by Ian Harvey
March 15, 2019
Stitch Fix Inc (NASDAQ:SFIX)
Stitch Fix shares surged for the online personalized styling service company, climbing close to 40% on Tuesday after releasing unexpected quarterly financial results. And, “Earnings Predictions Members made 445% potential profits on the day.
GREED CAN BE THE UNDOING OF A GOOD PROFIT!
PATIENCE PAYS OFF!
YOU NEED TO BE IN TO PROFIT!
The Trade Details can be found in this article……
Stitch Fix was recently up close to 40% after reporting earnings to $36.72, putting the shares up more than 100% in 2019; even though they’re still well below their late 2018 highs above $50.
Expectations were muted going into Stitch Fix’s second-quarter earnings report. The company had provided two successive quarterly forecasts that weren't what Wall Street was expecting, sending shares plummeting after the company's fiscal fourth-quarter and first-quarter results. It turns out that investor fears about the company's growth weren't justified.
Stitch Fix's revenue rose 25% year over year to $370.3 million -- its sixth straight quarter of at least 20% growth -- which translated into adjusted net income of $12 million, or $0.12 per share, up from $0.07 per share in the year-ago period. By comparison, Stitch Fix's guidance (provided in December) called for revenue in the range of $360 million to $368 million, while most analysts were modeling earnings of $0.05 per share.
CEO Katrina Lake noted the company reached 3 million active clients during the quarter, up 18% year over year. Stitch Fix hopes to sustain that growth after launching its first integrated brand campaign last month.
During the subsequent conference call, Stitch Fix management also raised their full-year guidance to call for revenue of $1.53 billion to $1.56 billion, up from $1.49 billion to $1.53 billion and good for 26% growth at the midpoint.
The Profits after Stitch Fix Shares surged…..
So, for “Earnings Predictions Members” a potential profit of 445% was available the day after the earnings report! The option trade was bought at $2.15 and the price of the option trade had risen to $11.72 the next day during the day.
ANOTHER WIN FOR THE WEEK!
AS ALWAYS THE DECISION IS YOURS!
Coming out of a successful second quarter that exceeded even management's expectations, Stitch Fix raised full-year guidance. Management now expects sales between $1.53 billion and $1.56 billion, up from the $1.49 billion to $1.53 billion it set last quarter. The combination of inventory management efforts along with sales leverage from increased per-client spending is expected to improve the bottom-line result, too. Guidance for adjusted EBITDA was raised to $33 million to $43 million, up from $20 million to $40 million.
It's also reasonable to expect management to continue prioritizing building a bigger business over squeezing every dollar of profit it can out of clients; a big ingredient is its personal touch, and steady investment in hiring and retaining the best style talent it can is critical to Stitch Fix's success.
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, but it 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!!
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