TUESDAY


With a shortened week this ER session will still be jam packed with issues that could make or break. Here are a few setups. 


BBW


SHORT THE BREAKDOWN ON THE WEEKLY ONLY


GNRC


Generator name, usually associated with Nat Gas/Oil. Low input costs = low necessity for this. Plus TSLA and other companies are in the space. 

ER HISTORY:

GUIDANCE:

NO UPSIDE GUIDANCE REVISION (LOWERED 10% IN AUGUST WHICH IS TYPICALLY THEIR STRONG SEASON)

ANALYSTS: 

Analyst coverage is neutral to underperform. Price targets are above current valuation. 

BIAS: SELL 

TRADE: BTO MAR 25 P


HRL


This pig (pun intended) has risen in stock price significantly faster than the S&P 500 in the past year and it's peer group. Hormel's moonshot rise has can be attributed to the following:

  • Improved quarter over quarter EPS growth (5.9% in the most recent quarter)
  • Pattern of positive EPS growth over the past two years 
  • Year over year bottom line growth ($2.23 vs $1.94) and an expectation of improved earnings year over year ($2.60 vs $2.23)
  • Net income growth from the same quarter one year ago exceeded the S&P 500 and has decimated any competition. ($137.98M vs $146.94M)
  • Net operating cash flow increased significantly (104.89% to $244.51M) when compared to same quarter (most recent quarter) last year
  • Debt to equity ratio is 0.15 and is below that of the industry average. This implies that the company is really good at managing debt and improving operating efficiencies.

EARNINGS HISTORY: 

REVENUES MISSED LAST QUARTER AND COMPANY WAS GIVEN A PASS - IF $MDLZ TAUGHT US ANYTHING, PEOPLE ARE SPENDING LESS ON JUNK 

GUIDANCE:

LOWER END OF THE RANGE

NALYSTS:

ANALYSTS ARE POSITIVE TO NEUTRAL (MORE ROOM FOR ERROR/REVISION)

CHARTS:

TRADE: BTO Mar 40P Feb 37.5 35 P (Full risk) 

OINK FUCKIN OINK


RAX


RAX ON RAX ON RAX

BIAS: SELL

TRADE: MAR 17/16 P (Or FEB 17 FULL RISK)


GPC


This company is literally "NAPA knowhow". With auto loan rates low and easy this company has enjoyed a steady climb the last several years. In 2015 however the stock ran into turbulence and has been in a downtrend since. Even while competition in the space continued to flex its muscle, this issue has been a serious underperformer. 

ER HISTORY:

REVS have decelerated while competitors are growing

Though the bar is set super low on GPC I believe the issues here are systemic and I would look to sell any rally that presents itself until the longer trend is broken.

BIAS: Neutral to Sell

TRADE: Short against 91


SGNT


EARNINGS HISTORY:

Earnings have been inconsistent at best.

GUIDANCE: 

 

ANALYSTS: 

ANALYSTS HAVE YET TO TURN ON THIS NAME AND A BAD REPORT WOULD TURN THE WAVE AGAINST THE COMPANY


TGNA


Reports Q4 (Dec) earnings of $0.53 per share, excluding non-recurring items, $0.07 better than the Capital IQ Consensus of $0.46; revenues fell 4.4% year/year to $805.3 mln vs the $823.74 mln Capital IQ Consensus. In 2014's fourth quarter we achieved political revenue of $92.4 million. Despite the almost complete absence of that spending in 2015, consolidated fourth quarter operating revenues were only $36.8 million lower. Excluding incremental political advertising, Media Segment revenues would have been 11.9 percent higher. Digital Segment revenues were up 2.2 percent on a pro forma, constant currency basis. The Media Segment achieved double-digit increases in retransmission fees and online revenues, as well as an increase in core advertising.

 

The support has held currently in the name but it may be short lived. This has been one of the more actively traded names on the CBOE today implying a negative bias moving forward. Look to be a seller into the downtrend on the weekly basis. 


YNDX


Yandex N.V. misses Q4 EPS, beats on rev; offers FY16 guidance 

  • Reports Q4 (Dec) adj. EPS RUB 11.24 vs. RUB 11.97 consensus; revenues rose 23.4% year/year to RUB 18.09 bln vs the RUB 17.33 bln Capital IQ Consensus.
  • "We expect our ruble-based revenue to grow in the range of 12% to 18% in the full year 2016 compared with 2015."

