NEW YORK (TheStreet) -- Today's pre-earnings profiles for seven diversified companies point to the importance of evaluating both fundamental and technical information when making investment and trading decisions before and after companies report earnings.
Most of the seven stocks profiled today have seen significant year-to-date volatility. The stocks with the biggest year-to-date gains in today's "Crunching the Numbers" tables are oil-service company Schlumberger (SLB) , which is up 29%; chipmaker Advanced Micro Devices (AMD), which has gained 20%; and financial-services company Capital One (COF), which is up 10%.
Let's take a look at the stock profiles now. The "Crunching the Numbers" tables follow.
Advanced Micro Devices ($4.66) set a 2014 high at $4.80 on July 15 and has been above its 200-day simple moving average at $3.85 since April 21. Analysts expect the company to report earnings per share of 3 cents after the closing bell Thursday. The stock has an elevated 12-month trailing price-to-earnings ratio of 30. This is not a dividend stock.
The weekly chart is positive with its five-week modified moving average at $4.25. A weekly value level is $4.31 with a monthly pivot at $4.47 and its 200-week simple moving average at $5.18.
Capital One ($84.38) traded to a multiyear intraday high at $85.39 on July 15 and the stock is above all five moving averages in my first table. Analysts expect the company to report EPS of $1.79 after the closing bell Thursday. The stock's 12-month trailing P/E ratio is 12 with a dividend yield of 1.4%.
The weekly chart is positive but overbought with its five-week MMA at $82.00. Quarterly and semiannual value levels are $82.66 and $81.85, respectively, with a monthly pivot at $83.96 and a weekly risky level at $88.21.
Ericsson (ERIC) ($11.61) is down 5.1% year to date and has been below its 200-day SMA at $12.42 since April 23. It traded as low as $11.50 on July 15. Analysts expect the wireless equipment company to report EPS of 14 cents before the opening bell on Friday. The stock's 12-month trailing P/E ratio is 13.9, and it has a dividend yield of 2.6%.
The weekly chart is negative but oversold with its five-week MMA at $12.02. The 200-week SMA at $11.32 is a key level to hold on weakness. Annual value levels are $8.83 and $7.05 with a weekly pivot at $11.85 and semiannual and monthly risky levels at $11.99 and $12.98, respectively.
General Electric (GE) ($27.02) is down 3.6% year to date and has been trading around its 200-day SMA since Feb. 3. This key moving average is now at $26.21. Analysts expect this Dow Jones Industrial Average component to report EPS of 39 cents before the opening bell on Friday. The stock's 12-month trailing P/E ratio is 16.5 with a favorable dividend yield of 3.3%.
The weekly chart is neutral with its five-week MMA at $26.74 and with declining 12x3x3 weekly slow stochastic. Annual value levels are $16.89 and $16.11 with a semiannual pivot at $26.94 and monthly and quarterly risky levels at $27.35 and $28.94, respectively.
Google (GOOGL) ($590.62) is up 5.3% year to date and set a 2014 low at $511.00 on April 28, which was a test of its 200-day SMA. That average is now at $549.57. Analysts expect the Internet services giant to report EPS of $5.16 after the closing bell today. The company's 12-month trailing P/E ratio is nearly 30. Google is not yet a dividend stock.
The weekly chart is positive but overbought with its five-week MMA at $576.40. Annual value levels are $522.17 and $489.53 with a semiannual pivot at $589.86 and monthly and weekly risky levels at $615.68 and $624.67, respectively.
International Business Machines (IBM) ($192.36) traded as low as $179.66 on June 27 then traded as high as $193.36 on Wednesday and is above all five moving averages in the first table. Analysts expect the tech stock and Dow component to report EPS of $4.31 after the closing bell on Thursday. The stock's 12-month trailing P/E ratio is 11 and it has a dividend yield of 2.3%.
The weekly chart is positive with its five-week MMA at $187.24 and its 200-week SMA at $183.77. A weekly value level is $183.77 with a monthly pivot at $192.99 and an annual value level at $206.19.
Schlumberger ($115.88) set an all-time intraday high at $118.76 on July 1 and is above all moving averages in the first table. Analysts expect the energy company to report EPS of $1.35 after the closing bell today. The company's 12-month trailing P/E ratio is 22, and it has a dividend yield of 1.4%.
The weekly chart is positive but overbought with its five-week MMA at $111.16. Annual value levels are $101.95 and $98.26 with a semiannual pivot at $110.25 and weekly risky level at $120.94.
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.
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.
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.
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
Now let's look at TheStreet Ratings' take on some of these stocks.
TheStreet Ratings team rates SCHLUMBERGER LTD as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate SCHLUMBERGER LTD (SLB) a BUY. This is driven by a number of strengths, 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 solid stock price performance, impressive record of earnings per share growth, compelling growth in net income, revenue growth and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company shows low profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Powered by its strong earnings growth of 34.44% and other important driving factors, this stock has surged by 51.48% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, SLB should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- SCHLUMBERGER LTD has improved earnings per share by 34.4% 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, SCHLUMBERGER LTD increased its bottom line by earning $5.11 versus $3.91 in the prior year. This year, the market expects an improvement in earnings ($5.70 versus $5.11).
- The net income growth from the same quarter one year ago has greatly exceeded that of the S&P 500, but is less than that of the Energy Equipment & Services industry average. The net income increased by 26.4% when compared to the same quarter one year prior, rising from $1,259.00 million to $1,592.00 million.
- Despite its growing revenue, the company underperformed as compared with the industry average of 10.9%. Since the same quarter one year prior, revenues slightly increased by 6.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The current debt-to-equity ratio, 0.31, is low and is below the industry average, implying that there has been successful management of debt levels. To add to this, SLB has a quick ratio of 1.58, which demonstrates the ability of the company to cover short-term liquidity needs.
- You can view the full analysis from the report here: SLB Ratings Report
TheStreet Ratings team rates GOOGLE INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate GOOGLE INC (GOOGL) a HOLD. The primary factors that have impacted our rating are mixed ? some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, disappointing return on equity and feeble growth in the company's earnings per share."
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 21.2%. Since the same quarter one year prior, revenues rose by 19.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Although GOOGL's debt-to-equity ratio of 0.07 is very low, it is currently higher than that of the industry average. Along with this, the company maintains a quick ratio of 4.17, which clearly demonstrates the ability to cover short-term cash needs.
- Net operating cash flow has increased to $4,391.00 million or 20.86% when compared to the same quarter last year. Despite an increase in cash flow, GOOGLE INC's average is still marginally south of the industry average growth rate of 23.17%.
- GOOGL's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 35.98%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Despite the heavy decline in its share price, this stock is still more expensive (when compared to its current earnings) than most other companies in its industry.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. When compared to other companies in the Internet Software & Services industry and the overall market, GOOGLE INC's return on equity is below that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: GOOGL Ratings Report