Uniform maker Cintas (CTAS) and investment bank Jefferies (JEF) headline the latest earnings calendar amid fresh all-time highs for the Dow, S&P 500 and Nasdaq. Cruise line Carnival (CCL) is also on the earnings calendar, along with enterprise software firm Braze (BRZE).
X
Royal Caribbean (RCL) is the leader among cruise line operators at this point, but buyers have pushed Carnival back above several key moving averages ahead of its earnings report due early Wednesday.
According to analysts polled by Zacks Investment Research, Carnival is expected to lose 17 cents a share, with revenue up 22% to $5.4 billion.
See Which Stocks Are In The Leaderboard Model Portfolio
Carnival jumped 6% in strong volume on Dec. 21 after the company reported a narrower-than-expected adjusted loss of 7 cents a share. Revenue jumped 41% to $5.4 billion, also above expectations.
“We entered the year with the best booked position we have ever seen, and now have nearly two-thirds of our occupancy already on the books for 2024, at considerably higher prices,” Chief Executive Josh Weinstein said in the earnings release.
Earnings Calendar Spotlight
Amid broad-based strength in financial stocks, results from Jefferies are due Wednesday after the close. Financial stocks outperformed en masse Thursday after the two-day Federal Reserve meeting concluded Wednesday.
The Fed’s so-called dot-plot showed that 10 policymakers expect at least three rate cuts this year, while nine expect two or fewer. Fed Chairman Jerome Powell sounded confident about the underlying health of the U.S. economy even after some elevated readings on inflation in January and February.
The Fed raised its GDP forecast this year to 2.1% growth, up from a prior estimate of 1.4%. But Powell acknowledged that an “unexpected weakening in the labor market could warrant a policy response.”
Jefferies definitely has the look of turnaround story after several quarters in a row of declining earnings and revenue. But results for the February-ended quarter are expected to show profit up 38% to 76 cents a share, with revenue rising 16% to $1.49 billion. Estimates for the next three quarters look strong as well.
Jefferies has ridden its 10-week moving average higher after a breakout from a base in mid-December.
Watching Cintas And Braze
Cintas, a member of the IBD Long-Term Leaders Watchlist, shows consistent earnings growth in recent years. It’s also among a select group in the S&P 500 known as “Dividend Aristocrats,” an index of companies with at least 25 years of consecutive dividend increases. Cintas currently pays a dividend of $1.35 a share.
Join IBD experts as they analyze top stocks in the stock market on IBD Live
Like Jefferies, Cintas also jumped on Dec. 21 after reporting strong results and increasing its full-year earnings and revenue outlook. The company predicts revenue of $9.48 billion to $9.56 billion, up from its prior forecast of $9.4 billion to $9.52 billion. Cintas also anticipated full-year earnings of $14.35 to $14.65 a share, up from an earlier estimate of $14 to $14.45.
Results for the current quarter are due Wednesday before the open. Adjusted profit is expected to rise 13% to $3.56 a share, with revenue up 9% to $2.38 billion.
In the enterprise software group, Braze is also on the earnings calendar. It’s not profitable yet, but top-line growth has been impressive in recent quarters thanks to strong demand for the company’s customer engagement platform. Fund ownership more than tripled last year to 374 funds from 122.
Results from Braze will be out Wednesday after the close. It’s expected to lose 5 cents a share, with revenue up 26% to $124.55 million.
But Braze’s Accumulation/Distribution Rating of E, the worst possible, is hurt by several higher-volume declines since early December. And Braze is still below its 10-week line after giving up the support level earlier in the month.
Braze would be a better candidate for a call option trade if it can rise above its 10-week line.
Options Trading Strategy
A basic options trading strategy around earnings — using call options — allows you to buy a stock at a predetermined price without taking a lot of risk. Here’s how the option trading strategy works.
First, identify top-rated stocks with a bullish chart. Some might be setting up in sound early-stage bases. Others already might have broken out and are getting support at their 10-week moving average for the first time. And a few might be trading tightly near highs and refusing to give up much ground. Avoid extended stocks that are too far past proper entry points.
A call option is a bullish bet on a stock. Put options are bearish bets. One call option contract gives the holder the right to buy 100 shares of a stock at a specified price, known as the strike price.
Once you’ve identified a bullish setup in the earnings calendar, check strike prices with your online trading platform, or at cboe.com. Make sure the option is liquid, with a relatively tight spread between the bid and ask.
Look for a strike price just above the underlying stock price — that’s out of the money — and check the premium. Ideally, the premium should not exceed 4% of the underlying stock price at the time. In some cases, an in-the-money strike price is OK as long as the premium isn’t too expensive.
Choose an expiration date that fits your risk objective. But keep in mind that time is money in the options market. Near-term expiration dates will have cheaper premiums than those further out. Buying time in the options market comes at a higher cost.
Earnings Calendar Option Trade
Braze trades monthly options. When shares traded around 54.50, a slightly out-of-the-money monthly call option with a 55 strike price and an April 19 expiration came with a premium of around $4 per contract. That was 7.3% of the underlying stock price at the time.
One contract gave the holder the right to buy 100 shares of Braze at 55 per share. The most that could be lost was $400 — the amount paid for the 100-share contract. To break even, Braze would need to rise to 59, factoring in the premium paid.
The expected move in the options market, based on the 55 strike price, is about 7-8 points up or down.
Follow Ken Shreve on X/Twitter @IBD_KShreve for more stock market analysis and insight.
YOU MAY ALSO LIKE:
Best Growth Stocks To Buy And Watch
Catch The Next Big Winning Stock With MarketSurge
IBD Stock Of The Day: See How To Find, Track And Buy The Best Stocks
IBD Digital: Unlock IBD’s Premium Stock Lists, Tools And Analysis Today