Not much of a pop here after an ER beat. Look for the 9 to still suffocate this name. 


ACHC


EARNINGS:

Last quarter provided a sequential YOY miss in revenue. This may show signs that the company's growth is stagnating in the mid/short term.

GUIDANCE:

 

ANALYSTS: 



AMC


STAR WARS

PREVIOUS ER: 

NALYSTS:

With double bottom support and star wars at its back, this stock looks poised to break out of its recent downtrend and into resistance into its daily MA's above. 


ZTS


This name was once a hedge fund favorite and is now on the verge of hitting the chopping block. With the most recent liquidator being Jana Partners which disclosed today that they've liquidated all 3.9MLN shares of ZTS as of Q4 2015.

ZTS Liquidation


EARNINGS:


FOSL


Current Consensus stands at EPS of $1.53 on Revenue of $923 mln.

Shares of FOSL have been under steady selling pressure since late 2013 when the stock was trading in the $120 area. An increase in competition and a slow down in the watch category have led investors out of the name, leading to an approx 75% decline in shares. Sentiment remains extremely low in the name with analysts cautious ahead of the Q4 report. A few have noted they expect to see the co provide very sobering guidance to reflect the current environment.

The stock has been showing some signs of finding a bottom in this $30 area which it has been holding since its last report. On that day in November, shares of FOSL fell from $50 to $32. But it has been holding that area for the most part which is impressive given the global carnage we have witnessed in 2016.

FOSL will face another hurdle today as investors await a dreadful report. The 20% short interest certainly highlights the fear among the markets. But it will be interesting if the stock is able to hold on and shake off another poor report. This may suggest that shorts are prepared to head to the sidelines. We are seeing some short covering in the name ahead of the report as it drives up to the $35 area. Investors/traders will want to see the Q1 and 2016 outlook before making the next move.

Guidance

  • Q4
    • Net sales to decrease in the range of 11.0% to 2.0%
    • Operating margin in a range of 12.0% to 15.0%
    • Diluted earnings per share in a range of $1.40 to $2.00.
  • 2015
    • Net sales to decrease in the range of a 3.5% to 1.0%
    • Operating margin in a range of 12.5% to 13.5%
    • Diluted earnings per share in a range of $5.60 to $6.20.

Q3 Recap

FOSL reported Q3 (Sep) earnings of $1.19 per share, $0.05 better than the Capital IQ Consensus of $1.14. Revenues fell 13.8% year/year to $771 mln vs the $794.97 mln Capital IQ Consensus.

  • Co issued downside guidance for Q4, seeing EPS of $1.05-1.65 vs. $2.14 Capital IQ Consensus. Expects revenue to decline 16.0-7.0% y/y; sees Operating Margin in the range of 8.5-11.5%.
  • FOSL lowered it's FY15 EPS GAAP guidance to $4.15-4.75 (Prior $4.80-5.60). Lowered revenue outlook to decline 10.5-8.0% (Prior down 8-4%).

Though the stock has been beat up lately and has been under considerable pressure since 2013 it has recently set up into resistance and is providing another good opportunity for more downside. 

BIAS: SELL

TRADE:  BTO MAR 30 P


ZEN


With DATA taken to the woodshed two weeks ago, the enterprise software space got taken out back with it. Hedge funds have also taken sizable cuts in ZEN as of late. 

IF this issue reports a bad number when it comes to licensing or subscriptions this will get obliterated. It is an expensive name on a sales basis. YOY revenue is stagnating, that is usually the first sign of decelerating growth. Analysts are still in the buy camp and will have to capitulate if the issue fails. IV is not too expensive and you can really take a leveraged shot.

BIAS: SELL

TRADEBTO FEB/MAR 12.5 P (DEPENDING ON RISK TOLERANCE)


TEX


Yet another hedge fund darling that has seen its fair share of liquidation. The latest coming from the closure of a position out of Apaloosa. 

This name has set up nicely to remain in trend and fall shortly after this ER. Currently we have a bull flag on the daily that sits between MA's and up against the downtrend line. 

