by Ian Harvey
November 10, 2019
EARNINGS PREDICTIONS RESULTS FOR WEEK BEGINNING NOVEMBER 04, 2019
|DATE||TRADE||EXITING BEFORE EARNINGS||GAIN/LOSS AFTER EARNINGS|
|November 04, 2019||UBER NOV 15 2019 30.000 PUT||17.5% P.P.||185% P.P.|
|November 06, 2019||CVS NOV 15 2019 67.500 CALL||38% P.P||218% P.P|
|November 06, 2019||ROKU NOV 15 2019 150.000 CALL||66% P.P||-100%|
|November 06, 2019||SQ NOV 15 2019 65.000 CALL||32% P.P.||107% P.P.|
|November 07, 2019||DIS NOV 15 2019 135.000 CALL||28% P.P||200% P.P|
|November 07, 2019||TTD NOV 15 2019 205.000 CALL||35% P.P||-43%|
Options Trades to Consider Based on Expected Earnings Reports:
Tuesday, November 12, 2019
Overstock.com Inc (NASDAQ: OSTK), an online closeout retailer
offering discount, brand-name merchandise for sale over the Internet, will
report earnings before the market opens. The consensus estimate is for a loss
of $0.70 per share on revenue of $404.59 million.
Consensus estimates are for year-over-year earnings growth
of 54.84% with revenue decreasing by 8.17%.
In the second quarter of 2019, Overstock missed revenue
estimates but reported a narrower-than-expected loss. Revenue fell 23% to
$373.7 million while net loss amounted to $0.69 per share.
After five long years the Overstock.com share price is a
whole 53% lower. And the stock has fallen 46% in the last year. The falls have
accelerated recently, with the share price down 43% in the last three months.
Overstock remains confident in its retail strategy and the
company anticipates achieving sustainable growth in its retail business aided
by its supply chain initiatives as well as a rise in organic traffic. The
company was considering the sale of its retail business but as the division
gains strength, the online retailer is likely to hold on to it. It remains to
be seen how the retail business performs during the upcoming holiday season.
The topline numbers are likely to be impacted by higher
costs in the third quarter due to tariffs. The delay in the integration of a
new freight carrier has led to higher freight costs as well. Last quarter,
Overstock managed to reduce its marketing expenses significantly which
benefited the bottom line numbers. The rise in costs could put pressure on
earnings in the third quarter.
BidaskClub lowered shares of Overstock.com from a hold rating to a sell rating in a research report published last Tuesday morning.
Option trade to consider: Buy the OSTK DEC 20 2019 10.000 PUT at approximately $1.65.
Wednesday, November 13, 2019
The computer networking giant Cisco Systems, Inc. (NASDAQ:CSCO), that designs and sells a range of products, provides services and delivers integrated solutions to develop and connect networks around the world, will report earnings after the market closes. The consensus earnings estimate is $0.81 per share on revenue of $13.14 billion; but the Whisper number is a bit higher at $0.83 per share.
The company's guidance was for earnings of $0.80 to $0.82 per share. Consensus estimates are for year-over-year earnings growth of 9.46% with revenue increasing by 0.52%.
Last quarter Cisco reported a small earnings beat and sales that were in-line with the consensus. The market expected more, and the stock sold off on the news. CSCO stock has traded sideways in the last three months since the report and it will take a strong set of numbers for shares to break out of their sideways trend.
Shares have started to move higher over the last two weeks as the broader market has risen to new highs, and with the stock trading at just 13.7 times future earnings there is a lot of upside potential on a strong report.
Short interest has decreased by 21.3% and overall earnings estimates have been unchanged since the company's last earnings release.
Of the 19 analysts who cover the stock 11 rate it Strong Buy, 2 rate it Buy, 6 rate it Hold, 0 rate it Sell, and 0 rate it Strong Sell. Analysts see a lot of upside in the stock with an average price target of $55.65.
Technically and fundamentally, Cisco stock can move higher. CSCO stock has rallied from an important pivot point on its chart, moving off a multiple bottom and above moving averages. There’s a clear path for CSCO stock to continue its breakout to $50 and beyond.
Option trade to consider: Buy the CSCO DEC 20 2019 50.000 CALL at approximately $1.00.
