(By Rich Bieglmeier) With the Fourth of July week coming, the number of stocks to pick from for their upcoming earnings' announcement is slim. In fact, iStock could only count 8 companies with a consensus estimate that are on next week's slate.
With a list that skinny, finding anything worth trading requires us to loosen or criteria to the max. Only one of the group comes close, Xyratex Ltd.
). Wall Street expects the data storage company to report a profit of 29 cents. The iEstimate is 33 cents – a potential upside surprise of 4 cents.
While XRTX's history of beating earnings is mostly solid, beating earnings 11 of the last 16 announcements, its price performance in the days surrounding the quarterly checkups has been wild.
Seventy-five percent of the time, Xyratex's price has moved more than 12.5% in either direction. Nine of the last 16 have seen the stock drop by an average of 14.77%. On six of the nine occasions, shares gave up more than 12.5% and three times more than 20%, with a max loss of 35%.
When XRTX's price turned green on earnings, the average gain was 18.5%, with six of the seven plus moves being larger than 13%. Three of the six returned more than 20%.
As you can see, Xyratex is a wild one around earnings, and the earnings are scheduled for July 5th, most likely before the market opens.
Based on XRTX's stock chart, it sure looks like Wall Street plans on taking the price lower. Shares are trading darn close to support at $10.50. That's following a massive selloff from its 52-week high of $17.96. A poor earnings announcement and muddled guidance could take shares as low as $9.
Now, if Xyratex Ltd lives up to the iEstimate and tells investors to expect better things to come, then a run up to $12 and change, maybe $13 is possible. Cantor Fitzgerald recently initiated coverage of XRTX with a rating of Hold and a price target of $12. Perhaps, they'll be right sooner than expected.
iStock would consider adding Xyratex Ltd. (XRTX
) if the stock gets squashed on earnings. Fundamentally, many of the metrics we follow are compressed. The company trades for only 22 cents for every dollar the company does in sales per share; the industry average is a 1.02. Its P/E of 9.43 is significantly discounted from the peer group's 15.73. It also trades for 20.8% less than its book value of 13.57.