Price Based Analysis Ahead of Earnings: ACOR, BYD, ABX, AAP
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 October 31.
Acorda Therapeutics Inc (NASDAQ:ACOR) is expected to report its Q3 earnings on Thursday October 31 before the market open. Analyst estimates are for the company to earn $1.13 per share versus the $1.24 the company earned in the same quarter a year ago. Acorda Therapeutics is about to begin a Phase 2b / 3 trial of its main marketed drug AMPYRA in patients with post-stroke deficit, with improvement in walking ability being the main endpoint. The trial design has yet to be finalized with the FDA, however progress has been very positive. The stock is up 33% YT, but the stock has fallen over 17% from the yearly highs made in April. Is this a buying opportunity for investors ahead of earnings?
Investors need to be aware of price, and based on the Stock Traders Daily real-time trading report, the stock has been drifting closer to long-term support, but isn’t there yet. If ACOR 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 to be patient and not chase the stock.
Boyd Gaming Corporation (NYSE:BYD) is scheduled to report earnings on Thursday October 31 before the market open. Analysts are expecting Boyd Gaming to report $0.01 per share, which would be $0.12 better than the loss of $0.11 per share a year ago in the same quarter. Boyd stock has more than doubled YTD, and without exposure to high growth Asian markets. The company owns 22 gaming entertainment properties located in Nevada, Illinois, Indiana, Iowa, Kansas, Louisiana, Mississippi and New Jersey. The stock has pulled back over 6% from the 52-week highs, which it made about a month ago. Is BYD still a buy ahead of earnings?
The stock has been drifting lower and is getting closer to a test of support (but not there yet), as defined in the real time trading report published by Stock Traders Daily. As a rule, we are buyers if support is tested, and if shares remain above support, we expect higher levels and a test of resistance. However, support also acts as our risk control, and if support breaks lower, the otherwise positive bias that exists now would dissolve, and sell signals would surface. We would avoid buying shares at current levels, and would only enter a long position if support is officially tested.
Barrick Gold Corporation (USA) (NYSE:ABX) is expected to report $0.50 per share when the company reports on Thursday October 31 before the market open, which would be $0.35 less than the $0.85 it earned the same quarter a year ago. ABX has invested $5 billion in its Chilean Pascua-Lama mine project, and faces a legal challenge regarding regulatory requirements, which could cost the company its license in Chile. The stock is down 42% YTD, however the stock has bounced 17% in the last few weeks. Should investors buy shares ahead of earnings?
Even if the company beats estimates on Thursday, it does not mean the stock will continue to go up, as price matters. The stock has made a big move recently and is trading just below 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, ABX is a sell/short at resistance, with risk controls in place if resistance breaks higher.
Advance Auto Parts, Inc. (NYSE:AAP) is scheduled to report its Q3 earnings results on Thursday October 31 before the market open. Analysts are expecting the company to earn $1.39 per share, which would be a 14% increase over the same quarter a year ago. Advanced Auto Parts just bought Carquest Auto Parts, which would make the company the largest auto parts retailer in the U.S. The Stock is up 42% YTD and 24% in the last few weeks. Should investors be buying shares ahead of earnings?
Based on the Stock Traders Daily real-time trading report, the stock has broken above long-term resistance, which is now converted support. So far, converted support is holding, and as long as that remains true, the rules that govern our strategies tell us to expect higher levels, but converted support also acts as our risk control. We are buyers at that converted support level, but caution buyers not to chase the stock because shares have already moved higher. Be patient and look for an entry closer to converted support.
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!