Earnings Preview: T, EBAY, MSFT Among Highlights As Earnings Season Heats Up


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To see all upcoming earnings release dates in the market, visit MarketChameleon's Earnings Calendar.

 

AT&T ($T)

Wednesday, January 25, After the Market Close

AT&T (T) is another big name scheduled to announce its quarterly results this week.  However, expectations for T are somewhat muted.

Analysts are expecting AT&T to report a quarterly profit of $0.66 per share.  This would be a nearly 5 percent improvement from last year, when the company posted $0.63 per share.  Revenue is generally expected to hold steady with last year.  Analysts are looking for a top-line result of about $42 billion.  It posted $42.12 billion last year.

Implied Volatility for T has been choppy over the last several weeks.  The measure has been in a range since late November.  It reached a monthly high of 17.4 on December 30, but is off that mark now.  It closed last week at 15.1.

The ATM Straddle premium for the January 27 expiration is $0.90, or 2.2%.

The post-earnings moves for shares of AT&T have underperformed expectations in each of the last six quarters.  The average absolute earnings move for the last four quarters is 1.25%, compared to an average implied straddle over that time of 2.55%.

eBay ($EBAY)

Wednesday, January 25, After the Market Close

eBay's last earnings report included a better-than-expected profit for the third quarter.  However, it also came with weak guidance for the fourth fiscal period. 

The company said it expected adjusted earnings between $0.52 and $0.54 per share.  Analysts were predicting $0.54 per share.  Revenues were projected to be between $2.36 and $2.41 billion, compared to a consensus estimate of $2.40 billion.

Going into the report, analysts are still looking for an EPS figure of $0.54 and revenue of $2.4 billion.

Shares of eBay plunged following the Q3 earnings report and continued to drift lower during the subsequent couple weeks.  The stock dropped from $32.52 before the earnings report to $27.95 in early November.  It eventually reached $27.39 in early December, the lowest mark since July.  Shares have since come off that multi-month low and finished last week at $30.64.

Implied Volatility has been rising for EBAY since the second half of November.  It reached 35.2 on January 17, its highest level since October, just after the release of its last quarterly report.  Since then, IV has come down slightly and finished last week at 32.8.

IV for EBAY had a massive increase going into October's quarterly report.  It reached 46.9 on October 20 and plunged following the earnings announcement.

EBAY's post-earnings move has significantly outstripped the expectation in four out of the last five quarters.  The average absolute post-earnings move for the last four quarters is 9.35%, compared to an expectation of 6.95%. 

The ATM Straddle premium for the January 27 expiration is $2.03, or 6.6%.

Microsoft ($MSFT)

Thursday, January 26, After the Market Close

Earnings season begins to heat up this week and Microsoft (MSFT) is among the more prominent companies set to release its quarterly results over the next few days.

The software maker is expected to earn $0.78 per share, matching the result posted in the same period last year.  Revenue is expected to ease by about 2 percent, slipping to about $25.3 billion.

Microsoft had a strong report last time around.  In October, the company reported better-than-expected earnings and revenues.  Results were helped by strong growth in its cloud business.

Implied volatility for MSFT has drifted higher since mid December, rising to 23.7 on January 17, its highest level since October.  It has since come slightly off that mark, closing at 22.8 on January 20.

The ATM Straddle premium for the January 27 expiration is $2.73, or 4.4%.

On average, shares of Microsoft have moved slightly more than expected over the last several earnings seasons.  The average absolute post-earnings move for MSFT has been 5.625% over the last four quarters.  This compares to an expected move of 4.825%.