Thursday, November 14, 2019
Mega retailer Wal-Mart Stores Inc. (NYSE:WMT) will
report earnings before the market opens. The consensus earnings estimate is
$1.09 per share on revenue of $128.99 billion; but the Whisper number is higher
at $1.15 per share.
Consensus estimates are for year-over-year earnings growth
of 0.93% with revenue increasing by 3.28%.
For the last reported quarter, it was expected that Walmart would post earnings of $1.22 per share when it actually produced earnings of $1.27, delivering a surprise of +4.10%.
Over the last four quarters, the company has beaten consensus EPS estimates four times.
Also, last week, the wide-moat retailer announced its
grocery delivery membership program in 1,400 stores to compete with Amazon
Fresh. With holiday season approaching, Walmart began launching Black Friday
deals and is offering one-day free shipping to all shoppers.
Overall earnings estimates have been revised higher since
the company's last earnings release.
One equities research analyst has rated the stock with a
sell rating, fourteen have issued a hold rating and eighteen have given a buy
rating to the company. Walmart presently has an average rating of “Buy” and a
consensus target price of $118.41.
Instinet initiated a number of retailers on Friday, calling Walmart Inc. (price target $132) as one of its best ideas. "Our positive outlook is based on share gains in stores and online, particularly in grocery," Instinet wrote about Walmart. "We also believe Walmart is well positioned to take advantage of a favorable consumer backdrop, but can also outperform in a weaker environment due to defensive characteristics."
Option trade to consider: Buy the WMT DEC 20 2019 120.000 CALL at approximately $2.70.
Chip-gear maker Applied Materials, Inc. (NASDAQ:AMAT),
headquartered in Santa Clara, manufacturing equipment, services, and software
to the semiconductor, display, and related industries worldwide, will report fiscal
fourth-quarter earnings after the market closes. The consensus earnings estimate
is $0.76, down from $0.97 during the same period last year; on revenues of
$3.69 billion, down 8.1% from the year-ago quarter.
The company has posted better than expected top and bottom line numbers the last three quarters, and the street expects another positive earnings surprise this quarter with a whisper number of $0.78.
For the last reported quarter, it was expected that Applied Materials would post earnings of $0.70 per share when it actually produced earnings of $0.74, delivering a surprise of +5.71%.
Applied Materials has received an average rating of “Buy” from the twenty-six ratings firms that are covering the company. One equities research analyst has rated the stock with a sell recommendation, ten have issued a hold recommendation, fourteen have assigned a buy recommendation and one has assigned a strong buy recommendation to the company. The average 12 month price target among brokers that have issued a report on the stock in the last year is $53.10.
The stock has surged 71% on the year.
Option trade to consider: Buy the AMAT DEC 20 2019 57.500 CALL at approximately $1.60.
The maker of graphics and high-performance computing chips NVIDIA
Corporation (NASDAQ:NVDA) will report earnings after the market closes.
The consensus earnings estimate is $1.58 per share on revenue of $2.90 billion;
but the Whisper number is higher at $1.64 per share.
The company's guidance was for earnings of $1.48 to $1.66
per share. Consensus estimates are for earnings to decline year-over-year by
5.39% with revenue decreasing by 8.83%.
NVDA struggled in the latter part of 2018 as the trade war
between the U.S. and China escalated with shares falling from around $290 in
October to under $130 at the start of 2019.
With hopes of a trade deal building chip makers have
recovered a lot of their 2018 losses, and NVDA has enjoyed a strong 57% gain in
2019. Both countries have signaled that a partial trade deal may be reached by
the end of November and should that occur chip stocks will continue to move
Profits have risen 53% per annum over the last five years.
Short interest has decreased by 11.1% since the company's
last earnings release.
This is a good company with good products in an industry
that will be in high demand for decades. But it is not cheap. It has a
price-to-earnings ratio of 54 and sells at 11 time’s sales.
Of the 28 analysts who cover the stock 17 rate it Strong
Buy, 2 rates it Buy, 7 rates it Hold, 0 rate it Sell, and 2 rate it Strong Sell.
NVDA stock has appreciated 56.5% in 2019.
Option trade to consider: Buy the NVDA DEC 20 2019 215.000 CALL at approximately $7.80.
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.
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.
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?”
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!
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……
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Best of Trading,
Director of Stock Options Made Easy