BIAS: SELL

TRADE: BTO FEB 19 P & MAR 21 C (2P X 1C)


DVN


This is a name that has seen its fair share of beatings with the depreciation in oil. This is a large cap oil producer that moves almost 1/1 with oil. I dont personally see a way out of a poor earnings report. 

BIAS: HARD SELL

TRADE: BTO FEB/MAR 20 P (DEPENDING ON TOLERANCE)

TARGET: 17


ESRX


Capital IQ EPS consensus: 1.55 Capital IQ Rev consensus: 26.58 bln

Bad chart setup on all timeframes. Looks like a sell without much support below 64. Fell victim to the biotech swoon that started mid last year. 

BIAS: SELL

TRADE: BTO MAR 62.5 P & WEEKLY 50 P FOR FUN


WEDNESDAY


SHOP


Web 2.0 name that just went public at the wrong time. Growth multiple shrunk and no traction for profitability. 

EARNINGS:

ANALYSTS: 

 BIAS: SELL

TRADE: SHORT ALL TIME LOW BREAK

 


GRMN


Capital IQ EPS consensus: 0.48 Capital IQ Rev consensus: 761.00 mln

EARNINGS: 

GUIDANCE:

ANALYSTS:

BIAS: BUY

TRADE: BTO MAR 35 C & Hedge with FEB 32.5 P


PCLN


PCLN is expected to report fourth quarter earnings tomorrow before the open. There is a conference call scheduled for tomorrow morning at 7:30 AM ET. Capital IQ consensus calls for EPS of $11.81 (versus $10.85 last year) on revenue of $1.956 billion, up 6% YoY). The current consensus is within the company's guidance range of $11.10-11.90 & $1.86-1.99 bln. The company is expected to guide for the first quarter where consensus stands at $9.60 & $2.067 billion. Some peers in the space include: EXPE,CTRPQUNRMMYTTRIPTZOOSABR
 

The first area of interest will be gross travel bookings

Taking a look at last quarter, the company reported gross travel bookings of $14.8 bln, which was up 7% YoY (or ~22% on a constant currency basis). The Group's gross profit for the 3rd quarter was $2.9 billion, a 12% increase from the prior year (approximately 29% on a constant currency basis). International operations contributed gross profit in the 3rd quarter of $2.6 billion, an 11% increase versus a year ago (~ 29% on a constant currency basis). 

Looking ahead to the fourth quarter, the company is expecting total gross travel bookings to increase ~1-8% (an increase of ~13-20% on a constant currency basis). International gross travel bookings are expected to increase 3-10 in Q4 (or ~17-24% on a constant currency basis). Following Q3, Oppenheimer said slower bookings overshadow the strong fundamental trends such as stable commissions, total advertising leverage on gross profit (-50bps y/y), and aggressive buy-backs, that caused a 5% non-GAAP EPS beat. With shares at 19x firm's revised 2016E non-GAAP EPS, the firm believes current levels offer a favorable entry point for LT investors, given firm's high-teens EPS growth forecast and management's commitment to returning capital through buybacks.

The next area of interest will be adjusted EBITDA. Taking a look at last quarter, Adjusted EBITDA for the 3rd quarter 2015 was $1.6 billion, an increase of 12% versus a year ago. Looking ahead to the fourth quarter, the company is expecting adjusted EBITDA of $710-760 mln (versus $712 mln in the same quarter as last year.

Options Activity

  • Based on PCLN options, the current implied volatility stands at ~ 46%, which in 13% higher than the historical volatility (over the past 30 days). Based on the PCLN February $1080 straddle, the options market is currently pricing in a move of ~13% in either direction by February expiration (Friday).

Technical Perspective

  • PCLN shares have underperformed the Nasdaq so far this year with PCLN falling by 15% vs 12% decline in the index. PCLNtends to have 5-7% reactions to earnings. On a positive report, look for resistance near the $1100-1125 area, while support sits near the $1025-1050 vicinity.

BIAS: Bullish

TRADE: WAIT TIL AFTER ER OR BUY SOMETHING VERY FAR OUT IN CASE THEY SPLIT THE STOCK -- 1250 C FULL RISK IF YOU HAVE THE STOMACH FOR IT


TMUS


This name is expensive. Especially now that investors are thirsty for yield. Its also sitting below resistance and multiple MA's across multiple time frames. 

