SanDisk the Year's Biggest Winner So Far Among Nine Companies Set to Report

NEW YORK (TheStreet) -- Profiling companies before they report quarterly earnings has become more difficult following Federal Reserve Chairwoman Janet Yellen's comments on Tuesday that valuations on small-cap, social-media and biotech stocks may be stretched.

Yellen made similar comments during a recent press conference, and her remarks are one reason I have added price-to-earnings ratios and dividend yields to my analysis. Both metrics give investors a sense of a stock's valuation.

Most of the nine stocks profiled today have been volatile this year. The stocks with the biggest year-to-date gains in today's "crunching the numbers" tables are SanDisk  (SNDK), with a gain of 50%; Baker Hughes (BHI), up 32%; and AutoNation (AN), up 22%.

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The biggest loser year to date is Mattel (MAT), down 18%.

Let's take a look at the stock profiles and the "crunching the numbers" tables follow:

AutoNation ($60.79) set an all-time intraday high at $61.29 on July 14, and is above all five moving averages shown in today's first table.

Analysts expect the car seller to report earnings per share of 87 cents before the opening bell on Thursday. The company's 12-month trailing earning-to-price ratio is 19. This is not a dividend stock.

The weekly chart is positive but overbought with its five-week modified moving average at $58.73. Monthly and semiannual value levels are $57.98 and $57.77, respectively, with quarterly and semiannual risky levels at $62.36 and $65.73, respectively.

Baker Hughes ($72.82) traded at a multiyear intraday high at $75.64 on July 2, and is just below its 21-day simple moving average at $23.39.

Analysts expect the oil and gas field services operator to report earnings of 89 cents per share before the opening bell on Thursday. The company's 12-month trailing P/E ratio is elevated at 23.2; the company has a dividend yield of just 0.9%.

The weekly chart is positive but overbought with its five-week MMA at $72.22. Monthly and semiannual value levels are $70.89 and $70.46, respectively, with a weekly risky level at $76.27.

eBay (EBAY) ($50.81) traded at an all-time high at $59.70 on Feb.28 , and crashed to as low as $48.14 on June 11. It has been below its 200-day simple moving average at $53.06 since April 30.

The stock is down 7.4% year to date as analysts expect the online retailer to report earnings of 58 cents per share after the closing bell today. The company's 12-month trailing P/E ratio is 21.2. eBay is not a dividend stock.

The weekly chart shifts to positive given a close this week above its five-week MMA at $50.82. A weekly value level is $48.95 with monthly and semiannual risky levels at $52.10 and $56.00, respectively.

Mattel ($38.94) set a 52-week intraday low at $34.98 after being below its 200-day SMA, which is now at $40.99, since Jan. 21.

Analysts expect the toy retailer to report earnings of 19 cents per share before the opening bell on Thursday. The company's 12-month trailing P/E ratio is 16.6; it has a favorable dividend yield of 3.8%.

The weekly chart shifts to positive given a close this week above its five-week MMA at $39.08. Monthly and annual value levels are $37.12 and $31.27, respectively, with a weekly pivot at $39.64 and annual and semiannual risky levels at $41.32 and $ 46.20, respectively.

Morgan Stanley (MS) ($32) has been trading around its 200-day SMA since April 7, and is above it today at $30.52.

Analysts expect the investment bank to report earnings of 55 cents per share before the opening bell on Thursday. The company's 12-month trailing P/E ratio is 14.3; its dividend yield is 1.3%.

The weekly chart becomes positive on a close this week above its five-week MMA at $31.61. Semiannual and annual value levels are $25.69 and $23.49 with monthly and quarterly risky levels at $33.52 and $37.82, respectively.

Sherwin-Williams (SHW) ($202.32) set an all-time high at $208.63 on March 7, and traded as low as $188.25 on April 15. It ended Tuesday below its 50-day SMA at $202.84 on Tuesday.

Analysts expect the paint retailer to report earnings of $2.90 per share before the opening bell on Thursday. The company's 12-month trailing P/E ratio is elevated at 25.4; its dividend yield is 1.1%.

The weekly chart shifts to negative with a close this week below its five-week MMA at $203.37. Semiannual and annual value levels are $199.01 and $161.59, respectively, with a monthly pivot at $203.77 and weekly and semiannual risky levels at $209.12 and $222.21, respectively.

SanDisk ($105.56) set an all-time intraday high at 107.13 on Tuesday and is above all five moving averages in today's first table. Analysts expect the flash memory storage company to report earnings of $1.28 per share after the closing bell today. The company's 12- month trailing P/E ratio is 18.5; its dividend yield is 0.9%.

The weekly chart is positive but overbought with a parabolic pattern and its five-week MMA at $100.60. Quarterly and monthly value levels are $98.37 and $94.91, respectively, with a weekly risky level at $111.11.

Dow component UnitedHealth Group  (UNH) ($83.90) set an all-time intraday high at $84.74 on Tuesday and is above all five moving averages in today's first table.

Analysts expect the health-insurance provider to report EPS of $1.25 before the opening bell on Thursday. The company's 12-month trailing P/E ratio is 15.9; its dividend yield is 1.8%.

The weekly chart is positive but overbought with its five-week MMA at $81.45. Semiannual and quarterly value levels are $80.06 and $80.00, respectively, with monthly and weekly risky levels at $86.52 and $85.71, respectively.

Yum! Brands (YUM) ($83.18) set an all-time high at $83.58 on Tuesday and is above all five moving averages in today's first table. Analysts expect the parent of Taco Bell, KFC and Pizza Hut to report earnings of 73 cents per share after the closing bell today. The company's 12-month trailing P/E ratio is elevated at 25.2; its dividend yield is 1.8%.

The weekly chart is positive but overbought with its five-week MMA at $80.62. Quarterly and annual value levels are $81.56 and $80, respectively, with monthly and weekly risky levels at $84.26 and $95.43, respectively.

Crunching the Numbers with Richard Suttmeier: Moving Averages & Stochastics

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

The 12-month trailing price to earnings ratio

The Dividend Yield

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 readings from 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 or not 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 and as a "reversion to the mean" over a rolling three to five year horizon.

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 and I consider this level as a shorter-term "reversion to the mean" over a rolling six to 12-month horizon.

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.

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-until-canceled GTC 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.

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

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

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

"We rate SANDISK CORP (SNDK) 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, impressive record of earnings per share growth, compelling growth in net income and expanding profit margins. We feel these strengths outweigh the fact that the company shows weak operating cash flow."

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

  • The revenue growth came in higher than the industry average of 2.4%. Since the same quarter one year prior, revenues rose by 12.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Although SNDK's debt-to-equity ratio of 0.28 is very low, it is currently higher than that of the industry average. To add to this, SNDK has a quick ratio of 1.89, which demonstrates the ability of the company to cover short-term liquidity needs.
  • SANDISK CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, SANDISK CORP increased its bottom line by earning $4.37 versus $1.69 in the prior year. This year, the market expects an improvement in earnings ($6.04 versus $4.37).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Computers & Peripherals industry. The net income increased by 61.8% when compared to the same quarter one year prior, rising from $166.23 million to $268.95 million.
  • The gross profit margin for SANDISK CORP is rather high; currently it is at 54.96%. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of 17.78% trails the industry average.

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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