by Ian Harvey
March 26, 2018
Options Trades to Consider Based on Expected Earnings Reports:
Monday, March 26
A player in the technology space, Red Hat Inc. (NYSE:RHT), a global provider of open source software
solutions, using a community-powered approach to develop and offer operating
system, middleware, virtualization, storage and cloud technologies, will report
after the market closes. The consensus earnings estimate is $0.81 per share, up 33% on revenue of
$761.96 million, up 21%. The Earnings Whisper number is for $0.84 per share. The
company's guidance was for earnings of approximately $0.81 per share on revenue
of $758.00 million to $763.00 million.
Red Hat has been ramping revenue from new products – OpenShift and
OpenStack — for hybrid (private/public) cloud computing.
Q4 report should confirm the company still manages to "elevate its
strategic positioning" and can sustain a low-to-mid-teens growth rate,
30-percent emerging product growth and billings growth in the mid-teens.
Overall earnings estimates have been revised higher since the company's
last earnings release.
Barclays recently increased its price target on the stock to 165 from
145, citing Red Hat's "hybrid cloud
positioning and momentum in both core and emerging products."
Also, Stifel's Brad Reback maintains a Buy rating on
Red Hat's stock with an unchanged $150 price target.
Shares have gained 20% since it reported Q3 results in December.
Option trade to consider: Buy the RHT APRIL 20 2018 150.000 CALL at approximately $6.00.
Tuesday, March 27
RH (NYSE:RH) formerly Restoration Hardware Holdings, Inc, a retailer in the home furnishings marketplace, reports after the market closes. Based on our latest Consensus Estimates, expect Restoration Hardware to report adjusted earnings of $1.57 per share and revenues of $671.5 million. These figures would represent earnings growth of 131% and revenue growth of 15%.
After a great 2017, RH has struggled to maintain its momentum, and the stock has actually slumped about 15% over the past three months. However, a strong management team could easily provide a positive outcome.
Short interest has decreased by 7.9% since the company's last earnings release; and overall earnings estimates have also been revised higher.
Recently RH has had some upgrades....
Option trade to consider: Buy the RH APRIL 20 2018 80.000 CALL at approximately $6.00.
Wednesday, March 28
GameStop Corp. (NYSE:GME), operating as an omnichannel video game retailer, will report earnings after the market closes. The consensus earnings estimate is $1.96 per share, down from $2.38 during the same period last year, on revenue of $3.25 billion, up 6.72%. The Earnings Whisper number is $1.95 per share.
Overall technical indicators for GME are bearish with a strong downward trend. GameStop has been weak over the last year, as falling earnings have weighed heavily on the stock; and this quarter will see much of the same. The stock has recent support above $13.60 and recent resistance below $16.00.
Short interest has increased by 25.0% since the company's last earnings release.
Of the seven analysts who cover the stock, two rate it a “strong buy”, four rate it a “hold”, and one rates it a “strong sell”.
Option trade to consider: Buy the GME APRIL 20 2018 14.000 PUT at approximately $1.15.
Walgreens Boots Alliance Inc. (NASDAQ:WBA), a global pharmacy-led, health and wellbeing enterprise, will report earnings before the market opens. The consensus earnings estimate is $1.55 per share, up from $1.36 during the same period last year, on revenue of $32.00 billion. The Earnings Whisper number is $1.56 per share. The stock is down heavily over the last twelve months.
The drug store industry is highly competitive, and consolidating. Walgreens has been buying Rite Aid (RAD) stores, and as of March the company has acquired around 1,650 locations for a reported $3.6 billion, which Rite Aid has used to reduce its overall debt.
Valuation is attractive, with a forward P/E of 10.3, and the recent weakness has boosted the stock’s yield to 2.4%.
Short interest has decreased by 8.5% since the company's last earnings
release; and the overall earnings estimates have been revised higher since the
company's last earnings release.
The stock has recent support above $65.50 and recent resistance below $70.50. Of the 18 analysts who cover the stock, eight rate it a “strong buy”, two rate it a “buy”, and eight rate it a “hold”.
Option trade to consider: Buy the WBA APRIL 20 2018 65.000 CALL at approximately $2.60.
Thursday, March 29
, a producer and marketer of beer, wine and spirits with operations in the United States, Canada, Mexico, New Zealand and Italy, is expected to report earnings before the market opens. The consensus earnings estimate is $1.74 per share, up from $1.48 during the same period last year, on revenue of $1.76 billion. The Earnings Whisper number is $1.83 per share.
After reporting in January with mixed results, shares fell, but have since found support and are once again moving in the right direction and close to breaking into positive territory for the year.
Stocks in the food and beverage sectors are typically viewed as defensive plays when the market is weak – because, regardless of overall economic conditions, people still need to eat and drink.
Overall technical indicators for STZ are bullish with a strong upward trend. Short interest has decreased by 38.3% since the company's last earnings release; and overall earnings estimates have been revised higher.
The stock has recent support above $220.00, and recent resistance below $231.75. Of the 17 analysts who cover the stock, 11 rate it a “strong buy”, three rate it a “buy”, and three rate it a “hold”.
Option trade to consider: Buy the STZ APRIL 20 2018 230.000 CALL at approximately $4.50.
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, get on board with the members of Stock Options Made Easy.
Our proven track record says it all!!