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, 26th May, 2016
Ulta Salon, Cosmetics & Fragrance, Inc. (NASDAQ:ULTA) Calls
**OPTION TRADE: Buy the ULTA June 17 2016 230.000 call at approximately $2.50. Sell price is left to your own judgment.
Ulta Salon, Cosmetics & Fragrance, Inc. (NASDAQ: ULTA), a beauty retailer, which provides one-stop shopping for prestige, mass and salon products and salon services in the United States, will issue its Q116 quarterly earnings data today, Thursday, May 26th, after the market closes. Analysts expect the company to announce earnings of $1.29 per share and revenue of $1.03 billion for the quarter. Ulta Salon, Cosmetics & Fragrance has set its Q1 guidance at $1.25-1.30 EPS.
Ulta Salon, Cosmetics & Fragrance last announced its quarterly earnings data on Thursday, March 10th. The company reported $1.69 earnings per share for the quarter, beating analysts’ consensus estimates of $1.54 by $0.15. The firm earned $1.27 billion during the quarter, compared to analyst estimates of $1.23 billion.
ULTA is the largest beauty retailer that provides one-stop shopping for prestige, mass and salon products and salon services in the United States. ULTA provides affordable indulgence to its customers by combining the product breadth, value and convenience of a beauty superstore with the distinctive environment and experience of a specialty retailer. ULTA offers a unique combination of over twenty one thousand prestige and mass beauty products across the categories of cosmetics, fragrance, haircare, skincare, bath and body products and salon styling tools, as well as salon haircare products. ULTA also offers a full-service salon in all of its stores.
Since coming public, Ulta stock has established a strong pattern of beating Street profit views. Over the last couple years, the company has beaten Street profit views 91% of the time, or on 11 occasions, and missed just once.
In the immediate aftermath of reporting, ULTA stock has mostly reflected its earnings prowess and seen its share of powerful upside reactions by investors.
The price moves in ULTA stock have produced an average and handsome gain of 5.63%, though one which comes with a larger 7.76% one standard deviation of risk.
Ulta Salon's seven-period stock performance has resulted in ULTA rising by a similar 5.72% on average and slightly lower a one standard deviation reading of 6.57% over the last six quarterly reports.
Ulta Salon, Cosmetics & Fragrance, Inc. has a market capitalization of $12.94 billion and a price-to-earnings ratio of 41.48. The stock has a 50 day moving average price of $205.61 and a 200-day moving average price of $183.37. Ulta Salon, Cosmetics & Fragrance, Inc. has a one year low of $120.38 and a one year high of $212.92.
Taking a closer look at ULTA's daily chart, a seven-week-long high-and-tight formation popular with growth investors is setting up. This bullish pattern could act as a potential springboard for yet another of ULTA's enthusiastic earnings-related price gaps.
Since coming public in late 2007 and hitting a financial crisis low of $4.10, ULTA stock has been a beauty queen among equities in racking up glamorous gains of about 5,000%.
Despite the enviable increase in the price of ULTA stock, a couple volatile corrections along the way and a modest market cap just north of $13 billion suggests ULTA may not be finished putting the blush on investors. A bullish base currently under development certainly doesn't hurt those chances.
Wednesday, 25th May, 2016
PVH Corp (NYSE:PVH) Calls
**OPTION TRADE: Buy the PVH June 17 2016 100.000 call at approximately $0.60. Sell price is left to your own judgment.
PVH Corp (NYSE: PVH), an apparel company, is slated to release first-quarter fiscal 2016 results today, May 25, after the closing bell. Last quarter, the company had delivered a positive earnings surprise of 4.8%. And during the same quarter in the previous year, the firm earned $1.76 earnings per share. The company had revenue of $2.10 billion for the quarter, compared to the consensus estimate of $2.07 billion. The company’s revenue for the quarter was up 2.1% compared to the same quarter last year. On average, analysts expect PVH Corp to post $6.46 EPS for the current fiscal year and $7.32 EPS for the next fiscal year.
In fact, the company has outperformed the Consensus Estimate for seven straight quarters now, with an average of 6.9% over the trailing four quarters.
