The second week of earnings season is when the action really starts, with around 90 S&P 500 companies scheduled to report this week.
The big banks typically hog the spotlight in the early going, and we�ve already seen reports from JPMorgan Chase (NYSE:JPM) last week, and Citigroup (NYSE:C) and Wells Fargo (NYSE:WFC) this morning.� Results have been mixed, with Citigroup impressing the Street the most so far.
Waiting to step up to the plate this week is U.S. Bancorp (NYSE:USB), which reports on Wednesday after the close.� Analysts expect USB to earn 62 cents per share, a 38% increase from a year ago.
That may sound rather optimistic, but it�s modest compared to the average 50% quarterly growth seen during the past four quarters.� The company has an enviable track record, as it hasn�t missed an estimate in the past 10 quarters.
Performance after recent reports has been solid. The shares have gained ground following four of the past five reports, averaging +4.5% a week after reporting.
The stock is currently in the midst of an uptrend punctuated by higher highs and higher lows.� The shares are up more than 19% off their August low, with the 20-day moving average providing support throughout the rally.� The stock is currently pulling back to the 20-day, which offers an attractive entry point for a pre-earnings trade.
Sentiment toward USB is mixed, with 18 of 33 covering analysts rating the stock a �Buy.�� That tells us there�s enough skepticism available to fuel the rally, should some of these analysts move into the �Buy� camp.
We�re not looking for a huge rally from USB.� But given its recent record of earnings success and performance after reporting, look for the uptrend to continue.� With October options expiring this week, we�re going out to November for this trade to give the rally time to play out.� Buy the USB Nov 24 Calls for around $1.30.
No comments:
Post a Comment