by Ian Harvey
IMPORTANT NOTE: There is no stop-loss or pre-determined sell price recommended – this is left to the discretion of the individual trader.
Thursday, 19th May, 2016
Option Trade – Foot Locker, Inc. (NYSE:FL) Calls
**OPTION TRADE: Buy the FL June 17 2016 62.500 call at approximately $0.65. Sell price is left to your own judgment.
Foot Locker, Inc. (NYSE: FL), a retailer of athletic shoes and apparel, is set to announce its Q116 earnings results tomorrow, Friday, May 20th. Analysts expect the company to announce earnings of $1.39 per share and revenue of $2.00 billion for the quarter.
Foot Locker (NYSE:FL) last posted its earnings results on Friday, February 26th. The company reported $1.16 earnings per share for the quarter, beating the consensus estimate of $1.12 by $0.04. The company had revenue of $2.01 billion for the quarter, compared to the consensus estimate of $2 billion.
In the trailing four quarters, the company outperformed the Consensus Estimate by an average of 9.4%.
It is believed that Foot Locker is likely to benefit by continually exploiting opportunities like kids’ and women’s business, shop-in-shop expansion in collaboration with its vendors, store banner.com business, store refurbishment and enhancement of assortments. The company is also well positioned to reap the benefits from the so-called “athleisure” trend that has been sweeping the retail sector as consumers are now opting for more comfortable and athletic style products.
Two research analysts have rated the stock with a sell rating, six have assigned a hold rating, fifteen have assigned a buy rating and two have issued a strong buy rating to the stock. Foot Locker currently has an average rating of “Buy” and an average price target of $73.42.
Foot Locker, Inc. has a 12-month low of $56.69 and a 12-month high of $77.25. The firm’s 50-day moving average price is $61.25 and its 200 day moving average price is $63.97. The company has a market capitalization of $7.77 billion and a price-to-earnings ratio of 14.88.
Wednesday, 18th May, 2016
Option Trade – Dicks Sporting Goods Inc (NYSE:DKS) Puts
**OPTION TRADE: Buy the DKS June 17 2016 37.000 put at approximately $1.30. Sell price is left to your own judgment.
Dicks Sporting Goods Inc (NYSE: DKS), a sporting goods retailer offering an assortment of brand name sporting goods equipment, apparel and footwear in a specialty store environment, is set to announce its Q116 earnings results tomorrow, Thursday, May 19th. Analysts expect the company to announce earnings of $0.50 per share and revenue of $1.67 billion for the quarter. Dicks Sporting Goods has set its Q1 guidance at $0.48-0.50 EPS and its FY17 guidance at $2.85-3.00 EPS.
Dicks Sporting Goods last issued its quarterly earnings results on Tuesday, March 8th. The sporting goods retailer reported $1.13 earnings per share (EPS) for the quarter, missing analysts’ consensus estimates of $1.15 by $0.02. The company had revenue of $2.24 billion for the quarter, compared to the consensus estimate of $2.29 billion.
Until recently, Dick's Sporting Goods, Inc. had been performing well in 2016, rising from $35.21 to start the year to a seven-month high of $48.56 on May 2. Since then, though, DKS has dropped more than 14% to trade at approximately $39 -- giving up support atop its 200-day moving average -- as the retail stock underperforms in May yet again.
There are many analysts with sell or hold on DKS. Robert W. Baird analyst Peter Benedict reiterated a Hold rating on Dick’s Sporting Goods yesterday.
Benedict commented, “Weather was more favorable this year, athletic apparel and footwear seem to have remained pockets of strength, and golf continues to stabilize. TSA liquidation sales represent a potential headwind, though our sense is management embedded some level of disruption into their plan.”
Also, Robert W. Baird restated a “hold” rating on Dicks Sporting Goods Inc‘s stock in a report issued on Monday.
Dicks Sporting Goods Inc opened at 39.53 today. The company has a 50-day moving average of $45.33 and a 200-day moving average of $41.24. Dicks Sporting Goods Inc has a 52 week low of $33.42 and a 52 week high of $54.48. The stock has a market cap of $4.54 billion and a P/E ratio of 13.97.