PVH has mainly been gaining from the strong performance of its Calvin Klein and Tommy Hilfiger brands, which helped deliver strong results even amid tough macroeconomic conditions. Apart from this, PVH’s solid business strategies and ongoing investments in top-quality brands, along with its focus on global expansion bode well.
For the first quarter of fiscal 2016, the company expects total revenue to rise 1% year over year, while currency neutral revenue is anticipated to increase 3%. Adjusted earnings per share for the first quarter are expected to be in the range of $1.40–$1.45, including a 50 cents negative impact from currency translations. On a currency neutral basis, adjusted earnings growth is anticipated in a band of 27%–30%.
PVH ranks among the larger U.S. apparel companies, with over $8 billion in sales. The company's market position and scale has been enhanced through acquisitions. The company recently completed the acquisition of 55% interest in TH Asia Ltd., representing the balance of the China joint venture. It is believed that PVH's acquisitions have leveraged its operating expertise and spurred growth while reducing its reliance on its legacy dress shirt business and U.S. market.
The company also has the ability to grow organically and has demonstrated it can develop brands through its sourcing, design, information technology, marketing, and distribution infrastructure. PVH's sales of about $8 billion exceed those of Ralph Lauren Corp. (about $7.4 billion in sales) but continue to lag VF Corp. (over $12.3 billion in sales).
PVH's diversification is good, with broad product offerings across sportswear, dresswear (men's shirts and neckwear), and, to a lesser extent, footwear. The company offers a diverse portfolio of brands including Calvin Klein, Tommy Hilfiger, Van Heusen, IZOD, ARROW, Warner's, and Speedo. Revenues are generated through wholesale distribution, company-operated retail stores, and through licensing arrangements. The company sells products globally across various retail channels ranging from department stores to mass merchandisers, with the five largest customers representing about 22% of revenue with no single client representing more than 10% of sales. PVH's geographic diversification is also good, with more than 45% of revenue from overseas.
PVH's operating performance has been consistently good; in part it is because its global sourcing platform provides for production flexibility. Nearly all of PVH's products (with the exception of a small amount of handmade neckwear) are sourced from off-shore manufacturing facilities. The company's sources are extensive and reach across roughly 50 countries and 1,300 factories.
The stable outlook reflects expectations that PVH's operating performance will remain at least near current levels based on continuing good performance of its diversified brands, strong market positions and global supply chain efficiency despite our forecast of weak top-line growth and a difficult consumer environment.
S&P Global Ratings said that it affirmed its 'BB+' corporate credit rating on PVH Corp. The outlook remains stable.
Peter Deluca, credit analyst for S&P Global Ratings, affirmed PVH's good market position, portfolio of well-recognized brands, geographic diversification, good profitability, and moderate leverage.
There are eleven analysts that have assigned a buy rating to the stock. The company has a consensus rating of “Buy” and a consensus target price of $106.25.
PVH Corp has a 12 month low of $64.16 and a 12 month high of $120.67. The firm’s 50-day moving average is $92.70 and its 200 day moving average is $83.73. The company has a market capitalization of $7.16 billion and a price-to-earnings ratio of 12.79.
Wednesday, 25th May, 2016
Abercrombie & Fitch Co. (NYSE:ANF) Calls
**OPTION TRADE: Buy the ANF June 17 2016 26.000 call at approximately $0.85. Sell price is left to your own judgment.
Abercrombie & Fitch Co. (NYSE: ANF), a retailer that operates stores and direct-to-consumer operations, will report first-quarter numbers tomorrow, May 26. The company reports before the market open, with the consensus calling for a loss of 50 cents per share. During the same period last year the company had a loss of 53 cents per share, and the stock is down 11.6% on the year.
Specialty teen retailer, Abercrombie & Fitch has lost a lot of ground over the last two months, but the stock remains pricey, with a P/E of just over 42. The company’s ability to turn things around over the last year has been impressive, but Wall Street remains pretty cautious of the stock.
