3 Important Earnings Reports to Watch This Week

TSLA, KATE and CTRP all trade at critical fluctuation points

3 Important Earnings Reports to Watch This Week

This week marks the moment of truth for many high-profile companies, as earnings reports from a slew of widely owned stocks are slated for their big reveal.

8438607 profit loss e1302273875673 3 Important Earnings Reports to Watch This WeekOf course, we all know that a very good earnings report is likely to drive a company’s share price higher immediately following the release. Conversely, an earnings report that misses badly on the top and/or bottom line is going to put the smackdown on just about any stock.

Yet some companies are just more susceptible to price swings on earnings. Moreover, some stocks just really need a solid earnings beat to either a) break them out from the confines of a current trading range, b) keep their momentum going, or c) keep them from tanking.

This week, investors will probably be watching the Tesla (TSLA) earnings report, and rightfully so. But in addition to that, they also should look out for Ctrip.com (CTRP) and Kate Spade (KATE). These high-profile companies are stalwarts in their respective industries, and all currently trade at critical technical junctures. Here’s a closer look at each:

Ctrip.com (CTRP)

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Earnings Report: Wednesday, May 7, after the bell

Chinese online travel website Ctrip.com (CTRP) is considered the Priceline.com (PCLN) of Asia, and for good reason. The company has carved out a niche as the go-to place for online travel, a pursuit the Chinese people have embraced in a huge way over the past several years.

Investors also have embraced CTRP stock, as the shares have a one-year gain of 110% and are up 275% since bottoming out in summer 2012.

The road has been much rougher this year for CTRP, as the stock is down about 2% year-to-date. CTRP shares now trade at just above $49, which is right between the 50- and 200-day moving averages.

If CTRP can come in with solid revenue numbers that shun the notion that the Chinese economy is slowing (solid here to me would be revenue north of $246 million), then we could see a breakthrough of the 50-day and a powerful move toward the $60 range we witnessed last October. A miss, however, and/or lower guidance going forward would drop CTRP below the 50-day average of $48.43, and if that takes place, the stock won’t find support again until the $40 range.

Kate Spade (KATE)

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Earnings Report: Thursday, May 8, before the bell

High-end retail fashion brand Kate Spade (KATE) — the remaining company following the rebranding and slimming down of Fifth and Pacific — has been a darling of Wall Street for some time, with a meteoric share price performance of 640% over the past five years. Over the past 52 weeks, KATE stock has spiked almost 70%. Yet so far in 2014, KATE shares also have been extremely volatile. The stock sank some 14% in January, only to rebound some 45% through the March 18 high.

KATE stock has come down sharply from its 2014 high, and shares are now trading just below the 50-day moving average. I suspect that if the company can impress Wall Street on the top line when it reports fiscal Q1 results (I would be impressed here with a metric north of $202 million), we could see another big move toward those March highs.

Of course, a miss on the top line might be just the catalyst for a selloff back down to the February low.

Tesla Motors (TSLA)

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Earnings Report: Wednesday, May 7, after the bell

I admit that Tesla Motors (TSLA) has been one of my favorite darling stocks over the past several years, and I’m not alone. The public has embraced CEO Elon Musk’s most-excellent Model S sedan, and more importantly, the investing public has embraced TSLA stock.

Over the past five years, TSLA stock has driven roughly 1,000% higher, and in the past 52 weeks alone, shares have spiked nearly 257%. Tesla also has impressed year-to-date, up some 41%; however, since March, there has been a decided drift lower that has pushed TSLA stock below its 50-day moving average.

We’ll find out Wednesday after the closing bell whether Tesla can deliver strong top- and bottom-line results. A strong top line would be approximately $700 million, while I want to see adjusted EPS of at least 6 cents on the bottom line.

My colleague Jeff Reeves says he’s expecting Tesla to post “its first ho-hum performance after earnings this week.” Reeves correctly points out that the shorts have mostly been shaken out, and that there hasn’t been a lot of volatility of late.

While I agree with this analysis, I also think that any significant beat and/or miss on either Tesla’s top or bottom line, and we’ll see traders go into overreaction mode. The former could send shares skyrocketing well past all-time highs … but the latter could send TSLA stock back down to support at the 200-day average around $175.

As of this writing, Jim Woods was long TSLA.


Article printed from InvestorPlace Media, http://investorplace.com/2014/05/3-important-earnings-reports-tsla-ctrp-kate/.

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