Earnings Predictions
for the
Week Beginning August 06, 2018

A Big Week Of Earnings Reports!
Five (5) Options Trades Are Offered!

Moving On Up!

by Ian Harvey

August 06, 2018

A Quick Review of Last Week’s Market…..

For the week, the Dow finished flat only rising 0.05% at 25,462 and is still 4.3 percent from its all-time high; and the S&P 500 gained 0.8 percent to 2,840, just 32 points or 1.1 percent from its record set Jan. 26 at 2,872. However, the Nasdaq which recently set a new high, was up nearly 1 percent at 7,812.

If the market continues to hold up, expect the S&P 500 make a run at a new all-time high in the week ahead, barring a nasty escalation in trade threats.

The current bull market has a very good chance of becoming the longest running one in the post-World War II years. The longest run until now was 1990 to 2000.

Reviewing the Earnings Predictions from Last Week…..

We have broken our two week drought of earnings predictions losses with three out of five being winners in the last week.

For several weeks before there were potential returns of  480.5%, 361%, 553%, 629%, 1,064%, 1,736%, and the list goes on…..

Therefore, “Earnings Predictions” members of Stock Option Made Easy, if they followed our recommended trading strategy, would have been in positive territory; even taking into account any losses that may have occurred. The profitable trades are shown below.


“EARNINGS PREDICTIONS for LAST WEEK” – 3 OUT OF 5 WERE WINNERS!

DATE TRADE GAIN
July 31, 2018 IQ AUG 17 2018 33.000 CALL P.P: 64%
August 01, 2018 SQ AUG 17 2018 70.000 CALL P.P: 105%
August 02, 2018 ATVI AUG 17 2018 72.500 PUT P.P: 47%

TOTAL potential profit for these 3 trades= P.P: 216%.

Obviously those trades that have not been successful at this stage could make a comeback, similar to Etsy (.....read article.....), or even give back some of the capital used to purchase the options.

When To Exit A Trade Based On Earnings?.....

It is also worth considering, when options trading earnings reports – “Do we exit on already existing profits or leave the companies to report their earnings and hope for bigger profit?” 

As most traders realize, there is a 50/50 chance that the company stock price could go either way after reporting earnings – even if the report is good, the stock price could reverse – and if you hold a call option, means depletion of an already good profit if it exists. A similar situation can be found if you hold a put option, and a report is not that sound (and you expect a profit from this) but the stock price can, at times move upwards due to traders bias or other external conditions......READ MORE.....

The Decision Is Yours!

Don’t miss out – check out further options trades recommended for the week ahead by becoming a member of Stock Options Made Easy “Earnings Predictions”.

Before You Trade Consider This Strategy……

"Trading Capital Management" is a key component of your trading strategy. The strategy, on which we base our trades to achieve maximum profit, and to minimize loss, is contingent on using an equal amount of money for each trade.

……continue reading this article……

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.

It is sometimes best to exit a trade, if there is already sufficient profit accrued, before an earnings report is presented.

GETTING OUT WHILST THE GOING IS GOOD!

GREED CAN BE THE UNDOING OF A GOOD PROFIT!

Options Trades to Consider Based on Expected Earnings Reports:

Monday, August 06

Brooklyn, NY-based Etsy Inc. (NASDAQ:ETSY), a commerce platform to make, sell, and buy goods online and offline, primarily in the United States, is expected to report earnings after the market closes. For the second quarter, analysts expect its revenue to rise 25% to $127.1 million. However, its adjusted EPS are expected to fall 60% to $0.04.

ETSY went through rocky times as the original CEO left and the company had to do cost-cutting, including layoffs. And the turnaround has worked. Shares are up 112% in 2018. They now trade with a forward P/E of 79 but earnings are expected to rise 42% in 2018.

Prior to the earnings release, 56.0% of the nine analysts covering Etsy stock have recommended “buys” as of July 27. Analysts are bullish; as the company’s strategic efforts have yielded the desired results.

