Get started

Earnings

Navigating NVIDIA Earnings Led Volatility with S&P 500 OptionsNVIDIA will announce its Q2 2025 results on 28th August. The semiconductor giant is expected to deliver USD 28.6 billion in revenues. Even a mild shortfall can send its stock prices tanking. The firm is slated to scale even greater heights on continued AI hardware demand & explosion in data centres. ANALYSTS REMAIN BULLISH NVIDIA enjoys buy rating with 12-month price targets ranging from USD 90 to USD 200 per share across 52 analysts. Forty-seven analysts have strong buy rating followed by nine buys and five holds based on 61 analysts issuing ratings over the last three months. The firm has a commanding position in the AI-driven chip market. Booming demand for GPUs in data centres and cloud computing serve as relentless tail winds. NVIDIA EXPECTED TO DELIVER INCREDIBLE RESULTS ON GROWING AI DEMAND AI demand is palpable. This demand is vindicated by eye popping financial performance. Few can deliver higher earnings without comprising margins. NVIDIA has crushed both. Its revenues have risen 5.6x since 2019 while its net income has risen 10.6x during the same period. Its net income margins have expanded two-fold from 25.6% to 48.9% in the same time frame. Little surprise that its shares are up 162.71% so far this year far surpassing S&P 500, Nasdaq 100, and other mega caps. NVIDIA IS EXPECTED TO EXTEND ITS DOMINATION Tech firms are in early stages of AI hardware adoption, driving demand for NVIDIA’s chips. Its data center business is a key revenue driver, benefiting from growing AI workloads. Source: Statista NVIDIA’s AI GPUs are crucial for machine learning and neural network tasks. GPUs will contribute to 40% of its total revenue in 2024. The firm continues to expand its CUDA software ecosystem. CUDA enables developers to optimize AI workloads. Combination of hardware and software makes its ecosystem extremely sticky. It locks in developers & clients contributing to long-term revenues. Furthermore, NVIDIA’s long-term roadmap includes innovations in AI chips designed for specific tasks, such as inferencing and deep learning, areas where its competitors have struggled to gain traction. RECAPPING NVIDIA’S RECORD SHATTERING Q1 2025 EARNINGS The firm delivered record quarterly revenues of USD 26 billion (up 18% QoQ & 262% YoY), primarily driven by a 427% surge in Data Center business. Its net income of USD 14.88 billion and diluted EPS of USD 5.98, marked 21% and 629% increase respectively YoY. The gross margin rose to 78.4%, up 2.4% QoQ & 13.8% YoY. The firm also announced ten-for-one forward stock split effective 7th June. It increased quarterly dividend by 150% to $0.10 per post-split share. On such stunning results, its share prices rose 9.3% after announcement. Even though NVIDIA share prices have risen, its price-to-earnings ratio have come off thanks to even sharper rise in its earnings. The price paid for each dollar of earnings is cheapest over the last eight quarters based on P/E ratio. The P/E ratio is down to 51x as of Q1 2024 compared to 144x as of Q1 2023. EARNINGS SURPRISES & SHOCKS AND ITS IMPACT ON STOCK PRICES NVIDIA’s quarterly earnings has crushed expectations 21 out of the last 22 quarters since 2019. Beating earnings has become par for the course for this firm. Even mild shocks can cause tremors in its share prices. It is no surprise then that the 12-month rolling beta of the firm is 2.78x making it highly volatile. Beta measures share price sensitivity to the overall market. It quantifies price moves of a stock to the broader index. BETA HEDGING NVIDIA STOCKS WITH S&P 500 MICRO INDEX OPTIONS Portfolio Managers holding NVIDIA stocks can cleverly use deeply liquid CME Micro E-Mini S&P 500 Index Options (CME Micro S&P 500 Options) to hedge against potential earnings linked price shocks. Holding NVIDIA shares while hedging the holding via CME Micro S&P 500 Put Options helps to build effective portfolio resilience. Investors are assumed to hold one-hundred shares for illustration. The notional value of NVIDIA shares is calculated using close of market price on 23rd August. Trading View publishes twelve-month rolling beta for each stock. It can be used for calculating the required number of S&P 500 index puts to hedge against downside price risk. We suggest adjusting the beta upwards (“Earnings Linked Beta”) by 50% to cater for earnings linked excess volatility. The notional value of options is calculated