by Ian Harvey
February 26, 2018
Options Trades to Consider Based on Expected Earnings Reports:
Monday, February 26
Palo Alto Networks Inc. (NYSE:PANW) - a cyber-security company, will report earnings after the market closes.
Wall Street expects EPS of 79 cents per share on revenue of $524.82 million, compared to the year-ago quarter of 63 cents per share on $422.6 million in revenue. However, the Earnings Whisper number is $0.81 per share.
Consensus estimates are for year-over-year earnings growth of 83.72% with revenue increasing by 24.32%. Overall earnings estimates have been revised higher since the company's last earnings release.
New product launches for both network and cloud-based applications has strengthened Palo Alto’s revenue which grew in Q1 27% year over year. And that trend is expected to propel the stock higher in 2018.
week Susquehanna analyst Anne Meisner upgraded PANW stock from Neutral to
Positive and raised her price target from $150 to $195, calling for 20% premium
from current levels.
Option trade to consider: Buy the PANW MARCH 16 2018 170.000 CALL at approximately $6.00.Tuesday, February 27
Macy's, Inc. (NYSE:M) -- an omnichannel retail company operating stores, Websites and mobile applications under various brands, will report Q4 earnings before the market opens.
Macy’s EPS is expected to be $2.68 against $2.02 the year before, and 1.6% total revenue growth. But much of that expected growth is coming from a real estate sale. There is a great deal of pessimism towards trust the stock, which trades at less than 9x forward earnings – which is a multiple that presumes earnings will decline going forward.
More store closures are expected. The new, lower tax rate is a concern in the sense that little will be going back into the business – and instead will simply be 'competed away' in the tough mall retailing space.
Trading has been choppy so
far this year. And as things stand, one day, such as Black Friday news, is not
going to cause a rebound.
Option trade to consider: Buy the M MARCH 16 2018 25.000 PUT at approximately $1.00.
Wednesday, February 28
Companies, Inc. (NYSE:LOW) -- a
home improvement retailer, is scheduled to announce its earnings before the
market opens. The consensus earnings
estimate is $0.88 per share on revenue of $15.29 billion. And the Earnings
Whisper number is only $0.88 per share, expectations for an earnings beat is
not high. Short interest has increased by 67.8% since the company's last
Don't expect Lowe's to match
or exceed its larger rival's 7% comps spike for the 2017 year. CEO Robert
Niblock and his team are projecting just 3.5% gains, and as recently as late
November, the business was running just slightly ahead of that modest result.
Despite longer store hours, customer-traffic
numbers slowed to a 1% rate in the third quarter from 3%.
Lowe's declined to raise its
profit forecast following its third-quarter earnings report in late November. Assuming the retailer stays close to its latest
forecast, disappointment in the broader 2017 performance is expected. Comps will
have risen by just 3.5%, after all, which is the same rate that Niblock and his
team originally projected.
Option trade to consider: Buy the LOW MARCH 16 2018 95.000 PUT at approximately $1.85.
Thursday, March 01
Ambarella Inc (NASDAQ:AMBA), a video-processing chip specialist, will report after the market closes. Wall Street expects Ambarella to earn $0.37 per share on revenue of $70.3 million, in line with the company's own guidance. By comparison, the chipmaker earned $0.92 per share on $87.5 million in revenue in the year-ago quarter. Therefore, the company's top and bottom lines are expected to take big hits.
Ambarella has had a rough start to the year after key customer and action-camera maker GoPro announced its exit from the drone market last month. This was the latest in a series of bad news for the chipmaker, which has been struggling with sharply declining revenue and earnings of late.
So itt won't be surprising if Ambarella fails to meet estimates. GoPro, which supplied almost 21% of Ambarella's revenue during the third quarter, announced in January that it would be overhauling its business by exiting the drone market and laying off employees. The loss of the GoPro drone business will hurt Ambarella over the coming quarters.
Ambarella's turnaround looks far from certain as its non-GoPro business is growing extremely slowly. During the third quarter, its non-GoPro revenue increased just 7.2% year over year to $70.6 million, accounting for approximately 79% of the overall top line.
well, the company's long-term oulook doesn’t seem very enlightening, as it is
entering highly competitive markets -- such as drones and self-driving cars --
where other tech giants have already made a lot of progress.
Option trade to consider: Buy the AMBA MARCH 16 2018 47.500 PUT at approximately $2.00.
Friday, March 02
Foot Locker, Inc. (NYSE:FL) -- a retailer of shoes and apparel, is expected to release earnings before the market opens. Based on 12 analysts' forecasts, the consensus EPS forecast for the quarter is $1.25. The reported EPS for the same quarter last year was $1.37.
Sales growth in 2017 sank into negative territory, slumping by 6% in the fiscal second quarter before rebounding slightly to a 4% decline in the following quarter. And this scenario is likely to continue in 2018 as Foot Locker works to trim its store footprint in the sluggish U.S. market.
demand has led management to target closing as many as 150 stores in 2017, up
from 116 in the prior year. Foot Locker's sales footprint plans for 2018 will
depend on whether the business stabilized over the holiday season, but the
consensus is that it will likely continue in 2018.
Given the stock's weak performance over the past year, Wall Street is apparently betting on that more pessimistic scenario playing out in 2018.
Option trade to consider: Buy the FL MARCH 16 2018 45.000 PUT at approximately $1.70.
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.
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