Earnings Are Coming Friday for Foot Locker, Ann Taylor and PetsMart – Here’s What to Expect

Earnings are approaching rapidly for: ANN FL PETM. They announce earnings this Friday, 11/22/2013. You can check out their historical stock price performance after earnings announcements by going to earningsBounce.com for FL and PETM. Looking at past data, I wouldn’t expect a move of much more than +/- 6% for Foot Locker or PetsMart (there is no data on the site for Ann Taylor). None are particularly pricey, but none have exciting growth going forward for the next two quarters – see the tables below. This is due to tough compares from a very solid 2012 for these retailers.

Stock PE Price/Sales Div Yield (Trailing Annual) Volatility
FL 13.71 0.9 2.1% 0.19
PETM 19.32 1.1 0.9% 0.16
ANN 17.47 0.7 N/A 0.2

All three companies have had solid growth over the last four quarters as compared to the year before.

Stock EPS Qtr. On Qtr. Growth Rev Qtr. On Qtr. Growth
FL 12.8%   8/2013
8.4%   5/2013
27.7%   3/2013
60.5%   11/2012
6.4%   8/2013
3.8%   5/2013
14%   3/2013
9.3%   11/2012
PETM 25.4%   8/2013
15.3%   5/2013
37.1%   3/2013
50%   11/2012
5.3%   8/2013
5%   5/2013
14.7%   3/2013
8.8%   11/2012
ANN 20.6%   8/2013
-24.1%   5/2013
16.1%   2/2013
37.7%   11/2012
7.3%   8/2013
2.5%   5/2013
7.2%   2/2013
8.6%   11/2012

The EPS picture for each company looks a bit mixed going forward. We should expect a weak EPS announcement for Ann Taylor on Friday, but, hopefully, a continued strong forecast for the following quarter where the growth picture looks too good, so good that I expect some accounting magic at work. EPS is subject to accounting games, but revenue is less so. Ann has the brightest revenue picture going forward at about 6% growth. This is solid buy not extraordinary in the context of a relatively high PE of 18.

Stock Current Qtr
EPS Growth
Forecast
Next Qtr
EPS Growth
Forecast
Current Qtr
Rev Growth
Forecast
Next Qtr
Rev Growth
Forecast
FL 0% ( High )
-4.3% ( Ave. )
-10.1% ( Low )
22.9% ( High )
11.1% ( Ave. )
-0.8% ( Low )
6.3% ( High )
3.7% ( Ave. )
1% ( Low )
5.7% ( High )
1% ( Ave. )
-2.5% ( Low )
PETM 17.3% ( High )
14.7% ( Ave. )
10.7% ( Low )
3.2% ( High )
0% ( Ave. )
-4% ( Low )
6.7% ( High )
4.3% ( Ave. )
3.7% ( Low )
0.1% ( High )
-1.5% ( Ave. )
-3.1% ( Low )
ANN 8.3% ( High )
2.4% ( Ave. )
-8.3% ( Low )
321.7% ( High )
201.2% ( Ave. )
-39.8% ( Low )
7.9% ( High )
6.8% ( Ave. )
4.9% ( Low )
9.5% ( High )
6.3% ( Ave. )
2.3% ( Low )

 

Technical Analysis

Looking at the price action in these companies, a few things stand out. First, I don’t trust the move in Foot Locker. I don’t like strong up moves coming into earnings. In my experience this is most likely followed by a sell off. Also, there is very little fundamentally to get excited about. Still the stock is relatively cheap with a PE of 13 or so, so it has room to get more expensive. It could also surprise and give a bullish forecast – so proceed with caution.

FL

Ann Taylor has a steady uptrend/channel going, but I could easily foresee it touching $33/$34 again either before or after earnings.

ANN

PetsMart is similar to Ann Taylor; it is lingering in the middle of a price channel.

PETM

Conclusion

Technically, I don’t see a great set up on any of these charts. In fact, with Foot Locker I see a danger sign. On the earnings front, it also seems like a mixed bag to me. Earnings are always a good time for a surprise, but everything seems so jumbled here on the fundamentals side, compounded with mediocre to mixed technicals, that I would wait until after earnings to make any moves (this is almost always good advice). I suspect that one of these stocks will sell-off a bit, probably in excess of what it should, and that might provide an opportunity. If there is good news and the stocks move up, I just don’t see much upside (unless the news is shockingly good). As always, be cautious – the term ‘earnings surprise’ was coined for a reason.