Teen retailers have struggled to keep consumers in their stores, and the fact that the company is expected to post a loss of 50 cents per share is a testament to that fact. However, this has already been priced into the stock, and Wall Street will overlook the loss as long as the loss is not bigger than expected. Urban Outfitters (URBN) has already reported its quarterly results, posting earnings that were in-line with the consensus and revenue that outpaced the consensus. The numbers drove the stock higher, and indicated that the demographic is still actively buying and indicates that ANF may also be able to enjoy a strong post-earnings bounce.
While the consensus calls for a loss of 50 cents per share, the street’s whisper number is better, forecasting a loss of just 46 cents per share. This increases the chance of an earnings-beat, and the chances of a strong move higher following the report.
Also, Abercrombie & Fitch Co.‘s stock had its “buy” rating reaffirmed by equities researchers at Stifel Nicolaus in a report issued on Monday. They presently have a $35.00 target price on the apparel retailer’s stock. Stifel Nicolaus’ price objective would suggest a potential upside of 40.90% from the company’s previous close.
ANF has a 50-day moving average of $26.96 and a 200-day moving average of $26.89. The company has a market cap of $1.68 billion and a price-to-earnings ratio of 48.71. Abercrombie & Fitch Co. has a one year low of $15.42 and a one year high of $32.83.
Wednesday, 25th May, 2016
Signet Jewelers Ltd (NYSE:SIG)
**OPTION TRADE: Buy the SIG June 17 2016 120.000 call at approximately $0.85. Sell price is left to your own judgment.
Signet Jewelers Ltd (NYSE: SIG), a retailer of jewelry, watches and associated services in the United States, Canada and the United Kingdom, is set to announce its Q117 earnings results tomorrow Thursday, May 26th. Analysts expect the company to announce earnings of $1.94 per share and revenue of $1.61 billion for the quarter. Signet Jewelers has set its Q1 guidance at $1.90-1.95 EPS and its FY17 guidance at $8.25-8.55 EPS.
Williams Jones & Associates Llc increased its stake in Signet Jewelers Limited by 86.73% based on its latest 2016Q1 regulatory filing with the SEC. Williams Jones & Associates Llc bought 82,470 shares, an increase of $10.23 million, as the company’s stock declined 0.64% while stock markets rallied.
Nineteen investment analysts have rated the stock with a buy rating; The company has a consensus rating of “Buy” and a consensus price target of $157.38.
A recent analyst activity consisted of Goldman Sachs reiterating their Buy stance on March 28. Goldman Sachs increased their price target on SIG from $186 to $192. This corresponds to a 76.68% upside from the last closing price. On the date of report, the stock closed at $122.46.
CL King upgraded their Neutral rating to Buy on March 1. On the date of report, the stock closed at $112.20.
Another research firm was Johnson Rice who initiated their coverage on the stock with Buy rating on November 9. On the date of report, the stock closed at $146.24.
The company has a market capitalization of $8.29 billion and a PE ratio of 18.02. Signet Jewelers Ltd. has a 52-week low of $93.45 and a 52-week high of $152.27. The company has a 50 day moving average of $110.48 and a 200 day moving average of $117.28.
Wednesday, 25th May, 2016
Dollar General Corp. (NYSE:DG) Calls
**OPTION TRADE: Buy the DG June 17 2016 87.500 call at approximately $0.95. Sell price is left to your own judgment.
Dollar General Corp. (NYSE: DG), a discount retailer in the United States, is slated to report first-quarter fiscal 2016 results before the market opens tomorrow, Thursday May 26, with the last earnings report coming in stronger than expected.
The CEO commented:
“2015 was another great year for Dollar General as we achieved strong financial results with a focus on profitable sales growth.”
“Looking ahead, Dollar General continues to have significant opportunities for growth. Considering the financial results we have delivered over the last three years and consistent with how we are managing the business, our growth model is focused …..For 2016, we plan to return approximately $1.3 billion to shareholders through anticipated quarterly cash dividends and consistent share repurchases.”
“The Company remains well-positioned to serve our customers with value and convenience. We continue to take the appropriate strategic steps to ensure that we are investing in the Company for sustainable and consistent growth.”
It is believed that Dollar General's commitment to better price management, merchandise, cost containment and operational initiatives will favor results in the quarter to be reported.
