American Eagle, HP, Target, Staples Into Earnings Woodshed

NEW YORK ( TheStreet) -- Today's earnings scorecard features nine companies that reported quarterly results Wednesday, and I previewed these stocks Tuesday in Hewlett-Packard, Lowe's, Target Earnings on Deck. Four of these stocks were sent to the woodshed following earnings disappointments.

American Eagle Outfitters ( AEO) ($14.78 vs. $16.00 on Aug. 19) matched EPS estimates earning 10 cents a share. The stock was taken to the woodshed trading down to $14.33 Wednesday on a reported decline in traffic at their retail stores. Share price weakness resulted in an upgrade to a strong buy rating, but I do not show a value level with the stock is below a weekly risky level at $16.95.

Hewlett-Packard ( HPQ) ($22.40 vs. $25.88 on Aug. 19) missed EPS estimates by a penny earning 86 cents a share. The stock closed at $25.38 on Wednesday and gapped lower to $21.81 Thursday. The trip to the woodshed followed CEO Meg Whitman's revelation that the company would not see revenue growth in 2014. The stock still has a buy rating with a semiannual pivot at $24.24 with a weekly risky level at $25.84.

Lowes Companies ( LOW) ($46.98 vs. $43.67 on Aug. 19) beat EPS estimates by 8 cents earning 88 cents a share. The stock rallied to a post-earnings high at $47.51 Thursday. The stock still has a buy rating with a monthly value level at $43.99 with a weekly risky level at $48.75.

L Brands ( LTD) ($59.21 vs. $59.04 on Aug. 19) beat EPs estimates by a penny earning 61 cents a share and the buy rated stock traded down to $57.01 Thursday. My semiannual value level is $56.99 with weekly and semiannual risky levels at $62.93 and $63.35.

PetSmart ( PETM) ($70.95 vs. $74.42 on Aug. 19) beat EPs estimates by 3 cents earning 89 cents a share and the buy rated stock dipped to $70.63 Wednesday vs. its 50-day SMA at $71.21 with Friday's close below this key level. My monthly value level is $64.91 with a semiannual risky level at $74.51.

JM Smucker ( SJM) ($108.46 vs. $109.06 on Aug. 19) beat EPS estimates by 4 cents earning $1.24 a share but the hold rated stock slipped to $106.65 Thursday vs. its 50-day SMA at $107.63 with Friday's close above this key level. My semiannual value level is $102.37 with a semiannual pivot at $109.18 and monthly risky level at $111.92.

Staples ( SPLS) ($14.20 vs. $16.41 on Aug. 19) missed EPS estimates by a penny earning 17 cents a share. The buy rated stock was sent to the investor woodshed on declining sales and profitability and lowered forward guidance. The week's low was $13.90 vs. the 200-day SMA at $13.84. This weakness resulted in an upgrade to strong buy from buy. My semiannual value level is $13.66 with weekly and annual risky levels at $16.33 and $16.58.

Target ( TGT) ($64.35 vs. $68.24 on Aug. 19) beat EPS estimates by 22 cents earning $1.19 a share. The buy rated stock gapped below its 200-day SMA at $66.52 to a low of $64.07 on Thursday on the way to the investor woodshed as the retailer warned that consumers will continue to spend cautiously in the face of household budget pressures. Last week I read a post the reported that household incomes have dropped 4.4% since the recession ended four years ago. My annual value level is $53.54 with an annual pivot is $65.45 and weekly and monthly risky levels at $70.32 and $70.74.

Toll Brothers ( TOL) ($31.19 vs. $30.66 on Aug. 19) beat EPS estimates by 11 cents earning 38 cents a share. The hold-rated homebuilder stock is below its 50-day and 200-day SMAs at $32.56 and $33.61. My semiannual value level is $24.57 with an annual pivot at $31.95 and weekly and semiannual risky levels at $32.16 and $32.51.

We learned Friday that sales of newly built, single-family homes declined 13.4% in July to a seasonally adjusted annual rate of 394,000 units. The National Association of Home Builders indicated that "higher mortgage rates prompted a temporary pause in buying activity. " Home buyers are on a tight budget and the shock of a 100 basis point rise in the mortgage rate has queered many deals.

The homebuilder stocks slumped on this news, but held above their week's lows. The PHLX Housing Sector Index (170.60) set a 2013 low at 164.03 on Aug. 15 and ended last week down 0.4% on the year and 18.7% below its May 20 high at 210.01.

At the time of publication the author held no positions in any of the stocks mentioned.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
Richard Suttmeier has an engineering degree from Georgia Tech and a master of science from Brooklyn Poly. He began his career in the financial services industry in 1972 trading U.S. Treasury securities in the primary dealer community. In 1981 he formed the Government Bond Department at LF Rothschild and helped establish that firm as a primary dealer in 1986. Richard began writing market research in 1984 and held positions as market strategist at firms such as Smith Barney, William R Hough, Joseph Stevens, and Rightside Advisors. He joined www.ValuEngine.com in 2008 producing newsletters covering the U.S. capital markets, and a universe of more than 7,000 stocks. Richard employs a "buy and trade" investment strategy and can be reached at RSuttmeier@Gmail.com.

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