Nike Scores Earnings Goal; Bed Bath & Beyond Sinks: Earnings Profiles

NEW YORK (TheStreet) -- Today we profile this week's three big earnings winners and three big earnings losers. These companies are among those we profiled before they reported quarterly results.

The biggest winner is Barnes & Noble (BKS), which popped 13% after announcing its plan to spin off the Nook e-reader unit. The biggest loser was Bed, Bath & Beyond (BBBY), which took an earnings bath, falling 6.5%.

Following are the updated profiles for the postearnings winners and losers. They are followed by two "Crunching the Numbers" tables.

And the winners are:

Barnes & Noble ($23.28), up 13% since June 20, after it had risen 38% year to date. The company reported a loss of 72 cents a share, which was 9 cents worse than analysts on average had forecast. Nevertheless, investors liked the idea of spinning off the Nook from the bricks-and-mortar retail unit, and the stock was rewarded with a rebound to $23.56 vs. its previous high of $23.71, which was set on May 13, 2013.

The weekly chart is positive with its five-week modified moving average at $19.75 and a 200-week simple moving average at $15.27. Semiannual and weekly value levels are $20.54 and $20.49, respectively, with a monthly pivot at $21.61.

Monsanto (MON) ($126.18) is up 3.4% since June 20 after it had risen 4.7% year to date. The company beat EPS estimates by 7 cents, earning $1.62 per share. The stock set a multiyear intraday high at $128.79 on June 25, well above its 200-day SMA at $111.88.

The weekly chart is positive but overbought with its five-week MMA at $120.10. An annual value level is $123.36 with a monthly pivot at $125.35 and weekly and annual risky levels at $128.75 and $131.26, respectively.

Nike (NKE) ($79.05 after-hours on Thursday) is up 5.4% since June 24 after it had risen 4.7% year to date. The company beat EPS estimates by 2 cents, earning 78 cents per share. The stock traded as high as $79.94 in after-hours trading on Thursday vs. its all-time intraday high at $80.26, which was set on Dec. 9, 2013. The stock had been trading back and forth around its 200-day SMA at $75.07 since April 7.

The weekly chart is positive given a weekly close above its five-week MMA at $75.37. Semiannual and annual value levels are $74.10 and $69.56, respectively with a monthly pivot at $76.69 and semiannual and quarterly risky levels at $83.03 and $89.37, respectively.

And the losers are:

Bed, Bath & Beyond ($56.70) is down 6.5% since June 24 after falling 25% year to date. The company missed EPS estimates by 2 cents earning 93 cents. The stock traded as low as $54.96 on June 26 versus its 52-week low at $54.33 set in December 2012.

The weekly chart is negative but oversold with its five-week modified moving average at $60.78 and its 200-week SMA at $61.44. My annual value level is $51.50 with weekly and semiannual risky levels at $60.08 and $64.99, respectively.

General Mills (GIS) ($52.03) is down 4.8% since June 20 after it had risen 9.5% year to date. The company missed EPS estimates by 4 cents earning 67 cents. The stock traded as low as $51.50 staying above its 200-day SMA at $50.73.

The weekly chart is negative with its five-week MMA at $53.54. Annual and quarterly value levels are $49.47 and $49.33, respectively, with monthly and semiannual risky levels at $53.86 and $54.08, respectively.

Herman Miller (MLHR) ($29.71) is down 5% since June 24 after it had risen 5.9% year to date. The company beat EPS estimates by 4 cents earning $50 cents. The company beat EPS estimates by 4 cents earning 50 cents. The stock traded as low as $29.00 on June 26 closing just below its 200-day SMA at $29.73.

The weekly chart is negative with its five-week MMA at $30.96. Annual value levels are $21.60 and $21.53 with monthly and semiannual risky levels at $31.12 and $32.04, respectively.

Crunching the Numbers With Richard Suttmeier: Moving Averages & Stochastics

This table provides the technical status for the stocks profiled in today's report.

