Many traders believe that trading around earnings announcements doesn’t provide an attractive risk/reward proposition, probably due in part to the information asymmetry that exists and the fact they are generally not well informed. They just dont have that ‘edge.’
Our clients do.
OTAS’ unique ability to bring multiple factor analysis and key risk identifiers together in one place gives our clients the ability to actively manage portfolios and stock positions by minimizing surprise risk over earnings season.
Clients with access to our Estimize earnings estimates have the ability to compare current consensus EPS data whilst additionally combining the power of OTAS’ Earnings Positioning screen and other Core multi-asset analytics to identify which of their investments have potentially elevated positive/negative price risk heading into numbers.
Let look at a couple of current examples with upcoming earnings:
- Stock making new 52-week highs. Technical RSI of 83.5, currently the third most overbought stock in S&P500.
- Analyst EPS estimates remained unchanged over last month versus share price +9%.
- Shares are now trading at the median analyst price target of $91(consensus ‘Buy’)
- Estimize consensus expects only a 2 cent(or 2%) Q1 beat vs Wall St.
- Short Interest in the last week has increased by a significant 18% to 9.11% of free float.
- Shares are priced to heavily beat, market EPS expectations are inline. Negative Hedge Fund positioning suggests possible ‘Travel & Arrive‘ scenario.
- Positive price reaction following fall in shares after negative pre-announcement in early April.
- Earnings estimate downgrades now reflected in share price. Shares trading at 16% discount to median analyst price target(consensus ‘Buy’)
- Company valuation and 12m yield looking potentially attractive
- Estimize forecast Q1 EPS of 0.50 cents, still 6.4% higher than Wall St average
- Significant 1 week fall in short interest, -37% to 2.4% of free float.
- Pre-announced downgrades now ‘in the price,‘ strong fundamentals, heavy short covering, general consensus still expect a Q1 beat.
For more information on any of our risk screening tools or trading analytics, make sure you visit our stand at TradeTech(Stand 14) over the next few days where we’d be happy to show you more.