by Ian Harvey
January 11, 2019
Helen of Troy Limited (NASDAQ: HELE)
Helen of Troy fell 13% after the seller of beauty products and other home and health consumer goods reported its fiscal third-quarter results.
But “Earnings Predictions Members”, taking a put option, realized 442% potential profit; with shares of Helen of Troy falling as much as 13.0% on Tuesday morning!
PATIENCE PAYS OFF!
YOU NEED TO BE IN TO PROFIT!
The Details Presented Previously……..
Helen of Troy Limited (NASDAQ: HELE), that designs, develops, imports, markets, and distributes a portfolio of consumer products worldwide, will report earnings before the market opens. The consensus earnings estimate is $2.16 per share on revenue of $420.20 million. Consensus estimates are for earnings to decline year-over-year by 11.11% with revenue decreasing by 7.25%.
Helen of Troy is exposed to certain headwinds, such as the Beauty segment which has been delivering a weak performance for quite some time. This unit is suffering from softness in personal care category, primarily due to tough competition. Further, Beauty sales are projected to dip in low to mid-single digits in fiscal 2019, which is a concern and likely to weigh on the upcoming quarterly results.
As well, sales in the Health & Home segment are exposed to volatility owing to the cold/cough/flu season, which usually extends from November to March.
Also, management expects commodity inflation and impacts of tariff changes to weigh on Helen of Troy's cost of goods sold in fiscal 2019. This also raises concerns regarding the company's bottom-line performance in the quarter to be reported.
Helen of Troy has experienced a decrease in activity from the world's largest hedge funds in recent months. Calculations also showed that HELE isn't among the 30 most popular stocks among hedge funds. Deutsche Bank AG cut its stake in shares of Helen of Troy Limited by 25.2% in the 3rd quarter.
Option trade to consider: Buy the HELE JAN 18 2019 130.000 PUT at approximately $3.30.
The Earnings Report…..
Sales rose a modest 2.4% from year-ago levels, but adjusted earnings
were down slightly. CEO Julien Mininberg pointed to currency headwinds and a
slowdown in Chinese e-commerce activity as partial causes of the mixed results,
and said the need to raise prices due to tariffs could hurt the company's
short-term shipment volumes. Even though Helen of Troy boosted earnings
guidance for the full fiscal year, a cut to the upper end of its expected sales
range was enough to worry shareholders.
The Result So Far………
Such headwinds dented investors' optimism, evident from the stock's
12.8% decline in Tuesday's trading session. Shares of the company have declined
2.9% in the past three months compared with the industry’s decline of 3.1%.
Management is impressed with sturdy growth in Leadership Brands, strong online sales and advancements in the Housewares segment. However, sluggishness in the Beauty segment and a volatile trading environment between China and United States are worries.
Management revised sales outlook for fiscal 2019. Consolidated net sales are now projected in the band of $1.535-$1.550 billion compared with the earlier projection of $1.535-$1.560 billion.
So, for “Earnings Predictions Members”, who managed to execute this trade recommended by Stock Options Made Easy; potential profits of 442% were available at the time.
Entering the option trade at a cost of $3.30 or less on Monday; and the price of the option reaching $17.90 on Tuesday; a profit of 442% was made. Therefore, one options contract would provide a profit of $1,460.00.
With just the profits from this trade, the cost for all six (6) trades for the week – total cost $1,360.00 – is covered. Any monies from the remaining 5 trades is extra profit!!!
A NICE START TO THE WEEK!
AS ALWAYS THE DECISION IS YOURS!
As you would have by now realized, some of our trades are based on earnings predictions. This is not to say all trades recommended to members follow this pattern, which is obvious that it does apply in this case; and during earnings season this strategy of predicting earnings has been very profitable.
Sometimes it is our approach to predict whether a company will beat or miss estimates, whether the stock will appreciate or depreciate as a result and what strategies investors and traders can use – such as found with the “Earnings Predictions Program”. This type of prediction is based on thorough investigation and fundamentally based research, and the results have been very exceptional.
An Important Note: That any 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. GREED can be the undoing of a nice profit!
Strategies to Consider……
When To Exit A Trade Based On Earnings?.....Read Article
"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……
Our proven track record says it all!!
Members of Stock Options Made Easy are provided with an extensive reason as to which direction a stock will move after earnings, followed up by a recommended options trade.
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