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Which Stocks Look Ready to Surge and Sink with Earnings Next Week?

Stocks tend to be most volatile around earnings season, when a good or bad report can make or break it. However, a good or even great earnings report doesn't necessarily translate into a huge pop for a stock.

During earnings season, BullMarket.com publishes a comprehensive 25- to 40-page Earnings Preview report for the week ahead each Friday.

Over the past year, BullMarket.com used the data it has collected to correctly predict investor reactions for approximately two-third of the stocks it's previewed.

In its latest earnings preview, BullMarket.com looks at several popular stocks, including Whole Foods (WFM), STEC (STEC), CVS Caremark (CVS), Sodastream (SODA), J.C. Penney (JCP), Qualcomm (QCOM), NVIDIA (NVDA), Nordstrom (JWN), and Groupon (GRPN).

Here is just a tiny sample of what BullMarket.com wrote about Nordstrom: Nordstrom has beaten EPS estimates six of the last eight quarters, meeting them once and missing once. Over that period, the stock has risen the next session three of eight quarters. Seasonally, the stock has fallen each of the last four years.

Last quarter, Nordstrom said it earned $156 million, or 75 cents per share, for the quarter ended July 28th, down from $175 million, or 80 cents per share, in the year-ago period. Results were down because its annual Anniversary Sale began one week later than last year.

Retail sales grew by 7.4% to $2.92 billion, paced by a 4.5% increase in sales on a same-store basis. It was the company's 11th consecutive quarter of same-store sales increases.

The consensus analyst estimate was for EPS of 74 cents on revenue of $2.96 billion.

The Anniversary Sale is historically Nordstrom's largest sale of the year and it started one week later in July relative to last year and that shift caused the dip in profit. Conversely, management expects the shift to boost Q3 results. The company said the sale produced same-store gains in the high single-digit range on a directly comparable basis to last year.

Nordstrom-brand same-store sales, which combine its full-line and direct businesses, grew by 4.9% with handbags, women's shoes, and cosmetics as the top-performing merchandise categories. Same-store sales at its full-line stores increased 1.1%, with the South and Midwest as the strongest regions. The company opened two full-line stores during the quarter, one in Southern California and the other near Philadelphia. In June, it announced plans to open its first New York City store in 2018.

Its off-price Rack unit reported a net sales gain of 18.9% and a 7.7% increase in same-store sales. The strong performance encouraged the company to accelerate the pace of Rack store openings next year. It has opened six stores so far this year. ...

Outside of earnings, despite a very strong sales performance recently, Nordstrom has a lot of levers to pull over the next several years to drive growth, including an improvement in its women's business, an accelerated rollout of its Rack concept, improved returns following its investment spending, its move into Canada, the opening of a new flagship store in NYC in 2018, and a better performance in California.

All in all, we consider Nordstrom the top multi-channel retailer around. Its department store has proven to be a destination spot that helps drive mall traffic, while its Rack concept has the best sales per square-foot in the off-price space and solid expansion opportunities. Meanwhile, the investment in its website, combined with free shipping on all orders, has also been driving sales. Its flash sale website HauteLook, meanwhile, has the potential to be a future growth driver, as well. ...
The full BullMarket.com earnings analysis includes a look at historical earnings data and EPS trends for the companies above and more; examines past investor reactions to earnings in various contexts; gives options activity analysis; reviews previous-quarter earnings; and gives an opinion on both what earnings will look like and how investors will react based on the aforementioned data points.

Just a few of the correct calls BullMarket.com made for Q3 were:

  • to be bullish on Priceline.com (PCLN) ahead of earnings.
  • to be bullish on Starbucks (SBUX) ahead of earnings.
  • to be bearish on First Solar (FSLR) ahead of earnings.
  • A daily investment service that is committed to creating long-term wealth for its members, BullMarket.com's Recommended List of stocks is up 33.3% from 2008-2011 versus a -14.4% return for the S&P, a 47.7% outperformance, topping the benchmark each year since the start of the Great Recession. Subscribers receive actionable market commentary, access to 40+ stock ideas on the Recommended List, and real-time trade alerts. Plus, sign up for a free trial today to view Bull Market's in-depth Special Reports - including its annual High Yield and MLP reports - and its timely Earnings Previews, which are published every Friday during the heart of earnings season. Get a Risk-Free Trial to Bull Market Today! (Please note returns are unaudited.)