Ahead of Earnings: TSN, BRCD, JEC, CRM

November 15, 2013, 10:15 am ET, BY Neal- Contributor| Editor: Thomas H. Kee Jr. (Follow on LinkedIn)

A few very important earnings releases are coming over the next few days.  We have conducted an analysis of these companies in order to provide investors with a summarized earnings analysis (both past and present), but also, and more importantly, a price-based observation that might be better suited for investors who are anticipating price action after earnings are released.

Of course, we already know that stocks sometimes do the exact opposite of what we might expect after earnings.  A stock might fall after it beats estimates, or increase after a miss, so although an evaluation of earnings data is clearly important, a close look at the recent decisions of smart money is as well.

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 18.

Tyson Foods, Inc. (NYSE:TSN) is expected to report earnings of $0.69 per share when the company reports its quarterly earnings on Monday November 18 before the market open.  If Tyson can match estimates on Monday, it would be a 55% increase from the $0.55 per share reported in the same quarter a year ago.   Shares of Tyson Foods are up 44% YTD, but are down 12% from the all-time highs made in mid-August.  Should investors buy, sell or hold TSN at current levels?

Investors need to be aware of price, and based on the Stock Traders Daily real-time trading report for TSN, the stock has been drifting 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 a move higher and an eventual test of resistance. We would only be buyers near support and caution investors not to chase the stock ahead of earnings.

Brocade Communications Systems, Inc. (NASDAQ:BRCD) is scheduled to report earnings on Monday November 18 after the bell.  Analysts are expecting Brocade to earn $0.18 per share for the quarter, which would be a penny better than the same quarter a year ago.  Brocade reported its fiscal 2013 third quarter results on Aug. 13. Adjusted earnings per share came in at 15 cents, which was $0.09 better than estimates and it was a 25% increase over the same quarter last year. This increase came in spite of a decline in revenue.  Shares of Brocade are up 44% since July 1 and trading near the 52-week highs.  Should investors buy, sell or hold ahead of earnings on Monday?

Even if Brocade beats estimates, as it has the previous eight quarters, it does not mean the stock is going up.  Price matters and shares of BRCD are getting close to a test long-term resistance, as defined in the real time trading report published by Stock Traders Daily.  As a rule, if BRCD tests long-term resistance, and remains below long-term resistance, we expect lower levels and a test of support.  That would make BRCD a sell/short at resistance, based on the real-time trading report published by Stock Traders Daily, with risk controls in place if resistance breaks higher.

Jacobs Engineering Group Inc (NYSE:JEC) is scheduled to report $0.88 per share when the company reports quarterly results on Monday November 18 after the bell.  Jacobs earned $0.80 per share in the same quarter a year ago.   Last month, the company won two task order contracts under the five year, multiple-award Marine Corps Logistics Support Services (MCLOGSS) Indefinite Delivery Indefinite Quantity (IDIQ) contracts.  The first was worth $12 million over three years, and the second was worth $6.5 million over the next two years.  The stock is up 45% YTD and trading near the 52-week highs.  Should investors buy, sell or hold ahead of earnings?

The stock is near six-year highs and up almost 7% in the last month.  Most of the news on the company has been very positive, so it is important for investors to focus on price.  Right now, the stock is getting closer to long-term resistance.  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, JEC is a sell/short at resistance, with risk controls in place if resistance breaks higher.

Salesforce.com, inc. (NYSE:CRM) is scheduled to report its Q3 earnings after the bell on Monday November 18.  Analysts are expecting the company to earn $0.09 per share, which would be a penny better than the same quarter a year ago.  Salesforce has met or exceeded analysts’ estimates for eight consecutive quarters.  Workday and saleforce.com announced plans to integrate the entire Salesforce and Workday product lines, which enables Force.com users to build applications using data directly from Workday's applications.  Workday HCM users will be able to use data from Salesforce to fuel greater workforce productivity and engagement.  The stock is up 50% since June 1 and trading near the 52-week highs.  Should investors buy, sell or hold?

Price matters and shares of CRM are getting close to a test of long-term resistance, as defined in the real time trading report published by Stock Traders Daily.  Smart money is watching long-term resistance, as insider Hilarie Koplow sold 2,333 shares of CRM stock in a transaction dated Tuesday, November 12th. The shares sold at an average price of $55.98, for a total transaction of $130,601.34.  As a rule, if the stock tests long-term resistance, and remains below long-term resistance, we expect lower levels and a test of support. That would make CRM a sell/short at resistance, based on the real-time trading report published by Stock Traders Daily, with risk controls in place if resistance breaks higher.

Navigating earnings can be tricky, sometimes investor’s earnings expectations are correct, but the stocks actually do the opposite of what they think it should have done after earnings, so our opinion based on price can help make investors make more well-rounded and sound investment decisions.

Stock Traders Daily has been providing comprehensive market analysis, and correlated trading strategies since January 2000, which was the virtual peak of the Internet Bubble.  Our objective is to provide strategies capable of making money in any market environment, and we have been doing that since inception.

Support and Resistance Plot Chart for

Real Time Updates for Repeat Institutional Readers:

Factset: Request User/Pass

Bloomberg, Reuters, Refinitiv, Zacks, or IB users: Access Here.