Big Week for Telecom Equipment Earnings
We are in the heart of the second quarter earnings season and we have already heard from a number of big tech companies. There have been a few positive surprises, but it seems like there have been more negative surprises. At least the reaction from investors has been negative.
Earnings results will continue to roll in this coming week and the telecom equipment industry will be in the spotlight. Corning (GLW) and Juniper Networks (JNPR) are both set to report on Tuesday while Qualcomm (QCOM) is set to report on Wednesday.
Tickeron has a positive outlook on this group and predicts a further increase by more than 4.00% within the next month. The likelihood of success is 73%. The scorecard shows Corning rated as a “strong buy” while Juniper and Qualcomm both have “buy” ratings.
The fundamental analysis summary shows both Corning and Juniper are undervalued at this time. Qualcomm is fairly valued. Qualcomm scores better than the others in the Profit Vs. Risk rating while Juniper is poorly rated in that category. Qualcomm has two positive, or green, ratings and no negative ratings. Corning and Juniper each have two positive ratings with one negative rating for each.
The technical analysis screener shows Corning with three positive readings from the AROON Indicator, the MACD, and the Momentum Indicator. The only negative reading is from the Bollinger bands and that rating only shows odds of success at 55% on a move lower.
Juniper shows bullish signals from its MACD and Momentum indicators, but it has bearish signals from its AROON indicator and the Bollinger Bands. Qualcomm shows bullish signals from the Bollinger Bands and the AROON Indicator. There are also bearish signals from the Stochastic indicators and the Momentum indicator.
Looking at the weekly charts, Corning and Qualcomm both show weekly stochastic readings that are in overbought territory. Qualcomm’s readings just made a bearish crossover and past instances of bearish crossovers have been pretty accurate at predicting downturns in the stock. Corning’s stochastic readings just turned higher and are still climbing at this point.
Juniper’s weekly chart shows that the stock is just below its 104-week moving average. The RSI is climbing, but it isn’t in overbought territory. The stochastic indicators made a bullish crossover this week. The readings are just below the 60 level currently, so they have a way to go before they would be in overbought territory.
One area where we see a big difference between the three stocks is in the earnings estimates and the sentiment readings. Corning has seen the consensus estimate for the quarter drop considerably over the last 90 days while the estimates for Juniper and Qualcomm have dropped slightly.
Analysts and short sellers are far more bullish on Qualcomm than they are on the other two. Of the 29 analysts covering Qualcomm, 18 have the stock rated as a “buy”. Corning and Juniper each have a meager five “buy” ratings. If we look at the ratings in terms of the buys as a percentage of the total, Qualcomm’s buy percentage is at 62%. Corning’s buy percentage is only 38.5% and Juniper’s is really low at 23.8%.
The short interest ratios (SIR) for Corning and Juniper are higher than the average stock with readings of 4.5 and 4.0, respectively. The average short interest ratio is in the 3.0 range. We see that Qualcomm’s ratio is well below average at 1.7.
Based on all of the data, the fundamentals, the technical analysis, and the sentiment indicators, it looks like Juniper has the best shot at moving higher after the earnings report. The fundamentals are decent, the stock isn’t overbought, and the sentiment is skewed to the bearish side. From a contrarian perspective, having bearish sentiment is a good thing.
Qualcomm may be the better long-term investment, but investors might be better served waiting for a little dip before entering a new position. Corning’s short-term indicators look good and that’s why it gets the “strong buy” rating from the Tickeron scorecard.
