Oracle Rises to the Cloud, While Jabil Goes to the Woodshed

NEW YORK (TheStreet) - There has been a troubling pattern over the last two weeks as earnings disappointments have exceeded positive results. This is decreasing the number of stocks participating in the rally to new highs by the major equity averages. This implies that 2014 will not be a stock pickers market.

Among the 15 companies I profiled on Dec. 17 and Dec. 18, only six traded higher by the end of the week, while nine traded lower. Oracle (ORCL) was the biggest winner with a gain of 8.4% followed by Lennar (LEN) with a gain of 6.8% and Conagra Foods (CAG) with a gain of 6.5%. There were three companies with bigger losses than the winners' gains; Jabil Circuits (JBL) lost 18.1%, Winnebago (WGO) lost 16.3% and Rite Aid (RAD) lost 12.1%.

Last Tuesdsay's Lennar, Oracle on Deck to Report Earnings covered six companies and three were winners while three were losers including the biggest winner and the biggest loser.

Last Wednesday's Walgreen, CarMax and Nike Earnings Preview covered nine companies and only three were winners while six were losers even as four of the five major averages surged to new all-time or multi-year intra-day highs on Friday.

Conagra Foods($33.64 vs. $31.48 on Tuesday up 6.5%) beat earnings per share estimates by 7 cents earning 62 cents a share in the premarket on Thursday. The upside into Friday was 3 cents below its 200-day simple moving average at $33.95. The buy rated consumer foods company is 3.1% overvalued with a gain of 11.2% over the last 12 months. My monthly value level is $31.33 with a weekly pivot at $33.82 and semiannual and quarterly risky levels at $34.74 and $35.14.

Darden Restaurants (DRI) ($51.09 vs. $52.33 on Tuesday slipping 2.4%) missed EPS estimates by 5 cents earning 15 cents a share premarket on Thursday The downside was to $49.35 then Friday's close was back above the 200-day SMA at $50.48. The buy rated operator of restaurants such as Red Lobster, Olive Garden, LongHorn Steakhouse and The Capital Grille is considering selling its Red Lobster chain and suspending expansion of its Olive Garden chain is 33.9% overvalued with a gain of 12.4% over the last 12 months. The stock's low was between my annual and monthly value levels at $50.52 and $49.13. My weekly and annual pivots are $52.88 and $53.36 with a quarterly risky level at $55.68.

Jabil Circuit ($16.12 vs. $19.68 on Dec. 16 plunging 18.1%) beat EPS estimates by 16 cents earning 63 cents a share in the afterhours on Tuesday. The company missed on the revenue line and lowered forward guidance and the stock plunged to a low of $15.30 on Wednesday well below its 200-day SMA at $20.64 last tested on Dec. 9. The provider of circuit board manufacturing services still has a buy rating, is 9.9% overvalued and has lost 19.2% over the last 12 months. This week's value level is $15.85 with and annual value level at $14.28 and monthly and quarterly risky levels at $23.10 and $23.40.

KB Home (KBH)($16.91 vs. $17.02 on Tuesday slipping 0.6%) missed EPS estimated by 14 cents earning 31 cents premarket on Thursday. The stock ended the week just below its 50-day SMA at $17.04 with the 200-day SMA at $19.06. The homebuilder is sell rated and 7.5% overvalued with a gain of 8.4% over the last 12 months. Weekly and monthly value levels are $16.50 and $15.60 with an annual risky level at $22.95.

CarMax (KMX) ($48.08 vs. $51.75 on Tuesday down 7.1%) missed EPS estimates by a penny earning 47 cents a share premarket on Friday. The stock gapped lower to $47.52 moving below its 50-day SMA at $49.43 but staying above its 200-day SMA at $47.33. The seller of used cars has a buy rating is 22.9% overvalued with a gain of 26.6% over the last 12 months. My semiannual pivots are $50.94 and $50.77 with a quarterly risky level at $52.09.

Lennar ($37.38 vs. $35.00 on Dec. 16 up 6.8%) beat EPS estimates by 9 cents earning 73 cents a share premarket on Wednesday. The stock rebounded above its 200-day SMA at $36.75 to a day's high at $37.79. The homebuilder remains sell rated is 9% overvalued and slipped 4.9% over the last 12 months. This week's value level is $33.35 with a semiannual pivot at $35.45 and my semiannual risky level at $40.29.

Herman Miller (MLHR) ($28.79 vs. $29.26 down 1.6%) beat EPS estimates by a penny earning 42 cents a share in the afterhours on Wednesday. The stock drifted lower but stayed above its 200-day SMA at $27.83. The manufacturer of office furniture is 16.5% overvalued with a gain of 37.6% over the last 12 months. My annual value level is $24.37 with semiannual pivots at $28.80 and $29.09, monthly and quarterly pivots at $29.48 and $29.68 and annual risky level at $30.39.

