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.
In its latest earnings preview, BullMarket.com looks at several popular stocks, including Zillow (Nasdaq:Z), Nuance (NUAN), Michael Kors (KORS), Monster Beverage (MNST), Groupon (GRPN), Green Mountain Coffee Roasters (GMCR), Priceline.com (PCLN), Linn Energy (LINE), Tesla Motors (TSLA), and First Solar (FSLR).
Here is just a tiny sample of what BullMarket.com wrote about Groupon:
Groupon has topped analyst EPS estimates two of six quarters since it IPO'd, missing the consensus three times and meeting it once. During that span, the stock has risen twice the next session. Seasonally, it fell last year.
Last quarter, Groupon said its gross billings increased by 4% to $1.4 billion. North American growth of 23% was offset in part by an international decline of -9%.
Sequentially, gross billings declined by -$113 million, related entirely to a -$149 million decline in the Goods category due to the holiday season. This was offset by growth in local and travel, management said. The results were from Groupon's first quarter, which also was its first since Groupon's board dumped co-founder and former CEO Andrew Mason after a string of disappointing quarters.
On a GAAP basis the company reported a loss of -$3.99 million, or -1 cent per share. On an adjusted basis it earned 3 cents per share, which was in line with Wall Street's expectations.
Revenue increased to $601.4 million from $559.3 million, which topped the Wall Street consensus estimate of $590 million.
North American revenue growth of 42% was offset by an -18% decline in the international segment. Sequentially, growth in local and travel, driven by increased billings as well as higher take rates, was more than offset by the Goods decline.
Gross profit decreased by -14% to $379 million. Sequentially, gross profit increased $23 million driven predominantly by a mix shift towards local, management said.
Management projected Groupon would generate revenue of $575 to $625 million in the current quarter and operating income of -$10 million to $10 million, which implied adjusted EPS of -1 cents per share to 2 cents. The consensus estimates prior to the release was for revenue of $616 million and EPS of a nickel per share. ...
Outside of earnings, we've been skeptical of Groupon's core business model from the beginning as we think the benefits to its merchant customers are fairly limited and the barriers to entry low. We've seen too many examples of retailers attracting business at a loss using Groupon campaigns. The company says they are the exception, not the rule, but until proven otherwise we think Groupon has a flawed long-term business model that offers very little value to its merchant customers.
We can see the rationale behind the company launching its new payment service. If it becomes another piece of the puzzle that binds local merchants to Groupon it could prove to be a boost for the core business, but it is a crowded field with some strong competition and we don't think it will move the needle much. Groupon Reserve, which will book tables and offer big discounts during off-hours, is also interesting, but in a crowded space.
The company, however, is testing a local e-commerce marketplace business, where it draws customers via search, not through emails. This could be a growth driver and eventually help change the face of the company, particularly as it looks to integrate with mobile, where local search accounts for nearly half of all inquiries. This endeavor could also make it a potential takeover candidate for a company like eBay (EBAY).
The ousting of founder Andrew Mason as CEO was a good move, as Wall Street had zero confidence in him. ...
Over time it is inevitable that comps will slow as Whole Foods gets bigger but it still holds a unique position in the grocery industry. Its customers visit the store for the quality of the food it sells, much of it organic, and for the ambiance of the stores. It appeals to a higher demographic that is willing to pay higher prices, but those customers are also certainly happy for a deal when available. We don't see management's new value-oriented pricing effort driving those customers away while it should draw in new ones. ...
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 Q2 so far were:
A daily investment service that is committed to creating long-term wealth for its members, BullMarket.com's Recommended List of stocks is up 104.9% from 2009-2012 versus a 57.9% return for the S&P, a 47.0% 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.)
- Personal Investing Ideas & Strategies