Which Stocks Look Ready to Sink and Surge with Earnings This Week?

Stocks tend to be most volatile around earnings season, when a good or bad report can make or break it. However, a good or even great earnings report doesn't necessarily translate into a huge pop for a stock.

During earnings season, BullMarket.com publishes a comprehensive 25- to 40-page Earnings Preview report for the week ahead each Friday.

In its latest earnings preview, BullMarket.com looks at several popular stocks, including Google (GOOG), Yahoo (YHOO), Coca-Cola (KO), Kinder Morgan Energy (KMP), Intel (INTC), eBay (EBAY), Microsoft (MSFT), Goldman Sachs (GS), and Mosaic (MOS).

Here is just a tiny sample of what BullMarket.com wrote about Yahoo: Yahoo has topped the EPS consensus each quarter over the past two years. During that time, the stock has risen the next session four of eight quarters. Seasonally, the stock has risen two of the last four years.

Last quarter, the Internet firm reported net income attributable to common shareholders of $390.3 million, or 35 cents a share, up from $286.3 million, or 23 cents a share, a year earlier. Adjusted EPS rose to 38 cents from 27 cents. Analysts had forecast EPS of 25 cents.

However, revenue excluding traffic acquisition (ex-TAC) costs fell to $1.07 billion from $1.08 billion, coming in below analyst estimates of $1.1 billion.

Display advertising revenue ex-TAC fell -11% to $402.0 million from $453.8 million. The number of ads sold, excluding the Korea business which was exited, decreased -7%, while the price per ad fell -2%.

"Overall trends are consistent with what we saw at the end of last year," CFO Ken Goldman said. "There were also some specific actions we took to remove ad inventory and page views in order to improve the overall user experience and the redesign of both Yahoo.com and Yahoo! Mail. We expect to see some near-term impact on our Display business from these changes, but believe that higher quality and more personalized user experiences will result in increased user engagement and higher ad prices as the year progresses." Search revenue fell -10% to $424.7 million, but ex-tac it rose 6% to $408.63 million. Excluding Korea where the business was closed, paid clicks climbed 16%, while cost per click dropped -7%.. ...

Outside of earnings, Yahoo's stock has skyrocketed since Mayer took over as CEO about a year ago, and while she's made a lot of changes, operationally thus far it's been the same old Yahoo. Part of the stock's outperformance is due to Wall Street giving Mayer a honeymoon period, but the biggest reason is the expected IPO of the Alibaba Group, of which Yahoo still owns around 24% despite selling half of its stake last year.

Projections value the company at between $60-$100 billion when it IPOs, which at the mid-point values Yahoo's stake at around $19.2 billion pre-tax, or about $12.5 billion after-tax. Essentially, Yahoo is trading at less than its stakes in Alibaba and Yahoo Japan ($9.3 billion pre-tax, at the end of Q1) if those estimates are accurate, not to mention it still has $4.4 billion in net cash and investments after the Tumblr deal. ... The full BullMarket.com earnings analysis includes a look at historical earnings data and EPS trends for the companies above and more; examines past investor reactions to earnings in various contexts; gives options activity analysis; reviews previous-quarter earnings; and gives an opinion on both what earnings will look like and how investors will react based on the aforementioned data points.

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