Wednesday, 18th May, 2016
Option Trade – Applied Materials, Inc. (NASDAQ:AMAT) Calls
**OPTION TRADE: Buy the AMAT June 17 2016 20.000 call at approximately $0.50. Sell price is left to your own judgment.
Applied Materials, Inc. (NASDAQ: AMAT), a provider of manufacturing equipment, services and software to the semiconductor, display, solar photovoltaic (PV) and related industries across the world, is expected to report Q2:16 earnings tomorrow, Thursday, May 19 after market close. Analysts expect the manufacturing equipment company to post EPS of $0.32, and revenue of $2.42 billion. Analysts seem certain, as their estimate has not changed in the past 60 days, and the range of 19 individual estimates is only $0.31 to $0.33. EPS have been within a penny of expectations in the past four quarters.
As a whole, the semiconductor industry has been victim to slowed demand growth and shrinking profit margins. In an optimistic approach, Applied Materials is priding itself with exceptionalism. The company is banking on positive changes deriving from implementation of technology with better memory storage, as well as company expansion in China.
Chinese companies use AMAT supplies in many of their electronic products, including smartphone maker Xiaomi. Applied Materials is planning to further expand the China market through investments and projects worth $616 million during the upcoming few years.
In light of these approaches from AMAT, there is to be expected more bullish outlooks from analysts. UBS analyst Stephen Chin reiterated a Buy rating on Applied Materials on April 25, 2016 with a price target of $26.00. The analyst notes, “We reiterate our Buy rating as our China tracker shows 4 of the big incumbent China fabs are buying semicap equipment now.”
Chin further exemplifies positive predictions for the upcoming quarters, mentioning, “Our proprietary China tracker found Intel’s China fab’s semicap purchases last month finally ramped up to $160M. We believe most of this was for litho tools but estimate etchers were $20M and implanters were $15M. Our tracker also found Intel’s China fab purchases of raw wafers dropped to only 3k versus a 20k average recently. This low number suggests Intel may have temporarily shut down its China fab to prep for a multi-quarter semicap installation. We believe Applied will have solid visibility shipping to Intel’s China fab over the next 2-3 quarters.”
Applied Materials has a solid product line and management has stepped up investments to prepare for the ongoing transitions to larger wafer sizes and smaller process nodes. The ramp up in FinFET, 3D NAND and new display technology will likely be the catalysts.
There is also scope for share gains on the Display side of the business backed by PVD tools. The drivers of this business are larger TV screens and better mobile displays that involve more complicated production processes and new tools.
Developing trends in mobility, connectivity, video and wearable devices are fueling growth in the industry. This, in turn, is increasing advancement in mobile processors, solid-state storage and interactive displays.
Applied Materials has strengthened its research & development and at the same time stepped up investment in product development.
The company has focused its structure and talent around key areas of value creation. It plans to align its product portfolio in a way that it generates the best returns for clients.
Applied Materials had guided well for the second quarter of fiscal 2016. Revenues are expected to increase 5–10 percentage points sequentially. Non-GAAP EPS is expected to come in a range of 30 cents to 34 cents, compared with 26 cents per share reported in the first quarter.
The company’s 50-day moving average is $20.72 and its 200-day moving average is $18.73. The firm has a market capitalization of $22.17 billion and a P/E ratio of 17.97. Applied Materials has a 52 week low of $14.25 and a 52 week high of $21.67.
Tuesday, 17th May, 2016
Option Trade – salesforce.com, inc. (NYSE:CRM) Calls
**OPTION TRADE: Buy the CRM June 17 2016 85.000 call at approximately $1.10. Sell price is left to your own judgment.
salesforce.com, inc. (NYSE: CRM), a provider of enterprise cloud computing and social enterprise solutions, is set to report Q1:17 earnings tomorrow, May, 18, 2016 after market close. Analysts expect the cloud computing company to post EPS of $0.23, and revenue of $1.89 billion. These analyst consensuses are quite ambitious relative to the same quarter of last year, when the company posted a loss per share of ($0.04). Revenue for the same quarter of last year was $1.81 billion showing a 25% increase y/y.