EARNINGS: 

ANALYSTS: 

BIAS: SELL

WAIT FOR ER AND THEN SHORT A FAILURE


NVDA


NVDA Feb 27 calls are seeing interest ahead of earnings tomorrow February 17 after the close  (volume: 16.3K, open int: 11.6K, implied vol: ~171%, prev day implied vol: 121%)

The stock was a darling towards the end of 2015 and recently has come off its most recent highs. The stock chart looks constructive and it appears that there is a bid under the issue. 

EARNINGS: 

GUIDANCE: 

ANALYSTS:

BIAS: BUY

TRADE: BTO FEB 27 C


SPWR


After SCTY broke down last week with poor earnings it will be interesting to see if the issue will follow suit or if the SCTY news was isolated. 

I don't think that this issue is a smart play at the moment. IV is cranked really high and the charts are flat. To me, playing this name will be dangerous and is as close to flipping a coin flip as you can get. 

BIAS: No Touch


GPOR


  • Net daily production for the Q4 of 2015 averaged approximately 643.8 MMcfe per day.
  • Year-end 2015 total proved reserves grew to 1.7 Tcfe, as compared to 933.6 Bcfe at year-end 2014, an increase of 83% year-over-year.
  • Year-end 2015 total proved developed reserves grew to 767.1 Bcfe, as compared to 453.8 Bcfe at year-end 2014, an increase of 69% year-over-year.
  • Entered into a joint venture ("JV") with a subsidiary of Rice Energy Inc. (NYSE: RICE), which venture completed a lateral that connects two existing dry gas gathering systems on which Gulfport currently flows the majority of its dry gas volumes.  
  • Year-end 2015 cash on hand totaled approximately $113.0 million and Gulfport's revolving credit facility of $700 million was undrawn with outstanding letters of credit totaling $178.6 million.

EARNINGS: 

ANALYSTS: 

Risk reward favors a bullish attempt on this one. In theory if this trend is broken you may see a precipitous drop to 22 but the price of options set up for FEB 27/5/30 C as ideal.


CF


This name has been obliterated in the last couple of months along with the whole space. It looks as though its below all key levels but it's on the last line of defense though as the charts show.

BIAS: BUY

TRADE: BTO MAR 30 C OR FEB 31 C


EPAM


ALL trend lines broken, if this finds support somehow it will come from a higher power than technicals. 

EARNINGS:

ANALYSTS:

BIAS: SELL

TRADE: Would NOT play the earnings but would rather short the break after ER


NTAP


This is a name that has been hated for a long time and it seems that it is finding its last leg to stand on. If the rhetoric is to remain the same, the flight from quality and reversion to the mean int he junk names should take this afloat. 

On a technical basis, the charts look a little constructive for once. 

NTAP has found a support floor off its last trend from 2009. 

EARNINGS:

GUIDANCE:

ANALYSTS: 

BIAS: BUY

TRADE: MAR 25 C or FEB 23.5 C (Hedge with FEB 22 P if you need protection)


NEM


Newmont Mining is scheduled to report Q4 and FY15 earnings after market. A conference call will be held on Feb 18 at 9:30 am E/T to discuss the results. EPS consensus is $0.16/share, a decrease of $0.02/share, compared to actual results y/y.

Color on Newmont Mining:

Shares of NEM hit an all-time-high at $72.42/share in Nov 2011, coinciding with a peak in the price of gold at 1191/oz. Since that time, shares of NEM have dropped 66% as gold dropped 36% from its 2011 highs and is trading around $1,210/oz. However, increased stock market volatility and uncertainty has renewed interest in miners as investors flee from risk and into safer assets such as gold, driving the price up.

NEM's realizable returns to shareholders are tied more intricately to the underlying price of gold than competitors operating within the same industry. The co's dividend policy includes a quarterly increase of $0.05/share for every $100 increase in the price of gold above $1,300/oz, and currently pays a quarterly dividend of $0.025/share. Investors tend to treat this dividend as a built-in option. The closer the underlying price of gold moves to $1,300, the higher the probability of receiving increased dividend payments and the more valuable NEM stock becomes. Shares of NEM are highly responsive to the price of gold for this reason, although they are also one of the world's largest copper producers.

