A Combined Analysis: CME, VMC, OMI, ED
Earnings season is upon us again, and as companies are releasing their earnings, we are going to offer investors a brief pre-earnings analysis of current and past quarters. Our focus will be on price, and how stocks might react after earnings reports based on the recent stock price changes.
We all know it is difficult to predict what a stock might do solely based on information released during earnings. Sometimes stocks go lower after beating estimates, and the reverse is true as well, so it is also important to factor in what smart money has been doing relative to the stock price.
This combination of simple earnings data and price-based analysis can help investors not only understand earnings results, but also anticipate the stock’s move after earnings are released.
The following Companies report earnings on November 4.
CME Group Inc (NASDAQ:CME) is scheduled to report Q3 numbers on Monday November 4 before the market open. Analysts are estimating the company will earn $0.74 per share, which would be a 6% increase compared to the $0.70 per share it reported in the same quarter a year ago. CME Group, which is the world's largest futures exchange, will launch an aluminum contract to compete with the London Metal Exchange who currently runs the largest base metals market. Shares of CME Group are up 48% YTD but have been pulling back over the last 10 days ahead of its earnings report. Is this a good time to buy shares of CME?
Investors need to be aware of price because that is what makes us money, and based on the Stock Traders Daily real-time trading report, CME is moving closer to long-term support, but isn’t there yet. If the stock continues to move lower, and tests long-term support, we would be buyers near support. If support holds, we would expect shares to move higher and eventually test of resistance. We would only be buyers near support, and it is not there yet.
Vulcan Materials Company (NYSE:VMC) is expected to report $0.27 per share for its third quarter when the company reports on Monday November 4 before the market. Last year in the same quarter, the company earned $0.14 per share. Last quarter the company reported earnings of $0.23 per share, $0.08 better than the consensus estimate of $0.15; revenues rose 6.4% YOY to $738.7 million versus the $736.5 million consensus. The company was encouraged by housing starts in the U.S., which were up sharply from a year ago. The company also expects significant growth in housing starts in several key states, including Arizona, California, Florida, Georgia and Texas. The stock is up only about 5% YTD, however shares are up 16% over the last three months. Should investors buy, sell or hold into earnings?
Smart money has been taking profits in VMC when the stock has tested long-term resistance over the past six months, and the stock is near a test of long-term resistance again. Even if the company beats estimates on Monday, it does not mean the stock will continue to rise, as price matters. According to rule, we are sellers at resistance, and as long as the stock remains below resistance, we expect lower levels and a test of support. Based on the real-time trading report published by Stock Traders Daily, VMC is a sell/short at resistance, with risk controls in place if resistance breaks higher.
Owens & Minor, Inc. (NYSE:OMI) is expected to report its Q3 earnings on Monday November 4 after the market close. Analysts estimates are for the company to earn $0.49 per share, which would be in-line with the same quarter last year. Owens & Minor recently renewed its lease in Franklin Mass., and expanded its space by approximately 87,000 square feet. The company has steadily expanded its presence since initially signing for less than 50,000 square feet in the building. The stock is up 32% YTD and trading near the 52-week high. Should investors buy, sell or hold ahead of earnings on Monday?
Shares of Owens & Minor are up 11% in the last three weeks, and trading close to all-time highs. The stock is very close to a test of long-term resistance, and right before earnings. Even if the company beats estimates, it does not mean the stock will continue to rise, based on price. According to rule, we are sellers at resistance, and as long as the stock remains below resistance, we expect lower levels and a test of support. Based on the real-time trading report published by Stock Traders Daily, OMI is a sell/short at resistance, with risk controls in place if resistance breaks higher.
Consolidated Edison, Inc. (NYSE:ED) is expected to report Q3 earnings on Monday November 4 after the market close. Analysts are estimating the company will earn $1.42, which would be $0.02 less than the $1.44 it earned in the same quarter a year earlier. Consolidated Edison last issued its quarterly earnings data on August 1. The company reported $0.59 earnings per share for the quarter, beating the analysts’ consensus estimate of $0.57 by $0.02. The company had revenue of $2.82 billion for the quarter, compared to the consensus estimate of $2.85 billion. During the same quarter last year, the company posted $0.73 earnings per share. The stock is up about 5% YTD, but shares are down over 8% from the 52-week highs in early May. Should investors be buying shares of ED ahead of earnings?
The stock is up over 6% in the last month, and getting close to a test of long-term resistance, and right before earnings. Price matters right now, so even if the company beats estimates, investors should not assume the stock would continue to rise. We would be sellers at resistance, and as long as the stock remains below resistance, we would expect lower levels and a test of support. Based on the real-time trading report published by Stock Traders Daily, ED is a sell/short at resistance, with risk controls in place if resistance breaks higher.
Although earnings season can bring with it a host of surprises, the simple approach may sometimes be the best choice, and our attempt here has been to provide a straightforward data-driven look-ahead analysis to prepare investors for the earnings report that lies ahead. Good trading!