Duke Energy Shares In The Earnings And Technical Spotlight

Duke Energy Corp DUK has seen its stock run from $40 in 2009 to just under $83, an impressive stock run considering the company has limited growth. This is an intrinsic value or a dividend valuation story, for the fundamental analysts out there. They will be fed some key fundamental information regarding Duke in the form of Wednesday's quarterly earnings report.

Technical analysts see this as a "fork in the road" story where either the stock will explode higher through key long-term resistance or fail there and endure an extended correction or pullback period.

What The Bulls See

• An attractive dividend yield of 3.9 percent.
• Some cheap valuation metrics: An enterprise value of $98.72 billion versus a market capitalization of $58.26 billion, a price-to-book ratio of 1.43 and a price-to-sales ratio of 2.35.
• 8.9 percent net profit margins.
• A current ratio of 1.32.

What The Bears See

• A heavy debt load as evidenced by the debt-to-equity ratio of 103.86 percent and only $2 billion in cash versus $42.46 billion in total debt.
• A pricey PE of 18 when compared with projected 2015 revenue and earnings growth of -0.20 percent and 3.9 percent, respectively.

The Technical Take

Technicians note that Duke shares are trading right below key long-term resistance (as seen on the monthly chart) between $82 and $83. The stock is extremely overbought on a daily and weekly chart basis and is getting there on a monthly chart basis.

"Overbought and at resistance" is typically a great set-up for short-sellers, as long as there is no bullish technical evidence that trumps everything. In this case, there does not seem to be anything that can trump the bearish evidence at hand.

Technicians note that only a close, especially on a weekly and monthly basis, above $83 will turn this chart from "dangerous for the bulls" to "dangerous for the bears." The first two support levels for Duke come in at $79.56 and $77.05. Above $83, the next Fibonacci price projection for Duke comes in at around $99.

Overall…

The shorts are entering their bearish bets in Duke Energy here and now. If they are correct in their bearish thesis, the stock may retrace a good portion of the up move that took place over the last five years. Aspiring bulls are almost certainly going to be looking to enter the stock on a post-earnings pullback to the $77 to $80 region.

Duke Energy closed Tuesday at $82.23.