Earnings are often a major determinant of a stocks trajectory on both an immediate and longer-term basis. Even some companies that release strong earnings reports may not be appealing as a result of high prices or weak guidance. The same goes for corporations that aren’t making money but have a strong body of evidence as to how they will in the future. That said, below, Equities takes a look at companies releasing earnings this week and identifies some that look promising against others that may have reached their peak or look overbought.
Peet's Coffee and Tea (PEET)is expected to release their earnings today and while the company has had an exceptionally strong year, as the price of coffee ratchets higher and competitors like Green Mountain Coffee (GMCR) and Starbuck’s (SBUX) gain appeal, Peet’s has not exhibited unique strength. From the looks of it, Peet’s is attractive largely by virtue of its placement in an area of current ascent, but that looks to already be factored into its nearly $60 share price. The price of shares has nearly doubled this year but the business has not grown much. The company is choosing to expand its packaging rather than create more stores meaning whatever growth it’s experienced in this department has already been accounted for. Additionally, while Peet’s may beat estimates, its done so for the past four quarters, this could be the company’s height. It’s hovering around its 5-year peak and insiders have sold off over 40% of their shares in the last six months. Additionally, earnings estimates for both this and next year have been significantly reduced.
Energy Transfer Partners (ETP) is a domestic provider of natural gas midstream and intrastate transportation and storage services. The stock has been on a strong upwards flight in recent trading. Ahead of earnings analysts are forecasting an optimistic Earnings-per-share reading of 30 cents per share on revenue of $1.79 billion. This is a huge improvement compared with the previous year’s reported EPS of 3 cents per share on revenues of $1.27 billion. Whether the company will come through with the estimate 41 percent revenue growth remains to be seen but if it can, share prices will benefit significantly as it will only compound the attractiveness of its 7.7 dividend yield.
LinkedIn (LKND) The most talked about IPO of the year, LinkedIn earnings are perhaps the most hotly anticipated to debut this week. In spite of nearly doubling since the start of trading, LinkedIn is expected to post losses of 4 cents for the quarter. There is something about this business-based social network; however, that prompts investors to keep buying it in spite of a massive body of evidence that would indicate otherwise. Many speak of the potential of LinkedIn as a massive database of usable information but trading with a P/E ratio of 2,867.18 it’s perhaps worth it to consider waiting until the company figures out how to generate profits more effectively.
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