Earnings Focus: Rackspace, Michael Kors, Oceaneering in the Spotlight
Earnings season is winding down, but this week is still busy as several high-profile names are set to report.
On Tuesday, watch for earnings from Rackspace Hosting (NYSE: RAX). The stock looks a bit vulnerable ahead of earnings.
Last week, it paid a visit to its 50-day simple moving average -- a key support level -- but no bounce yet. Sellers have been in the stock ahead of earnings, but another solid quarter of growth is expected. Look for earnings to be up 22% from a year ago to $0.22 a share with sales up 26% to $355.4 million. Last quarter, 24% of the company's total sales came from cloud products -- the rest from its Web hosting services.
Michael Kors (NYSE: KORS), a current holding in the Ultimate Growth Stocks model portfolio, also reports on Tuesday. KORS is in a bullish setup ahead of earnings that doesn't mean a technical breakout over $60 is a sure thing.
Analysts expect profit of $0.41 a share, up 105% from a year ago. Sales are seen rising 45% to $540.3 million. Because KORS sells at a premium valuation, it will be held to a high standard. Good growth probably won't be enough. The market wants great growth. Recent price and volume trends in KORS say the market is optimistic about a solid quarter.
On Wednesday, oil services firm Oceaneering (OII: NSYE) will be out with fourth-quarter results. It continues to trade beautifully ahead of the results. The consensus estimate calls for profit of $0.72 a share, up 33% from a year ago with sales up 28% to $736.8 million.
Oceaneering broke out over $57.45 on January 15. It's extended now, making it a risky buy at current levels. Watch for a low-volume pullback to support its 10-week moving average around $57.42. Like many other stocks now, its 10-week coincides with its last breakout area.
Finally on Thursday, IT staffing firm On Assignment (Nasdaq: ASGN), another holding in the Ultimate Growth Stocks model portfolio that's been performing well, is expected to earn $0.28 a share, up 40% from a year ago with sales up 139% to $387 million.
Big revenue growth is a result of On Assignment's acquisition of Apex Systems last year for $600 million. Like several other current leaders, On Assignment gapped up on January 2 and continues to hold gains nicely.
In terms of economic data, it's a pretty quiet week. Here's a look at what's on tap.
Tuesday: Treasury budget (January)
Wednesday: Retail sales (January), import/export prices (January), business inventories (December)
Thursday: Weekly jobless claims
Friday: Empire Mfg (February), industrial production/capacity utilization (January), Michigan sentiment (February)
On Wednesday, overall retail sales are seen rising 0.1%; excluding autos, also up 0.1%. Last week, same-store sales from many of the nation's retailers looked pretty good.
Eighteen retailers tracked by Thomson Reuters posted 5.8% growth in January, nicely above expectations of 3.5% growth. The sector, though, isn't offering up much in the way of leadership.
That said, shares of recent new issue Five Below (Nasdaq: FIVE) remain under accumulation. It continues to flirt with a breakout from a first-stage IPO base.
The company caters to the pre-teen and teen market, offering all of its products at $5 or below. It currently operates in 19 states and is still in the early stages of expansion. It plans to open 60 new stores this year, bringing the number of locations to about 300.
The retailer went public in July at $17 and has more than doubled in price due to strong growth and bright growth prospects. Full-year profit in 2013 is seen rising 67% in 2013 and 40% in 2014.
Earnings aren't due until late March. When it does report, look for profit to be up 65% from a year ago to $0.38 a share with sales up 35% to $170.22 million.
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