There are eighteen analysts that have issued a buy rating and one has assigned a strong buy rating to the company’s stock. The stock has a consensus rating of “Buy” and a consensus price target of $91.14.
Dollar General Corp. has a market cap of $23.27 billion and a P/E ratio of 20.56. The stock’s 50 day moving average is $82.82 and its 200 day moving average is $75.49. Dollar General Corp. has a 12-month low of $59.75 and a 12-month high of $87.42.
Tuesday, 24th May, 2016
Option Trade 1. – Hewlett Packard Enterprise Co (NYSE:HPE) Calls
**OPTION TRADE 1: Buy the HPE June 17 2016 16.000 call at approximately $0.70. Sell price is left to your own judgment.
Option Trade 2. – HP Inc (NYSE:HPQ) Puts
**OPTION TRADE 2: Buy the HPQ June 17 2016 11.500 put at approximately $0.35. Sell price is left to your own judgment.
In November 2015, Hewlett Packard announced it was splitting into two new companies. Hewlett Packard Enterprise Co (NYSE: HPE), now handling the software, server, and storage aspects of the previous company, whilst HP Inc (NYSE: HPQ) focuses solely on printers and PCs. Many lauded the split as it was a massive yet seamless transition executed on a global scale. Now, both new companies will be posting earnings this week.
1. Hewlett Packard Enterprise Co
Hewlett Packard Enterprise is expected to report earnings today, May 24, 2016 after market close. Overall, analysts expect the company to post $0.42 per share on revenue of $12.34 billion.
Credit Suisse analyst Kulbinder Garcha is bullish on the company ahead of its earnings report. He expects the company to post quarterly revenue of $12.4 billion and earnings per share of $0.42. Many analysts are concerned about the challenging macro conditions surrounding this quarter’s report, but Garcha believes HPE “has many levers to pull to deliver decent results.”
Specifically, Garcha expects ES to “continue the course of inflection,” and deliver revenue of $4.6 billion and an operating margin of 7.5%. The analyst notes that the free cash flow recovery should reach $3.2 billion by 2017, up from $1.0 billion in 2015 due to restructuring/separation costs diminishing over time.
Some analysts believe the HP split has already started benefiting the enterprise leg of it. Looking ahead, analysts explain that the split will allow for a more distinguished and customized approach to each business, something that would not have been accomplished as one encompassing business.
The average analyst consensus for HPE is Moderate Buy, with 67% of analysts bullish and 33% of analysts neutral. All recommendations amounted to a 12-month average price target of $19.72, marking a 24.26% upside from where shares last closed.
Hewlett Packard Enterprise has a 12-month low of $11.62 and a 12-month high of $18.55. The firm has a market capitalization of $27.24 billion and a PE ratio of 13.28. The company’s 50 day moving average is $16.82 and its 200 day moving average is $15.04.
2. HP Inc
HP Inc is expected to report second quarter earnings tomorrow, May 25, 2016 after market close. Analysts are expecting $0.55 per share and revenue at $11.73 billion.
For the upcoming quarter, analysts are bracing themselves for declining demand for key products that will impact earnings. Specifically, demand for PCs and printers have fallen over the last decade, falling 9.6% year-over-year in the first quarter of 2016 to 64.8 million units. The persistent slow-down has taken a toll on HP Inc.’s top line.
Analysts speculate that this has little to do with the business split from parent company Hewlett Packard, but rather a result of the technology and consumer demand shift towards mobile devices and cloud storage and interest in more inexpensive solutions to mobile devices and PCs.
However, many believe that HPQ should make a recovery in the second half of 2016. HP Inc believes the industry will benefit in a consumer transition towards Windows 10 towards the end of the year.
The average analyst consensus for HP Inc is Moderate Buy with 45% of analysts offering bullish recommendations and 55% of analysts neutral.
Hewlett-Packard Company has a 1-year low of $8.91 and a 1-year high of $15.72. The stock has a 50 day moving average price of $12.07 and a 200 day moving average price of $11.62. The firm has a market capitalization of $20.27 billion and a PE ratio of 5.61.