using Earnings Linked Beta. Two lots of CME Micro S&P 500 Options are required to hedge 100 NVIDIA shares. The table below demonstrates overall Beta Hedged P&L based on various price scenarios for NVIDIA share prices and S&P 500 futures price after earnings. Single stock options can be used to hedge. The cost of hedging using them would be expensive due to elevated IV levels during earnings. Investors must balance cost savings against basis risks. Please note that beta hedging involves basis risks. If the stock and index prices fail to move in tandem as expected, then beta hedge may not provide adequate protection from adverse price moves. The table below illustrates Beta Hedged P&L if index moves in a muted manner which is unlikely. The table below illustrates Beta Hedged P&L if index moves inversely to NVIDIA share prices. This scenario is a highly unlikely but is included for clarity of understanding and illustration purposes only. Investors can consider exploiting elevated implied volatility in NVIDIA options by selling calls to partly fund the purchase of index put options. By selling a 25-delta options expiring on 30th August, the investor creates a covered call strategy on the underlying NVIDIA stocks. A 25-delta call translates to a 142 strike and the last traded price on 23rd August was USD 2.70 per share. Investors can view up-to-date pricing sheets along with various options analysis tools on CME QuikStrike . The P&L of beta hedge plus covered call assuming expected index moves is as shown below: MARKET DATA CME Real-time Market Data helps identify trading set-ups and express market views better. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs tradingview.com/cme . DISCLAIMER This case study is for educational purposes only and does not constitute investment recommendations or advice. Nor are they used to promote any specific products, or services. Trading or investment ideas cited here are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management or trading under the market scenarios being discussed. Please read the FULL DISCLAIMER the link to which is provided in our profile description.
NASDAQ:NVDALong
by mintdotfinance
NCLH Norwegian Cruise Line Holdings Buy oppertunity (Long term)Stategic - This company is growing, expect rapid growth of more then 20% the coming 5 years. - This company performance is pressed down with the high interested rates that are coming down so this should create a spiral that has a positive outcome on the company. - In my opinion this company is still recovering from covid, what makes the upside around 200% on the first eye. Fundamental - The company has strong earnings growth shown the past periods and continues with this, - expecting growth. Technical - Stock has a good risk reward setup. - Buys are kicking in the door also with the news of the lowering interest rates.
NYSE:NCLHLong
by leohanhart1996
ESI Element Solutions Inc Long Oppertinnity (Long term) Startegic - This company has a strong outlook, strong return growth, and strategic position. - With strong growth, sectors as clients that will accelerate in the upcoming interest rates investments this company should be able to grow rapidly. - I think that if the national production of chips comes back to the US, this company will profit. Fundamental - Good earnings growth. - Big call positions with PuttCallRatio of 0.29. - Biggest inflow of hedge fund positions since last quarter. Techincal - This stock has a good risk-reward setup covering. - Big volume spike on the news that interest rates will go down.
NYSE:ESILong
by leohanhart1996
AERO UPDATEGood Morning traders This is an AERO UPDATE. As I better myself, I'm finding ways to show potential and no potential. This is a FIBONACCI guidance with a very powerful Volume-Weighted Average Price. Advanced alternate forecast weight is part of my algorithm which I've recently added to my trade. This helps me determine my next move and reads Power Bull Run. There are plenty of ways to read this TA. 2 BULL Signals. Always consider BITCOIN. Never trade without analyzing BITCOIN otherwise you're going to get trapped. there is no such BULL RUN unless BITCOIN is BULLISH. It does not matter how BULLISH an ALT might look. This is 99% percent true. TRAP means I don't want to expose the price target for Smart money manipulation. Let's be ahead of them and make profits. If I'm available, send me a message, ill unveil the target but only if the target is nearby.
