Previewing Netflix, GE, Starbucks, Lam, and Intel Upcoming Earnings Results
This week will feature earnings from some big companies such as Netflix, Starbucks, Verizon, GE, Lam Research, Celgene, Intel, and Caterpillar. Below is a chart of the major companies slated to report this week, I have compiled, along with the latest estimates, using Ycharts.
In this article, I will focus on Netflix, GE, Starbucks, Lam, and Intel only.
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The first company to kick things off will be Netflix and based on the run-up in the stock since the start of 2018; expectations appear to be sky high. According to Ycharts, consensus estimates are calling earnings of $0.41 and revenue of $3.28 billion. Earningswhisper.com is looking for an earnings beat of 2 cents, coming in at $0.43. The company last guided for domestic net additions of 1.25 million, and international net adds equaling 5.05 million, giving the company total net adds of 6.30 million, bringing total subscribers to about 115.55 million.
The chart suggests that there is support around $220, while a break of this support likely sends shares lower back towards $204. Additionally, the relative strength index is still in overbought territory with a reading of about 73.
The options market using a long straddle strategy of buying one put, and one call is suggesting a rise or fall for the stock of 10 percent for expiration on February 16. It would place the stock in a massive range of about 199.50 and 241, a range of 20 percent. The open interest on the calls, as of Friday was heavily favored towards the calls, with nearly 9,000 contracts, vs. 1,500 puts. It would suggest that more bets are being placed on shares rising.
General Electric is expected to report on January 24, and with all the recent bad news that keeps flowing from the company, there is likely not much that should change when the company reports results. Estimates are calling for revenue of $33.75 billion, with earnings of $0.29, a decline of nearly 39 percent from the same period a year ago.
Technically the chart of the stock is broken and appear headed lower towards $14.80.
Starbucks is expected to report EPS of $0.57 and revenue of $6.2 billion. More interesting will be if Starbucks changes its full-year outlook given the new tax laws that were put into effect. The company pays an effective tax rate in the mid-30 percent range, and should that rate decline, then it could be a big boost to Starbucks bottom line. For now the street is guiding for 2018 earnings of $2.35.
The stock has recently broken out, rising above $59.50 and appears headed toward the previous highs above $64, and with shares trading, at only 19 times 2019 earnings estimates of $3.10 the stock could have plenty of upside beyond $64.
Lam Research is expected to report results this week as well, and fiscal second quarter 2018 results are expected to come in at $3.67 on revenue of $2.56 billion. It was just last week that ASML reported strong results, which helped give Lam shares a significant boost.
The chart shows that the stock has been able to put in a substantial support level around $185 and appear to be rising back towards the previous highs around $220.
Intel had seen its shares rocked recently when news of security flaws in its chips came to light. But still the stock appears more than ok on a technical basis, with the stock nearly refilling the gap entirely.
The street is looking for the company to report earnings of about $0.87 per share, on revenue of $16.34 billion. Earningswhisper.com is calling for earnings per share beat of $0.02, coming in at $0.89. The options market is not looking for much of a surprise when the company reports results. The February 16, long straddle using the $45 strike price is calling for a move of only 4 percent putting the shares in a range of $43 to $47.
Hope this helps gets you through some of the big results coming this week.
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Michael Kramer and the clients of Mott Capital own shares of NFLX and SBUX
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