturer and servicer of high productivity mining equipment for the extraction of coal and other minerals and ores, will issue its Q315 quarterly earnings data on Thursday, September 3rd, before the opening bell on Sep 3, 2015, and is expected to announce earnings of $0.62 per share and revenue of $801.29 million for the quarter.

Joy Global continues to face choppy demand in the international markets on lackluster economic growth. In the fiscal second quarter, Joy Global’s original equipment and service orders declined year over year after adjusting for foreign currency exchange movements. For the first time in the last two years, the company failed to book any electric mining shovel order.

Despite having customers in other industries, Joy Global’s revenue generation to a large extent is tied to coal market demand. Nearly 61% of the total revenue of the company is generated from its thermal and metallurgical coal-mining customers.

The company is expected to suffer due to extended production shutdown at many of its major customers. Last quarter too, the company’s service order was hit by incremental idling of coal mines in North America.

Moreover, the company itself expects to report weak third-quarter fiscal 2015 results in terms of sales, earnings and cash.

As well, Joy Global Inc. declared that Randal W. Baker, the Company’s Executive Vice President and Chief Operating Officer, would leave the Company effective September 4, 2015 to pursue other opportunities. Mr. Baker formerly served as President of Joy Global Surface Mining Inc. from November 2009 until his appointment as Chief Operating Officer in December 2013.

Joy Global Inc. has received a strong sell rating for the short term, according to analysts.

Axiom initiates coverage on Joy Global Inc. and announced its price target at $21 per share on the company. The rating by the firm was issued on August 21, 2015.

Shares of Joy Global, Inc. appreciated by 4.22% during the last five trading days but lost 8.29% on a 4-week basis. Joy Global, Inc. has dropped 38.29% during the last 3-month period. Year-to-Date the stock performance stands at -47.43%.

Technical Details

The firm’s 50-day moving average price is $26.40 and its 200-day moving average price is $36.52. The company has a market capitalization of $2.36 billion and a price-to-earnings ratio of 8.83.

Joy Global has a 12 month low of $22.13 and a 12 month high of $63.29.

Earnings

Previous Earnings

Joy Global last issued its earnings results on Thursday, June 4th. The company reported $0.59 earnings per share for the quarter, beating the Zacks’ consensus estimate of $0.58 by $0.01.

During the same period last year, the firm earned $0.76 earnings per share. The firm had revenue of $810 million for the quarter, compared to the consensus estimate of $815.24 million. The company’s revenue for the quarter was down 12.8% on a year-over-year basis. On average, analysts expect Joy Global to post $2.46 EPS for the current fiscal year and $2.52 EPS for the next fiscal year.

Analysts Opinions

As already mentioned, Axiom Securities initiated coverage on Joy Global in a research note on Friday, August 21st, and set a $21.00 price target on the stock.

The company has also been the subject of a number of other research reports:-

• Canaccord Genuity restated a “buy” rating on shares of Joy Global in a research report on Friday, August 14th.

• Zacks downgraded Joy Global from a “hold” rating to a “strong sell” rating in a report on Monday, August 10th. Scotiabank cut shares of Joy Global to a “sell” rating and set a $21.00 price objective for the company. in a research note on Tuesday, July 28th. •

• Finally, Goldman Sachs reaffirmed a “sell” rating on shares of Joy Global in a research report on Tuesday, July 28th.

Three research analysts have rated the stock with a sell rating, eleven have given a hold rating and four have assigned a buy rating to the stock.

Harvey’s Options Volatility Indicator

Conclusion

Note that Joy Global is highly linked to China and makes mining equipment, which is a dying industry at this stage.

Therefore, based on the facts above, and Harvey’s Options Volatility Indicator, the following option trade is recommended…..

**OPTION TRADE: Buy the JOY Oct 2015 22.000 put (JOY151016P00022000) at approximately $1.80. Place a protective stop loss at $0.70, and a pre-determined sell at $3.50.

”Success is simple. Do what's right, the right way, at the right time.”

Option Tip for your Success!
Options traders are not successful because they win.
Options traders win because they are successful.



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