In the previous quarter, Salesforce saw a substantial growth in both its top and bottom line year-over-year. Analysts speculate this growth may likely be attributed to the company’s cloud-based solutions, specifically, an increased demand for the company’s ExactTarget Marketing Cloud platform. In more good news for stockholders, the growth seems to be steadily improving and analysts are expecting this trend to continue in the upcoming quarter.
Analysts are expecting upcoming earnings to witness yet another boost due to beneficial geographical contributions as well as a higher number of successful deals. One factor that may hinder growth, however, is increasing competition from other semiconductor companies IBM, Oracle Corp, and SAP AG. Also notable impediments for CRM are currency fluctuations and more investment towards international expansion.
The minor obstacles the company faces – competition, currency fluctuations and international expansion -- hasn’t affected analyst opinion too negatively. Oppenheimer analyst Brian Schwartz shared his earnings predictions for CRM on May 13, 2016, reiterating a Buy rating on the stock with a price target of $88.00. He comments, “We think our marketing software industry update and annual Marketing Cloud customer survey can be a quality indicator of category spending conditions and priorities over the next six months, and somewhat of a proxy for SaaS spending trends.”
He further mentions, “Overall, we interpret the latest results as indicating CRM’s installed base spending trends and growing importance and leadership position in the marketing space remain healthy, which strengthens our confidence in the name. Bottom Line: We expect positive business momentum to continue for salesforce.com with increasing comfort in CRM’s growth trajectory and long-term potential ahead of 1Q results.”
Salesforce.com currently holds a Strong Buy average analyst consensus with a 94% of analysts bullish, and only 6% of analysts neutral on the stock. The average price target is currently $90.82 with an upside of 18.92%.
Tuesday, 17th May, 2016
Option Trade – Cisco Systems, Inc. (NASDAQ:CSCO) Calls
**OPTION TRADE: Buy the CSCO June 17 2016 28.000 call at approximately $0.45. Sell price is left to your own judgment.
Cisco Systems, Inc. (NASDAQ: CSCO), a network and communication provider, is expected to post Q3:2016 earnings today, Tuesday, May 18, after market close. Analysts expect the multinational technology company to post EPS of $0.55, and revenue of $11.97 billion. In the same quarter of the previous year, Cisco posted revenue of $12.1 billion which was a 5% increase y/y, and EPS of $0.47.
Though Cisco shares dropped over 3% on weakness in enterprise firms, analysts remain bullish on the premise that the company will be able to offset slowdown by growth in security software, specifically, its SourceFire products.
Additionally, CSCO’s Meraki WiFi, is significantly improving company shares. Lately, Meraki WiFi has been selling more software products and generating steady revenue for the company. These factors allow Cisco to be shielded from macro economic slowdown and declining enterprise spending on hardware.
Cisco is profiting from three of technology's fastest growing trends, cyber security, data analytics and IoT.
Further, the shares should benefit from a strong dividend yield of about 4 percent, and cash flow generation (more than 60 billion in cash/short term investments).
Contributing to bullish outlooks, Drexel Hamilton analyst Brian White reiterated a Buy rating on CSCO on May 13, 2016 with a price target of $34.00. White explained his optimistic expectations are due to Cisco’s above-par product and company implementation, noting, “We expect Cisco’s strong execution and product cycle to provide a buffer in a soft spending environment (especially in the enterprise market).”
As well, Cisco Systems, Inc.‘s stock had its “buy” rating restated by equities researchers at Citigroup Inc. in a research report issued to clients and investors last Friday. They presently have a $30.00 price target on the network equipment provider’s stock. Citigroup Inc.’s target price indicates a potential upside of 13.08% from the company’s current price.
The company has a 50-day moving average of $27.73 and a 200 day moving average of $26.76. Cisco Systems has a one year low of $22.46 and a one year high of $29.90. The firm has a market cap of $133.50 billion and a PE ratio of 13.13.