Nike Inc (NKE) ($77.34 vs. $76.76 on Tuesday up 0.8%) beat EPS estimates by a penny earning 59 cents a share in the afterhours on Thursday. The stock traded down to $76.64 on Friday then closed above its 50-day SMA at $77.15 and is well above its 200-day SMA at $66.88. The hold rated maker of athletic shoes and apparel is 34% overvalued with a gain of 56.2% over the last 12 months. My quarterly value level is $71.62 with a monthly risky level at $79.07.

Oracle ($36.37 vs. $33.54 on Dec. 16 up 8.4%) beat EPS estimates by 2 cents earning 66 cents a share in the afterhours on Wednesday. The stock popped to a new multi-year intra-day high at $36.96 on Thursday after testing its 200-day SMA at $33.26 on Dec. 13. The software giant has a hold rating is 8.8% overvalued and has gained 7.2% over the last 12 months. My annual value level is $30.81 with quarterly, monthly and annual pivots at $33.19, $34.05 and $34.68 and semiannual risky levels at $36.42 and $38.05.

Verifone (PAY) ($24.14 vs. $24.98 on Dec. 16 down 3.3%) missed EPS estimates by 5 cents earning 13 cents a share in the afterhours on Tuesday. The stock slumped to $22.60 on Wednesday then ended the week above its 50-day SMA at $23.92 with the 200-day SMA at $21.27. The provider of electronic payment solutions has a buy rating is 4.8% undervalued with a loss of 17.9% over the last 12 months. My monthly and quarterly pivots are $23.15 and $23.02 with a weekly risky level at $26.27.

Paychex (PAYX) ($45.15 vs. $43.17 on Dec. 16 up 4.6%) beat EPS estimates by a penny earning 43 cents a share in the afterhours on Wednesday. The stock popped to a new multi-year intra-day high at $45.69 on Thursday. The payroll processing company has a hold rating is 33.3% overvalued with a gain of 39.4% over the last 12 months. My semiannual value levels are $37.88 and $34.29 with quarterly and monthly pivots at $42.46 and $44.64.

Rite Aid($4.99 vs. $5.68 on Tuesday slumping 12.1%) matched EPS estimates earning 4 cents a share premarket on Thursday. The stock broke below its 50-day SMA at $5.39 and traded as low as $4.73 on Friday with the 200-day SMA at $3.60.The buy rated drug store chain is 42.1% overvalued with a gain of 312.4% over the last 12 months. My quarterly value level is $3.73 with weekly and monthly risky levels at $5.63 and $6.29.

Tibco Software (TIBX)($22.01 vs. $23.96 on Tuesday down 8.1%) beat EPS estimates by 3 cents earning 35 cents a share in the afterhours on Thursday. The stock closed Thursday just below its 50-day SMA at $24.45 with a high of $24.90 that day. On Dec. 20 the low trade was $20.84. The buy rated provider of software solutions is 7.9% undervalued with a gain of 6.1% over the last 12 months. My annual value level is $19.62 with a weekly pivot at $21.94 and monthly risky level at $26.04.

Walgreen (WAG) ($59.04 vs. $56.25 on Tuesday up 5%) matched EPS estimates earning 72 cents a share premarket on Friday. The stock dipped to $54.86 then popped to $59.15 above its 50-day SMA at $58.64 and well above its 200-day SMA at $51.68. The buy rated drug store chain is 18.2% overvalued with a gain of 57.2% over the last 12 months. My quarterly value level is $49.12 with monthly and weekly pivots at $57.04 and $59.03.

Winnebago($26.49 vs. $31.64 on Tuesday slumping 16.3%) beat EPS estimates by a penny earning 40 cents a share premarket on Thursday. The stock broke below its 50-day SMA at $29.70 to a low of $26.13 on Friday above its 200-day SMA at $23.83. The hold rated builder of motor homes is 1.6% overvalued with a gain of 62.2% over the last 12 months. My semiannual value level is $20.06 with a quarterly pivot at $26.56 and weekly and monthly risky levels at $28.73 and $29.09.

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

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This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

Richard Suttmeier is the chief market strategist at ValuEngine.com. He has been a professional in the U.S. Capital Markets since 1972, transferring his engineering skills to the trading and investment world.

Suttmeier has an engineering degree from Georgia Tech and a Master of Science degree from Brooklyn Poly. He began his career in the financial services industry in 1972 trading U.S. Treasury securities in the primary dealer community. He became the first long bond trader for Bache in 1978, and formed the Government Bond Department at LF Rothschild in 1981, helping establish that firm as a primary dealer in 1986. This experience gives him the insights to be an expert on monetary policy, which he features in his newsletters, and market commentary.

Suttmeier's industry licenses include, Series 7 and Registered Principal (Series 24). He has been the Chief Market Strategist for ValuEngine.com since 2008 and often appears on financial TV.

Click here for details on Suttmeier's "Buy and Trade" investment strategy.

Richard Suttmeier can be reached at RSuttmeier@Gmail.com

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