J.C. Penney, Walmart, Plus Two Other Retailers Next on the Earnings Dance Floor

NEW YORK (TheStreet) -- Four retailers and a semiconductor-equipment company will report their quarterly reports on Thursday and Friday. Here are some trading guidelines for their stocks.

First up is the world’s largest retailer, Walmart (WMT), which is a component of the Dow Jones Industrial Average. The Dow 30 is down 0.1% year to date; Walmart is down 5.7%.

Walmart will report its earnings before the opening bell on Thursday as will Kohl's (KSS), which is down 1.4% year to date.

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The biggest winner year to date among the stock profiled in this post is Applied Materials (AMAT), with a gain of 18%. That leads the PHLX Semiconductor Index, which has a gain of 14%. Applied Materials will report after the closing bell on Thursday.

Investors will be scrutinizing the results of retailer J.C. Penny (JCP) to size up the company's turnaround efforts. Penney will report after the closing bell on Thursday. Its stock is up 3.4% year to date.

Estee Lauder (EL) will report before the opening bell on Friday. Its stock is up 0.1% so far this year.

Here are today’s stock profiles. Two “crunching the numbers” tables follow.

Applied Materials ($20.91) has been above its 200-day simple moving average since the beginning of 2013, and it set a multiyear intraday high at $23.46 on July 7. The stock has been below its 50-day SMA at $22.10 since July 24, trading as low as $20.60 on Thursday, which was still above its 200-day SMA at $19.31

Analysts expect the company to report earnings of 24 cents per share. Applied Materials has a 12-month trailing price-to-earnings ratio of 21.5 and dividend yield of 1.9%.

The weekly chart is negative with its five-week modified moving average at $21.42. Semiannual value levels are $18.63 and $14.57 with monthly and quarterly risky levels at $22.06 and $22.07, respectively.

Estee Lauder ($75.37) has been above its 200-day SMA at $72.37 since April 16, and it set an all-time intraday high at $77.34 on June 6.

Analysts expect the company to report earnings of 56 cents per share. Estee Lauder has a 12-month trailing P/E ratio of 24.4 and dividend yield of 1.1%.

The weekly chart shifts to negative given a close on Friday below its five-week MMA at $74.86 as its 12x3x3 weekly slow stochastic is declining. Weekly and monthly value levels are $73.35 and $70.12, respectively, with quarterly and monthly risky levels at $82.64 and $88.04, respectively.

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J.C. Penney ($9.46) set an all-time intraday low at $4.90 on Feb. 5, and went as high as $9.93 on May 16. The stock is above its 200-day SMA at $8.26.

Analysts expect the company to post a loss of 99 cents per share. J.C. Penney doesn't pay a dividend.

The weekly chart is positive with its five-week MMA at $9.17. Annual and monthly value levels are $7.95 and $6.72, respectively, with a weekly pivot at $9.37 and semiannual risky levels at $19.11 and $21.10.

Kohl's ($55.93) has had a choppy year so far, crossing its 200-day SMA at $54.16 several times since Jan. 21. The stock traded as low at $48.68 on Feb. 5 and as high as $58.20 on April 4.

Analysts expect the company to report earnings of $1.08 per share. Kohl's has a 12-month trailing P/E ratio of 13.8 and dividend yield of 2.8%.

The weekly chart is positive with its five-week MMA at $53.88 and 200-week SMA at $51.18. Monthly and semiannual value levels are $53.94 and $53.83, respectively, with a quarterly risky level at $57.65.

Walmart ($74.22) set an all-time intraday high at $81.37 back on Dec. 4, and traded as low as $72.27 on Feb.5. The stock has been trading back and forth around its 200-day SMA at $76.68 since March 21.  

Analysts expect the company to report earnings of $1.21 per share. Walmart has a 12-month trailing P/E ratio of 14.7 and dividend yield of 2.6%.

The weekly chart is negative with its five-week MMA at $75.30 and 200-week SMA at $66.75. Annual and monthly value levels are $72.95 and $71.79, respectively, with a weekly pivot at $74.39 and semiannual and quarterly risky levels at $78.09 and $80.48, respectively.    

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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.

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

TheStreet Ratings team rates WAL-MART STORES INC as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:

"We rate WAL-MART STORES INC (WMT) a BUY. This is driven by multiple 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 revenue growth, good cash flow from operations, reasonable valuation levels and notable return on equity. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."

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

  • WMT's revenue growth has slightly outpaced the industry average of 3.4%. Since the same quarter one year prior, revenues slightly increased by 0.8%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Net operating cash flow has increased to $5,939.00 million or 21.35% when compared to the same quarter last year. In addition, WAL-MART STORES INC has also modestly surpassed the industry average cash flow growth rate of 11.54%.
  • WAL-MART STORES INC' earnings per share from the most recent quarter came in slightly below the year earlier quarter. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, WAL-MART STORES INC reported lower earnings of $4.86 versus $5.01 in the prior year. This year, the market expects an improvement in earnings ($5.15 versus $4.86).
  • 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. Compared to other companies in the Food & Staples Retailing industry and the overall market, WAL-MART STORES INC's return on equity exceeds that of both the industry average and the S&P 500.
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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