Earnings Preview: CSCO To Set Tone; STRA Sees IV At 52-Week High


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To see all of the market's upcoming earnings releases, visit MarketChameleon's Earnings Calendar

Groupon, Inc. (GRPN)

February 15, Before the Market Open

A one-time darling of the new Internet economy, Groupon has traded below $5 since last October, when the release of its quarterly report prompted a drop of more than 22% in the company's stock.  This has been just one of many recent volatile post-earnings performances for shares of the online coupon provider.  Expectations are that this quarter could see similar percentage moves, with IV reaching its highest level in nearly a year and an ATM Straddle premium once again above 16%.

GRPN's Implied Volatility has marched higher since the second half of December.  It reached 96.5 on February 10, its highest level since last February.

The ATM Straddle premium for GRPN for the February 17 expiration is $0.59, or 16.5%.

Groupon's post-earnings moves have outpaced expectations in each of the last five quarters.  On average, the absolute post-earnings moves by GRPN have been 24.55% over the last four quarters.  This compares to an average pre-earnings expectation of 17.25%.

Analysts are looking for Groupon to earn $0.03 per share for the quarter, though there is a wide margin among the expectations.  Some experts are predicting the company will post a loss for the quarter, while others are projecting a profit as high as $0.06 per share.  Last year, the company posted a profit of $0.04 per share.  Revenue is expected to hold basically steady with last year at about $914.2 million.

Cisco Systems, Inc. (CSCO)

February 15, After the Market Close

Networking equipment maker Cisco is among the biggest names set to report earnings this week.  The stock is traditionally relatively staid in its post-earnings reactions.  But the firm's quarterly release will likely help set the tone for the technology sector this week.

In its last earnings report, which took place in mid-November, Cisco's earnings were stronger-than-expected, but the company issued a weak forecast, prompting a notable dip in its shares.

Specifically, Cisco reported a quarterly profit that edged down from last year, but still beat expectations, excluding one-time items. Revenues declined slightly to $12.35 billion.

However, looking ahead, the company predicated a 2 to 4 percent decline in revenues for the quarter that has now just recently ended.  Prior to the warning, analysts were looking for revenue growth of nearly 2 percent.

Given the forecast, analysts are currently looking for Cisco to report a quarterly profit of $0.56 per share, compared to $0.57 per share in the same period last year.  Revenue is projected to fall about 3% to $11.55 billion.

Implied Volatility for CSCO drifted higher in late December and for much of January.  However, there hasn't been much further increase in recent weeks.  IV reached 21.8 on February 2 and has hovered below that mark since. CSCO's IV levels are well off where they were prior to its last quarterly report.  In November, the figure touched 28.8, its highest point since May.

The ATM Straddle premium for the February 17 expiration is $1.08, or 3.4%.

Cisco has consistently posted more modest post-earnings moves than expected in recent quarters.  The average absolute post-earnings move for CSCO for the past four quarters is 4.6%, compared to an expectation of 5.05%.

Strayer Education, Inc. (STRA)

February 16, Before the Market Open

Expectations for Strayer Education's latest earnings release have been rising in recent weeks, with Implied Volatility reaching a new 52-week high ahead of its earnings report this week.

Analysts expect the for-profit higher education company to report a quarterly profit of $1.17 per share.  This would be down from last year's mark of $1.21 per share.  The lower earnings are projected to come despite an increase in revenues, with analysts looking for the top line to grow 5% to $119.37 million.

Implied Volatility for STRA has been rising steadily since late December.  It reached a level of 65.7 on February 9, its highest mark in over a year.  It ticked just off this level at the end of last week, finishing Friday's trading at 64.1.

The ATM Straddle Premium for the February 17 expiration is currently $9.14, or 11.1%.  This is slightly below the average for the last several quarters.

The average absolute post-earnings move for STRA for the past four quarters is 11.05%.  That is below the pre-earnings expectation, which has averaged 12.33% over the same period.