COINBASE:AEROUSDLong
by The_ForexX_Mindset
7
Carvana- Low Risk/High Reward EntryIt's a rare occasion when fundamentals and technicals align, and we might just have a compelling case here. Carvana stands out as one of the most heavily shorted stocks in the market. The company has been in the red for quite some time, and this quarter was no exception, with a loss of $1 per share, falling short of analysts' expectations on both EPS and revenue (they lost more than expected). Despite these challenges, the company sees a shift in demand, with buyers increasingly returning to online car purchases. The Orange number 1 on chart marks the lowest price at the open on the gap-up day ( $66.48), a +26% jump from the previous night's close. The momentum didn't stop there; the price ran another 20% to hit a daily high of $76, before settling at $69.21. Here's my strategy: - Stop: Sell if the price drops below $66.48 (allow some leeway, given the volatility) - Target: If it trades above $76, we could be looking at an elevator ride up to $150, mirroring its previous ride down from $150 to under $30 a share. I'm eyeing a 1:2 quick trade risk/reward ratio, but that's a waste and the prospect of a potential short squeeze is tantalizing (yes, I said it!). Opportunities like this are few and far between. Trade carefully, OnlyTrade2Win.
NYSE:CVNALong
by onlytrade2win
4
CSCO Layoffs Positive for the StockNASDAQ:CSCO gapped up on its earnings report even though the company has failed to reinvent and failed to change to HyperAutomation in its IT departments quickly enough. News of layoffs is considered a positive action on the part of the officers of the corporation who are responsible first and foremost to INVESTORS and cutting costs so that the company can slowly regain revenues and earnings for dividends for INVESTORS. Delaying layoffs, which may be kind and thoughtful for employees, is a negative for INVESTORS, namely the giant Buy-Side Institutions, because it extends and worsens the financial condition of the company. As more and more companies buy robots/robotics and AI technology, these will reduce payroll expenses and help to control internal business inflation, which is caused mostly by rising payroll expenses with declining productivity from the workforce of the company. This is always misunderstood by retail groups who believe layoffs are a bad thing for the "economy." The world of commerce and the financial markets is not a fair or kind place.
NASDAQ:CSCO
by MarthaStokesCMT-TechniTrader
$IBM Support Levels HoldingNYSE:IBM did not have a great earnings report for the 1st Quarter 2024, but 2nd quarter improved. The stock has one of the better charts in the Dow 30 components. It has held up better than most of the Dow components, except for those stocks that are in buyback mode. It has been tapering off its buybacks for 2 quarters. So the gains holding above the support lows are not from buybacks. There are accumulation patterns and pro trader activity in the mix. One to watch for swing trading potential.
NYSE:IBM
by MarthaStokesCMT-TechniTrader
NMIH Bullish outlook.Fundamentels - Very strong earnings grow expectations. Management reports it excellent ( and that word is not much used in my reports) - Good price earnings spiral. - Stock should have at least been priced need the 44-45 range in my opinion. But if you look further ahead with a p/e of 15-20 the stock should be priced between 60 and 80 which is easy to estimate with these strong fundamentals. Technical - I saw a great R/R setup with stops need the bottom of this last block-range. - I think this trade volume (VWAP) drives up this price on a very fair pace. I think it with the last volume dips it's clear we heading to a time with a lag of liquidity. This could result in some volatility in the range between 38-40 with bullish pressure. Strategic - The company is a Tech-leaning Insurance company for mortgages, an interest that will grow when economic tension rises. What a great company. Making money from the insurance of the most bubbly asset in the world. Large demand I would say, probably this company will blow up in times of a housing crisis because these models will be heavily biased I guess. But if the risk department would buy CDS'S it could be a very fair business model --- if they will be covered this time ---- how could you even cover that CDS"S, please tell me in the comments.