Also, the co has recently announced the retirement of COO Chris Robinson. He will be succeeded by Tom Palmer, who joined the company only 2 years ago but has 20 years of experience in Rio Tinto's bauxite/alumina, coal, copper, & iron ore businesses.

Q3 Recap:

  • Net income: Adjusted net income was $126 mln, or $0.23/share, compared to $249 mln or $0.50/share in the prior year quarter
  • Cash flow: Generated cash from continuing operations of $813 mln compared to $328 mln in the prior year quarter & free cash flow from continuing operations of $478 mln, compared to $51 mln in the prior year quarter

FY16 Guidance:

  • Gold all-in sustaining costs: Expected to improve from between $900-$960/ounce in 2016 to between $850-$950/ounce in 2017; longer term co expects to sustain savings achieved to date, and maintain AISC below $1,000 per ounce through 2020
  • Gold costs applicable to sales: Expected to be between $650-$700/ounce in 2016
  • Attributable production: Gold production rises to between 5.2-5.7 mln oz by 2017 as CC&V, Merian and Long Canyon Phase 1 more than offset declines at Batu Hijau, Yanacocha and Twin Creeks
  • Capital: 2016 sustaining capital is expected to be between $700 and $750 mln Copper production: Expected to be between 120,000 and 160,000 tonnes in 2016 and 2017 before decreasing to between 70,000 and 110,000 tonnes by 2018

Shares of NEM are currently up 2% before the earnings release.

If you believe that the gold rally is not over, this story is not over. 

BIAS: BUY

TRADE: BTO MAR 26 or FEB 26C


JACK


Jack In The Box target lowered to $86 at Oppenheimer ahead of the Q1 results 

Oppenheimer lowers their JACK tgt to $86 from $95 ahead of the earnings next week. In this turbulent market, firm forces themselves to remain fundamentals-driven. Co is the poster child for a healthy story with strong execution that's become under-the-radar and out-of-favor. It is one of firm's top picks for '16. NT comp fears appear overdone with analysis of recent industry trends. And firm's work points to buffers in '16 ests, which appear achievable, not aggressive. Co's 9x EBITDA valuation sits at a discount to its own 3-year average and current peer group. The new transformative menu has been launched (late-Jan), 1Q16 results are 2/17 and the late-May Analyst Day could reveal next leg of value-enhancing levers.

 

Wait for the break above 80 or the breakdown below 70 to trade this one. IV will milk your $ dry. 


SIX


Six Flags pre-earnings mover: SIX now bid +3.5% with volume pacing above the +850K avg. today as price sets a new multi-week high print right into the 50d sim. moving average @ 51.56 with the well-known theme/amusement park operator confirmed to release quarterly earnings results tom. morning, pre-mkt

 

Capital IQ EPS consensus: -0.11 Rev consensus: 192.98 mln

 

Chart and expectations remain tame this one is a long into ER. 

BIAS: Bullish

TRADE: BTO FEB 55 C & MAR 50


SODA


 

Sodastream (SODA) is scheduled to report Q4 earnings before the market opens tomorrow. The co reported at 7:45 AM ET last quarter. Conference call is scheduled for 9:30 AM ET. The Street expects Q4 adj. EPS of $0.17 on revs -13% to $110 mln.

  • Co typically does not provide guidance on calls
  • Capital IQ consensus for FY2016 adj EPS of $0.90 on +4% revs YoY to $427.4 mln.
  • Shareholders have been on an up and down ride since co reported Q3. After initially popping 5% following ER,SODA sold off ~19% over the next two weeks. SODA then gapped up 8% on 12/7 in sympathy w/ the GMCR buyout. The stock proceeded to go on a 16% run before starting to nosedive on 12/31. The stock has found support at the $12 level and is currently trading at ~$14.
  • PE of 10.6x 2016 EPS and Short Interest of 17%

Highlights of Last Q

  • The co is currently entrenched in last year's plan to reposition its brand as a health and wellness brand 
    • Co is looking for its topline to stabilize in Q4 (probably meant in-line w/ Q3 decline of -13%) w/ it returning to growth in 2016 
  • Co noted that sell through on its new flavors had accelerated week to week, but co had not noticed any uptick in maker sales
  • By segments
    • Sparkling water maker units declined 22% to 639K
    • Flavor units -12% to 6.7 mln
    • Gas refills units +10% to 7 mln 
  • By Region
    • Western Europe (62% of revs): -8% YoY
    • Americas (24% of revs): -11% YoY 
    • US sales were down low single digits
    • Asia Pacific (8% of revs): -32% YoY
    • East Africa (6% of revs): -26% YoY
  • Gross margin was 48.84%, down 280 bps YoY
    • Negatively impacted by currency and partially offset by higher share of CO2 refills in the product mix.

