Earnings: What's Up with the Economy? MCD, MSFT, GE and CAT Might Know

What’s really going on in this economy? Investors will get a chance to take the pulse from a few different angles with earnings results coming out Thursday after the market closes and Friday before the bell from McDonald’s Corporation MCD, Microsoft Corporation MSFT, General Electric Company GE and Caterpillar, Inc. CAT.

Is MCD’s All-Day Breakfast Still Hot?
MCD knocked it out of the park in the last quarter when customers, who long begged for it, showed they were lovin’ the all-day breakfast. MCD posted its best quarterly sales numbers in four years after extending breakfast. Will that happen again? Or has breakfast for dinner lost its luster? And is the new twist on the value menu working?

At Thomson Reuters, analysts, on average, are looking for the Golden Arches to turn in a 38% jump in profit to $1.16 a share from $0.84 a share in the year-ago period when results are released before the bell Friday. Revenues, however, are expected to fall back to $5.8 billion from $5.96 billion last year.

Short-term options traders have priced in a potential 3% share price move in either direction around the earnings release, according to the Market Maker Move indicator on the thinkorswim® platform from TD Ameritrade.

Going into earnings, we’re seeing some action at the 132-strike calls and there was activity at the 125-strike puts. The implied volatility is at the 21st percentile. (Please remember past performance is no guarantee of future results.)

Note: Call options represent the right, but not the obligation, to buy the underlying security at a predetermined price over a set period of time. Put options represent the right, but not the obligation, to sell the underlying security at a predetermined price over a set period of time.

Analysts reporting to Thomson Reuters are looking for a per-share profit of $0.64 compared with $0.61 a year ago. Revenue is expected to edge higher by 1.7% to $22.1 billion. Results will come out ahead of the market open on Thursday.

Short-term options traders have priced in a potential 4% share price move in either direction around the earnings release, according to the Market Maker Move indicator on the thinkorswim® platform from TD Ameritrade.

Going into earnings, options traders are active near the money at the 56-strike puts with a number of buyers coming in at the 60-strike calls.

Analysts reporting to Thomson Reuters are forecasting earnings per share of $0.19, down slightly from last year’s profit of $0.20 per, when results are reported ahead of the market open Friday. Top-line sales are projected to retract to $27.67 billion from $29.36 billion in the year-ago period.

Short-term options traders have priced in a potential 1.5% share price move in either direction around the earnings release, according to the Market Maker Move indicator

Going into earnings, the options activity is primarily at the money at the 31-strike calls and the 31-strike puts. The implied volatility is at the very low 2nd percentile, reflecting what little expectation there is for any surprises.

According to some analysts, CAT lowered the Q1 guidance by $0.30 a share earlier this month while keeping its full-year guidance. According to one analyst: “All that happened here was that analysts mistakenly tried to divide up Caterpillar's annual guidance into the four quarters but they got Q1 horribly wrong. The intervention by Caterpillar means that now we have a strong possibility that the company reports a beat on its first-quarter earnings.”

And that could be so even if results drop. Analysts reporting to Thomson Reuters are expecting a per-share profit of $0.69 a share on revenues of $9.4 billion. A year ago, CAT turned in earnings of $1.86 on $12.7 billion.

Short-term options traders have priced in a potential 4% share price move in either direction around the earnings release before the bell Friday, according to the Market Maker Move indicator.

Going into earnings, a lot of options traders are lining up at the 81-strike calls and the 76-strike puts.

Probability analysis results from the Market Maker Move indicator are theoretical in nature, not guaranteed, and do not reflect any degree of certainty of an event occurring.

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