There are five columns with moving average titles: Five-Week Modified Moving Average; 21-Day Simple Moving Average; 50-Day Simple Moving Average; 200-Day Simple Moving Average; and the 200-Week Simple Moving Average.

The column labeled 12x3x3 Weekly Slow Stochastics shows the pattern on each weekly chart with a reading of oversold, rising, overbought, declining or flat.

Interpretations: Stocks below a moving average are listed in red.

Five-Week Modified Moving Average (MMA) is one of two indicators that define whether a weekly chart profile is positive, neutral or negative. The other is the status of the 12x3x3 weekly slow stochastic.

A stock with a positive technical rating is above its five-week MMA with rising or overbought stochastics.

A stock with a negative technical rating is below its five-week MMA with declining or oversold stochastics.

A stock with a neutral technical rating has a profile that is not positive or negative.

The 200-Week Simple Moving Average (SMA) is considered a long-term technical support or resistance level and as a "reversion to the mean" over a rolling three- to five-year horizon. (Even Apple (AAPL) declined to its 200-week SMA in June 2013.)

The 21-Day Simple Moving Average is a short-term technical support or resistance used by many hedge fund traders to adjust positions. A stock above its 21-day SMA will likely move higher over a rolling three- to five-day horizon and vice versa.

The 50-Day Simple Moving Average is also a technical support or resistance used by many strategists and commentators in financial TV.

The 200-Day Simple Moving Average is another technical support or resistance level, and I consider this level as a shorter-term "reversion to the mean" over a rolling six- to 12-month horizon. (Even Apple tested or crossed its 200-day SMA in nine of the last 10 years.)

Crunching the Numbers With Richard Suttmeier: Earnings & Where to Buy & Where to Sell

This table presents the EPS estimates including date and before or after the close, and where to buy on weakness and where to sell on strength.

"EPS Date" is the day the company reports its quarterly results.

"EPS Estimate" is the EPS estimate from Wall Street analysts.

Value Levels, Pivots and Risky Levels are calculated based upon the last nine weekly closes (W), nine monthly closes (M), nine quarterly closes (Q), nine semiannual closes (S) and nine annual closes (A). I have one column for pivots, which is a magnet for the period shown. The columns to the left of the pivots are first and second value levels. The columns to the right of the pivots are first and second risky levels.

Investors who wish to buy a stock should use a good-'til-canceled limit order to buy weakness to a value level. Investors who want to sell a stock should use a GTC limit order to sell strength to a risky level.

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Now let's look at TheStreet Ratings' take on some of these stocks.

TheStreet Ratings team rates NIKE INC as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:

"We rate NIKE INC (NKE) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, reasonable valuation levels and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Despite its growing revenue, the company underperformed as compared with the industry average of 14.8%. Since the same quarter one year prior, revenues rose by 12.7%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • NKE's debt-to-equity ratio is very low at 0.12 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, NKE has a quick ratio of 2.12, which demonstrates the ability of the company to cover short-term liquidity needs.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Textiles, Apparel & Luxury Goods industry and the overall market, NIKE INC's return on equity exceeds that of both the industry average and the S&P 500.
  • 46.40% is the gross profit margin for NIKE INC which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 9.82% is above that of the industry average.

TheStreet Ratings team rates BED BATH & BEYOND INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:

"We rate BED BATH & BEYOND INC (BBBY) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its notable return on equity, attractive valuation levels, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Specialty Retail industry and the overall market, BED BATH & BEYOND INC's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
  • Net operating cash flow has increased to $781.25 million or 33.41% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -3.54%.
  • BED BATH & BEYOND INC' earnings per share from the most recent quarter came in slightly below the year earlier quarter. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, BED BATH & BEYOND INC increased its bottom line by earning $4.81 versus $4.58 in the prior year. This year, the market expects an improvement in earnings ($5.05 versus $4.81).
  • BBBY's debt-to-equity ratio is very low at 0.03 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.47 is very weak and demonstrates a lack of ability to pay short-term obligations.

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

Follow @Suttmeier

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff

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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