I DONT BELIEVE THE CURRENCY ISSUES ARE GOING AWAY. I ALSO DONT BELIEVE THIS COMPANY HAS BEEN ABLE TO TURN AROUND IN JUST ONE QUARTER. 

BIAS: SELL

TRADE: BTO FEB 13 P (HEDGE WITH 15 C) 3X1


WMT


The world's largest brick and mortar retailer Wal-Mart (WMT) is scheduled to report earnings tomorrow (February 18) at ~7am ET along with access to its pre-recorded conference call. As usual the current quarter consensus estimates are in-line with the co's last updated guidance -- WMT is expected to report Q4 EPS of $1.43 on sales of $130.4 bln (guided for $1.40-1.55). Along with Q4 results on Tuesday, the co will have Q1 and updated FY17 outlook. Key drivers include any changes to outlook, comps and insight into sales trends. 

Headed into last quarter, shares of WMT were trading near 52-week lows ($56.30) after selling accelerated during the October Annual shareholders meeting when WMT provided a cautious long-term outlook. Since last quarter, WMT has been steadily climbing higher (while notably outperforming the broader market by large margin) and has now closed the October gap lower. Market participants will keep a close eye on the stock to see how it reacts to forward looking guidance and whether or not it can hold its steady uptrend. Based on WMT options, the current implied volatility stands at ~ 27%, which in 10% higher than the historical volatility (over the past 30 days). Based on the WMT Feb $66 straddle, the options market is currently pricing in a move of ~3% in either direction by weekly expiration (Friday). 

Key areas of focus:

  • Outlook: Included with Q4 results will be Q1 EPS/comps guidance—expectations are for Q1 EPS of $0.91 --and updated 2016 (FY17) guidance. The latter was initially discussed in October at the Annual meeting -- FY17 EPS 6-12% lower (current consensus of $4.18 is near the midpoint of this guidance range) and annual sales growth rate of 3-4% over the next 3 years. 75% of the decrease in earnings in FY17 is related to wage and store structure. Operating income is expected to be impacted by ~$1.5 bln from the second phase of previously announced investments in wages/training. WMT results/guidance tend to have broad implications and can provide insight into overall consumer sentiment. As seen during its Annual meeting - commentary/outlook can have a heavy hand in guiding the direction of the entire retail sector.
  • Longer term guidance (from October Annual Meeting; event materials): By FY19 WMT expects EPS to be +5-10%. Over the next 3 years, annual sales growth will add $45-60 bln in net new sales (annual growth rate of 3-4%). Capital investments will be ~ $11.0 bln for FY17 (down from FY16 estimate of ~$12.4 bln) and will remain flat in FY18/19. This decline in FY17 capital investments is primarily due to a moderation of physical store expansion.
  • Comparable Store Sales (Table of WMT and big box peers historical comps; press release will include Q4 comps results and Q1 comps guidance for U.S. and Sam's): Last quarter Wal-Mart US comps were in-line with co's expectations, while Sam's Club missed the midpoint of its guidance range. U.S. Q3 comparable store sales +1.5% vs 1-2% guidance and 0.5% last year driven by traffic of 1.7%; Sam's Club Q3 comparable store sales +0.4% ex fuel vs 0-2% guidance; Neighborhood Market format comps increased ~8%. Q4 guidance included US up ~1% and Sam's comparable store sales +0-1%.
  • Traffic/ticket trends (provides limited traffic commentary with comps in the press release): Q3 Walmart US comp traffic +1.7% (Q2 +1.3%, Q1 +1%; prior year Q4 +1.4%, Q3 -0.7%), while average ticket -0.2% (Q2 +0.2%, Q1 +0.1%; prior year Q4 0.1%, Q3 +1.2%, Q2 +1.1%). Sam's Club Q3 comp traffic turned negative with 0.3% decline (Q2 +0.5%, Q1 -0.2%; prior year Q4 +1.5%, Q3 +0.2%, Q2 +0.3%) but Q3 ticket was positive with +0.7% increase (Q2 +0.8%, Q1 +0.6% prior year Q4 +0.5%, Q3 +0.2%, Q2 -0.3%)
  • Expansion plans/International growth (unit count and square footage data)
    • Recently announced closures: Confirmed in January plans to close 269 locations. Financial Impact- EPS estimated impact is ~$0.20-0.22 with $0.19-20 in Q4.
    • Walmart Express / Domestic store closures: Plans to close 154 US locations, including the 102 smallest format stores - Walmart Express, to focus on strengthening Supercenters, optimizing Neighborhood Markets, growing the e-commerce business. Additional Closures: Included in the closures are 23 Neighborhood Markets, 12 Supercenters, 7 stores in Puerto Rico, 6 discount centers, and 4 Sam's Clubs.
    • International plans: WMT is also closing 115 stores internationally including the 60 recently-closed, loss-making stores in Brazil and 55 stores that are primarily small, loss-making stores in other Latin American markets. International units as of Sept 30 were 6310 (total # 11,620 )--- includes Asda in the U.K. (620 units), Mexico (2324 units), Asia 790 units (China 423, Seiyu in Japan - 346 units and Best Price in India only 21 units) and has operations in Argentina (108 units), Brazil (559 units), Chile (398 units), Canada (396 units).
    • Updated expansion plans: FY17 -- Domestically opening 50 - 60 Supercenters and 85 - 95 Neighborhood Markets and 7-10 new Sam's Club locations; Internationally opening 200 - 240 stores.
  • Other hot topics: Competition - Online retailers (ie Amazon) are becoming increasingly more threatening to Brick&Mortar format. As seen at the annual meeting, WMT has a lot of catching up to do -- and with such a large infrastructure in place --- is going to take some time. Mid July Wal-Mart began testing 3-day delivery service ‘ShippingPass ‘ with $50/year membership fee. Since then Amazon has expanded its two day delivery and even same-day delivery in select areas (its $95 fee includes other perks like Music/video). Whether this pilot will change or expand has yet to be determined. 