NASDAQ:NMIHLong
by leohanhart1996
Fed Watch Tool Target Rates on the US 10 YOn this graph, we see the current priced in Interest Rates of the FED Watch Tool in compare to the US 10 Year Treasuries. We can clearly identify by how much the market is frontrunning and at what pace the market believes the Interest Rates will decline. The Orange Box below is the average Interest Rate of ~2.75% and the expected Mid/Long Term Interest Rate, until something brakes and the next Liquidity Cycle begins. I personnaly believe that we will see an even faster pace in the future, hence the Earnings showing more uncertainty in the guidance of Corporate Ameria. Additionally the job openings decline, more people are unemployed, the Yen carry trade is not yet unwinded, consumer credit and auto loans are on verge of a credit shock. Conclusion: hence TLT is pretty much the exact counterpart of the US10Y, I decided to go long TLT with leverage.
TVC:US10YShort
by derMatzeImNetz
WAB: balanced risk with long term upside due to California lawBalance Sheet Analysis Current Assets: $4,855,000,000 Non-Current Assets: $14,133,000,000 Intangible Assets: $11,985,000,000 Current Liabilities: $4,056,000,000 Long-Term Debt: $4,408,000,000 Asset to Liability Ratio A current ratio of 1.20 indicates that WAB has more current assets than current liabilities, which suggests the company is not at immediate risk of liquidity issues. However, the ratio is relatively close to 1, indicating that while the company can cover its short-term obligations, it doesn't have a substantial buffer. Income Statement Analysis Key Figures: Total Revenue: $10,217,000,000 Operating Income: $1,521,000,000 Net Income: $918,000,000 Operating Margin: 14.89% The operating margin of 14.89% is just below the 15% threshold, suggesting WAB is operating efficiently but has room for improvement. A margin close to 15% reflects good management of operating expenses relative to revenue. Statement of Cash Flow Analysis Free Cash Flow (FCF): Trailing Twelve Months (TTM): $1,487,000,000 2023: $1,015,000,000 2022: $889,000,000 2021: $943,000,000 2020: $648,000,000 WAB's free cash flow has shown a consistent increase year-over-year, which is a positive sign for the company’s financial health. Increasing free cash flow indicates that the company is generating more cash from its operations, which can be used for expansion, debt reduction, or dividends. Qualitative Analysis Brand Recognition: WAB has strong brand recognition in the rail industry, particularly in providing advanced technologies for freight and transit rail. This recognition bolsters its competitive position. News: Recent regulations in California targeting diesel-powered trains present both challenges and opportunities for WAB. The state’s push for zero-emissions technology aligns with WAB's innovation in green technologies. However, the industry faces concerns about the feasibility and costs of transitioning to zero-emission locomotives. Emerging Industries: WAB is positioned to benefit from the growth of industries focusing on sustainability and green energy. As governments and companies increasingly prioritize environmental impact, WAB's investments in green technology could drive long-term growth. Conclusion WAB appears to be a relatively stable stock with a solid balance sheet, consistent free cash flow growth, and a strong operating margin, though slightly below the desired 15%. The company’s strategic focus on innovation, especially in response to regulatory changes, could position it well for future growth. However, the relatively modest current ratio suggests that the company should continue monitoring its liquidity closely. Overall, WAB presents a balanced risk profile with potential upside in emerging green industries.
NYSE:WABLong
by rogomezpalacio
Newmont Corp | NEM | Long at $48.00While gold prices have soared recently, gold mining stocks have lagged. Newmont Corp NYSE:NEM , the world's largest gold mining corporation, may be undervalued if the miners take off to catch up to the gold demand/price. Currently sitting near $48.00 and at a historical moving average that it will need to break to show a true trend reversal, NYSE:NEM is in a personal buy zone. Now, the price may break down at the simple moving average and test the patience of shareholders, but the long game may benefit those who can tolerate the volatility. Target #1 = $57.00 Target #2 = $71.00
NYSE:NEMLong
by WorthlessViews