Etsy’s growth prospects look bright as consumer preferences shift toward online shopping. The company has been making its service more transparent by adding more accurate information on shipping dates and information on returns and exchanges. It’s also increasing its marketing spending to expand its customer base and simplifying the search process by deploying machine learning and AI technology along with human curation. It has collaborated with customer service software company Zendesk to set up an improved help center.

Etsy has been pumping ample resources into improving its operational efficiency and building infrastructure. Recently, Etsy hiked its seller transaction fee—which is also applicable to shipping costs—to 5% from 3.5%. It’s looking to increase its investments in marketing and product innovation, and it expects the higher fee to help. It’s looking at increasing its 2017 marketing spending by 40%.

Option trade to consider: Buy the ETSY SEPT 21 2018 45.000 CALL at approximately $2.10.

Andeavor (NYSE: ANDV), operating as an independent petroleum refining, logistics, and marketing company in the United States, will report after the market closes. Based on 7 analysts' forecasts, the consensus EPS forecast for the quarter is $2.96 on revenues of $12,356 million. The reported EPS for the same quarter last year was $1.96.

After a great start to the year, energy stocks have become range-bound. But one top technical analyst says a group within the sector is poised to charge higher.

Oil refinery stocks look particularly well-positioned, according to Ari Wald, head of technical analysis at Oppenheimer. He sees one refiner within the group as exceptional, Andeavor, and in a recent note to clients said, "What a Great Chart: Buy ANDV."

Factors favouring Andeavor…..

  • …..The oil refinery is well-positioned due to broad-based strength, as well as relative strength.
  • …..Shares have soared 32 percent this year, far outperforming the energy-tracking XLE ETF, which has risen 7 percent during the same period. Crude oil, meanwhile, is up 15 percent this year.
  • …..Andeavor shares are breaking out to fresh all-time highs while the rest of the energy sector is retracing losses dating to the sector's 2014 peak. This is a mark of leadership, and should continue.
  • …..Ultimately, Andeavor is poised to rise to $170 per share, implying a 12 percent rally from current levels.
  • ….. The refining segment of Andeavor is expected to record an improvement in results as crack differentials are widening, leading to margin expansion and higher refining capacity rate for the refiners.
  • ….. The recent uptick in crude price is not expected to act as a negative catalyst in the quarter to be reported, at this stage.
  • ….. The company had earlier projected throughput volumes within 1,055-1,110 thousand barrels per day (MBbl/d), higher than the year-ago quarter’s 893 MBbl/d. Earnings are likely to be driven by higher volumes processed. The Logistics segment of the company is set to benefit from the positive contributions from the Western Refining Logistics buyout.

In the last reported quarter, the company delivered a positive earnings surprise of 12.07% due to a great report from the refining and logistics segment.

Option trade to consider: Buy the ANDV SEPT 21 2018 150.000 CALL at approximately $2.40.

Wednesday, August 08

CVS Health Corp (NYSE:CVS), formerly CVS Caremark Corporation, is a pharmacy healthcare provider in the United States, is confirmed to report earnings before the market opens. The consensus earnings estimate is $1.61 per share on revenue of $46.45 billion; but the Whisper number is for $1.63 per share. The company's guidance was for earnings of $1.59 to $1.64 per share. Consensus estimates are for year-over-year earnings growth of 21.05% with revenue increasing by 1.67%.

CVS shares have stabilized in the last several months after taking a big hit earlier in the year on news that e-commerce giant Amazon.com (AMZN) was looking to make an aggressive move into the pharmaceutical sector with its acquisition of Pill Box.

The market seems to have come to terms with the fact that it will be a long road for Amazon to really shake up the sector, and that a lot of consumers prefer to purchase their prescriptions in person where they can discuss any questions with a pharmacist.

CVS Health has so far progressed well due to several factors…..