Results from WMT precede other big box peers - Target (TGT) reports earnings next week on February 24 before the open, Costco (COST)  March 2 after the close and discount/dollar store names - Dollar Tree (DLTR) late Feb, Big Lots (BIG) / Dollar General (DG) early March, Fred's (FRED) March 24, Five Below (FIVE) late March. ETFs: Retail HOLDRS Trust (RTH) - WMT ~7%, Consumer Staples Select Sector SPDR (XLP) - WMT is sixth largest holding at ~6% , SPDR Retail (XRT) less than 2%.

 

BIAS: SELL

TRADE: FULL RISK (TRYING TO CAPITALIZE ON HIGH EXPECTATIONS ONLY) FEB 65 P FEB 63 P

 


SAM


This is a former high growth high flyer that recently lost a little bit of its mojo. SAM is showing signs of weakness on all three time frames but the recent run-up has allowed for some room to precipitate more damage without affecting the overall trend of the stock.

EARNINGS: 

ANALYSTS:

BIAS: SELL

TRADE: BTO FEB 175 P Or MAR 170 P


EQIX


THIS HIGH FLYER RECENTLY LOST ITS UPTREND ON THE DAILY AND WEEKLY TIMEFRAMES. Though it may surprise to the upside and resume the trend, I believe that will be difficult.

 

 

EARNINGS:

ANALYSTS:

BIAS: SELL


IF you are a believer that materials and industrials are in fact turning around, FLR should be a beneficiary of this type of behavior.

FLR appears to be putting in a base at these levels. With cheap options, this is a good name to place a bet on.

BIAS: BUY

TRADE:  BTO MAR 47.5 C HEDGE WITH WEEKLY 44 P


DE


Deere pre-earnings mover: DE now -1.95% posting a notable pullback after setting new 6-month intraday highs @ 82.23 yesterday with the Industrial Machinery & Equipment co. confirmed to release quarterlies tom. morning, pre-mkt.

With a recent stake in DE announced by Berkshire  this name is interesting. The stock has been range bound for quite some time now and the new share purchase announcement should help solidify a floor below this name. 

BIAS: BUY AFTER ER


B