Earnings Predictions
for the
Week Beginning April 09, 2018

Political Volatility Causes Mayhem!

by Ian Harvey

April 09, 2018

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The Climb – Gotta Keep Trying!!

Options Trades to Consider Based on Expected Earnings Reports:

Tuesday, April 10

Industrial parts specialist MSC Industrial Direct Co Inc (NYSE: MSM) will report earnings before the market starts. The consensus earnings estimate is $1.30 per share on revenue of $767.83 million.

Short interest has increased by 46.0% since the company's last earnings release.

MSM has seen plenty of negative analyst attention as-of-late -- receiving an average recommendation of “Hold” from the eighteen research firms that are covering the company.

Gabelli cut shares of MSC Industrial Direct from a buy rating to a hold rating in a research report sent to investors on Friday, March 16th.

Zacks Investment Research lowered shares of MSC Industrial Direct from a buy rating to a hold rating in a research note issued to investors on Saturday, March 17th.

Investor’s sentiment has decreased to 0.88 in Q4 2017; down 0.43, from 1.31 in 2017Q3. 32 investors sold MSC Industrial Direct Co., Inc. shares while 103 reduced holdings.

Since November 10, 2017 there have been 16 insider sales for $81.41 million activity.

Option trade to consider: Buy the MSM MAY 18 2018 90.000 PUT at approximately $3.20.

Wednesday, April 11

Fastenal Company (NASDAQ:FAST), engaged in wholesale distribution of industrial and construction supplies, will report before the market opens. The consensus earnings estimate is for $0.61 per share on revenue of $1.18 billion. Consensus estimates are for year-over-year earnings growth of 32.61% with revenue increasing by 12.63%.

Overall earnings estimates have been revised higher since the company's last earnings release.

Fastenal has several positive factors working in its favour --

  • Fastenal's sales in the last few quarters have been driven by an increased installation of industrial vending machines. Sales through vending machines grew at or near a double-digit pace in each of the four quarters of 2017. The company signed 19,355 vending machines in 2017, up 7.2% from the prior-year quarter and the highest since 2013.
  • A consistent increase in the number of on-site locations is likely to strengthen Fastenal's market share and boost the quarterly numbers.
  • Fastenal's acquisition of certain assets of industrial and fastener supply distributor - Manufacturer's Supply Company (Mansco) - in March 2017 - fortifies Fastenal's presence in markets where it has not significantly contributed in the past.

Backed by sustained strength in most of its end markets as well as strong momentum in vending machines installations and onsite locations, the company is expected to report solid top- and bottom-line growth in the first quarter.

Option trade to consider: Buy the FAST MAY 18 2018 55.000 CALL at approximately $1.85.

Bed Bath & Beyond Inc. (NASDAQ:BBBY), a specialty retailer of domestic merchandise and home furnishings, will report after the market closes. The consensus earnings estimate is $1.41 per share on revenue of $3.67 billion. The Earnings Whisper number is $1.37 per share.

BBBY has been struggling lately with falling customer traffic, which has led to reduced profitability as it cut prices to keep inventory moving. Operating profit tumbled over the past nine months, diving to $424 million from $705 million in the year-ago period. And its most recent quarter was marked by a modest decline in comparable-store sales.

Despite a rally in retail over the past few months, BBBY shares haven't moved. The stock now trades at less than 8X forward EPS; and a consensus beat with Q3 results in December didn't help the stock much.

A downgrade from JPMorgan Chase & Co. in January showed that the Street still isn't behind the story of a Bed Bath & Beyond turnaround.

BBBY has declined 70%-plus since early 2015 and 45% over the past twelve months. Until the company proves it can stabilize earnings, consensus estimates assume the negative trend returns in fiscal 2018 (ending February 2019) is to continue.

Option trade to consider: Buy the BBBY MAY 18 2018 20.000 PUT at approximately $1.00.

Thursday, April 12

Delta Air Lines, Inc. (NYSE:DAL) will report earnings before the market opens. The consensus earnings estimate is for $0.72 per share, down from $0.77 during the same period last year, on revenue of $9.82 billion. The Earnings Whisper number is for $0.77 per share. The company's guidance was for earnings of $0.60 to $0.80 per share. Consensus estimates are for earnings to decline year-over-year by 5.19% with revenue increasing by 7.35%.

Short interest has increased by 40.3% since the company's last earnings release.

In the U.S., Delta has had to deal with a series of severe winter and spring storms on the East Coast. Internationally, things have been better, as economies globally accelerate. But analysts remain concerned about how higher jet-fuel prices might hit margins; Delta has grown earnings by 30% per annum over the last five years, but growth is slowing with rising oil prices, and analysts now expect profits to rise by 12% a year over the next five years. Also, intense competition is keeping fares relatively low.

Option trade to consider: Buy the DAL MAY 18 2018 52.500 PUT at approximately $2.15.

Friday, April 13

Banking Summary

GOP tax cuts are expected to help banks' profitability, as well as an an uptick in bond yields and interest rates, which means pushing up what banks can charge on their own loans. The recent spike in stock market volatility is also expected to boost the banks' trading desks, which have weighed on earlier quarterly results.

The market remains very bullish on the overall sector, and rising rates, recent tax reform, low unemployment, and rising wages all create a great environment for big banks, which should remain strong for the foreseeable future.

JPMorgan Chase & Co. (NYSE:JPM) will report its first-quarter numbers before the market opens. Wall Street expects EPS of $2.28, a 38% jump, on revenue up 12% to $27.53 billion. The Earnings Whisper number is for $2.31 per share.

JPM has been strong over the last couple of years. Higher interest rates will allow big banks like JPMorgan to widen the spread on money where “the borrow” versus “loan out” to customers, which means that higher rates will drive profits higher.

Overall earnings estimates have been revised higher since the company's last earnings release.

Technical indicators for JPM are bullish with a strong upward trend. The stock has recent support above $106.00 and recent resistance below $115.00.

Of the 19 analysts who cover the stock, nine rate it a “strong buy”, one rates it a “buy”, and nine rate it a “hold”.

Option trade to consider: Buy the JPM MAY 18 2018 110.000 CALL at approximately $3.75.

Citigroup Inc (NYSE: C) will report earnings before the market opens. Citigroup is seen reporting an 18% EPS boost to $1.61, on a 5% revenue gain to $18.94 billion The Earnings Whisper number is for $1.65 per share.

Short interest has decreased by 9.1% since the company's last earnings release; as well overall earnings estimates have been revised higher.

Its last quarterly outing showed progress in management's long-term initiatives, including an improved efficiency ratio, higher capital returns to shareholders, and steady growth in its consumer banking segment. In early comments on the upcoming fiscal year, CEO Michael Corbat and his team said they're targeting healthy growth both in the bank's return on invested capital and in its return of capital to shareholders.

Option trade to consider: Buy the C MAY 18 2018 70.000 CALL at approximately $1.95.

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.

If you wish to receive more options trading recommendations similar to this, which will help boost your portfolio strategy, get on board with the members of Stock Options Made Easy.

Our proven track record says it all!!


Best of Trading,
Ian Harvey
Director of Stock Options Made Easy


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