  • ….. Per the last-reported numbers, client retention rate was in line with year-ago quarter rates and the company was more than halfway through the 2019 renewals.
  • …..currently gaining on high level of service and execution, a competitive pricing along with unique integrated model.
  • …..upbeat about sustaining a solid year-over-year earnings trend in the second quarter of 2018, realizing gains from the Pharmacy Services segment.
  • …..expectation of drug price inflation, product launches and higher utilization to fuel growth.
  • ….. promising performance in the to-be-reported quarter, primarily banking on script utilization at retail

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

Of the 16 analysts who cover the stock 11 rate it Strong Buy, 2 rate it Buy, and 3 rate it Hold.

 Option trade to consider: Buy the CVS SEPT 21 2018 65.000 CALL at approximately $2.55.

The Los Gatos, California-based TV streaming platform Roku Inc. (NASDAQ: ROKU) will report earnings after the market closes. The consensus estimate is for a loss of $0.15 per share on revenue of $141.24 million; but the Whisper number is for ($0.11) per share. The company's guidance was for revenue of $135.00 million to $145.00 million.

Analysts have grown more bullish on the stock amid the stock's rebound off its early April test of the $30 mark.

In September 2017, Roku shares hit the public market trading on the Nasdaq exchange with an IPO price of $14 per share. Roku's stock has gained 54% in the past three months, while the S&P 500 SPX, +0.18% have gained 4.9%.

According to one team of bulls on the Street, Roku could see its value more than quadruple since garnering a $1.3 billion valuation in September, thanks to a variety of factors including a secular shift toward over-the-top TV viewing, connected TVs and Roku's growing advertising business.

The company is looking to build a true content ecosystem - and from a subscriber standpoint, already has surpassed Charter Communications Inc and trails only AT&T Inc. and Comcast Corporation.

In a note to clients recently, Needham analyst Laura Martin lifted her 12-month price target on ROKU stock from $50 to $60.

Earlier this year, analysts at KeyBanc estimated the ROKU had a 35% hold over the video streaming player space, selling its operating system in about 20% of smart TVs in North America in 2017.

While much of video streaming has moved to ad-free environments, bulls on the Street are optimistic about Roku's new ad-supported Roku Channel.

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

Option trade to consider: Buy the ROKU SEPT 21 2018 50.000 CALL at approximately $2.70.

Thursday, August 09

Dropbox Inc (NASDAQ: DBX), providing a collaboration platform worldwide, will report second-quarter earnings after the market closes. The consensus earnings estimate is $0.06 per share on revenue of $330.32 million. The Whisper number is $0.09 per share.

Shares of Dropbox fell 17.4% in July after a Harvard Business Review (HBR) report incorrectly stated that some of its researchers had been given access to non-anonymous Dropbox users’ data.

Dropbox was quick to address the situation, but the company's share price hasn't fully recovered yet. It's up about 5% since the beginning of this month. However, this has provided a great opportunity to enter this trade at a greatly reduced cost.

And, one Wall Street analyst agrees, saying that the pre-earnings weakness in Dropbox is a buying opportunity.

Jefferies analyst John DiFucci upgraded Dropbox from Hold to Buy and reiterated his $32 price target for the stock.

According to DiFucci, the recent Dropbox sell-off has given the stock an attractive valuation.

Shares are now attractively valued at 6.3x EV/C19E rev.,” DiFucci said.

He said Dropbox has an attractive free cash flow outlook that's unique among its software-as-a-service peers.

In coming quarters, DiFucci said the pricing benefits from Dropbox’s two new subscription services launched last year will start reflecting in average revenue per user numbers, which should be a positive catalyst for the stock.

DiFucci said these new product trends are positive indicators of Dropbox’s ability to innovate and expand its business in the long-term.

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

Option trade to consider: Buy the DBX SEPT 21 2018 30.000 CALL at approximately $2.50.

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, check out the other  memberships available at Stock Options Made Easy.


”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.


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


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”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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