Earnings Calendar Spotlight: Fast-Growing On Holding, Palo Alto Networks Set To Report

Third-quarter earnings season is pretty much over and done with, but a couple of top-performing retailers are on the earnings calendar, along with a leader in the chip-equipment group.

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Applied Materials (AMAT) is back above its 50-day line as it forms a double-bottom base. AMAT stock came close to the 148.40 entry Thursday but backed off highs by the close. Results are due Thursday after the close.

The earnings calendar has other technology reports to consider from the likes of Palo Alto Networks (PANW), a member of the top-performing security software group, along with Cisco Systems (CSCO). But buying demand has dried up in CSCO, with the stock on pace for its eighth straight weekly close below the 10-week moving average.

PANW has been trading near its 10-week line after a short-lived breakout from a 14-week consolidation. The stock gapped up sharply in August after the company reported an 80% surge in quarterly profit. Revenue growth topped 20% for the sixth straight quarter.

Results are due Wednesday after the close. The Zacks consensus estimate calls for non-GAAP profit of $1.16 a share, up 40% year over year, with revenue up 18% to $1.84 billion.

Earnings Calendar Highlights

In the retail sector, TJX Companies (TJX) is holding near highs with earnings due Wednesday. The parent company of T.J. Maxx is also known for its Marshalls and HomeGoods brands.

TJX stock is trading tightly above its 50-day line as it forms a flat base. Shares popped more than 4% on Aug. 16 as Wall Street cheered its latest earnings report, which showed an 8% increase in revenue and 23% rise in adjusted profit. Bottom-line and top-line growth accelerated from the prior quarter, and the company also raised its outlook. The company said it was able to offer a wider assortment of premium merchandise as higher-end retailers offloaded bloated inventories.

For the October-ended quarter, adjusted profit is seen rising 13% year over year to 97 cents a share. Revenue is expected to rise 7% to $13.05 billion.

Results from group peer Ross Stores (ROST) are due Thursday after the close. It also has been showing relative strength amid improving fundamentals.

High-profile retailers like Home Depot (HD) and Walmart (WMT) are also on the earnings calendar.

Watching Earnings From On Holding And Woodward

Investors will be hoping for a better report from Roger Federer-backed Swiss shoemaker On Holding (ONON), which reports Tuesday before the open.

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ONON stock plunged through its 50-day line on Aug. 15 after the company missed on earnings and gave lukewarm revenue guidance. There’s no doubt that On Holding still offers a compelling growth story for its premium footwear, but it’s already getting a premium multiple in the market, selling at 97 times trailing earnings and 65 times forward earnings.

That means it will held to a very high standard again. Look for quarterly revenue to be up 129% to 16 cents a share, with revenue up 51% to $513.78 million. In 2022, full-year revenue soared 55% to $1.3 billion.

Meanwhile, IBD’s aerospace and defense group is home to several top performers, including Woodward (WWD). The company’s Aerospace segment provides fuel pumps, air valves and fuel nozzles for turbine engines. It also provides flight deck controls and sensors for aircraft.

Woodward rose to the top of a 14-week flat base Thursday with a 133.15 entry. Volume was light.

Q3 earnings and revenue growth is expected to slow slightly after two straight quarters of accelerating growth. Adjusted profit is seen rising 51% to $1.27 a share. Revenue is expected to rise 19% to $761.5 million.

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 options trading strategy works and what a call option trade recently looked like for On Holdings.

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 lines 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 an earnings setup for a call option, 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.

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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

On Holding is a fairly liquid name in the options market, but its technical picture is still weak, with the stock more than 20% off its high and stuck below its 40-week moving average (see weekly chart).

When ONON stock traded around 27.75, a slightly out-of-the-money weekly call option with a 28 strike price and a Nov. 17 expiration came with a premium of around $1.50 per contract. That’s 5.4% of the underlying stock price at the time.

One contract gave the holder the right to buy 100 shares of ONON at 28 per share. The most that could be lost was $150 — the amount paid for the 100-share contract. Going out one more week to the Nov. 24 expiration, the premium grew to $1.60, or 5.8% of the stock price.

Using the earlier expiration, On Holding would have to rally past 29.50 for the trade to start making money (28 strike price plus $1.50 premium per contract).

Follow Ken Shreve on X/Twitter @IBD_KShreve for more stock market analysis and insight.

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