2015-02-12 Pre-Earnings Analysis (AIG) (IPG)

Posted on February 12th, by Mitchell Warren in Free Articles, Options Risk Management. Comments Off on 2015-02-12 Pre-Earnings Analysis (AIG) (IPG)

Pre-Earnings Analysis

  1. AIG- American International Group will report Q4 earnings after the bell tonight. Analysts are looking for $1.05 per share in EPS on revenue of $8.7B. Shares of AIG have fallen after earnings on five consecutive earnings reports despite beating EPS estimates by at least $0.02 on each occasion. The company has been going through a transition by naming Peter Hancock the new CEO last summer (replacing the successful Robert Benmosche). The stock trades at a P/E ratio of 10.53x (2015 estimates), price to sales ratio of 1.12x, and a price to book ratio of 0.68x. All of these are relatively low, but revenue is likely to come in flat or slightly lower for 2014 (decline 2-3% in 2015) and is experiencing only low to mid single digit earnings growth. The stock has an average analyst price target of $61.33 (7 hold ratings, 8 buy ratings). On February 9th, Deutsche Bank raised their price target to $61 from $60. The options market is pricing in a $1.44 move, or 2.75%, in either direction through Friday’s close.

American International Group

  1. IPG- Interpublic Group of Companies, a $9B global advertising company, is expected to report Q4 earnings before the bell tomorrow morning. Analysts are looking for $0.58 in EPS on revenue of $2.2B. Shares have gone up after earnings on three straight reports (up on 4 out of the last 7 reports). Interpublic trades at a P/E ratio of 18.45x (2015 estimates) with 16.2% EPS growth, P/S ratio of 1.17x, and a P/B ratio of 4.18x. Sales are likely to increase 2.8% this year to just over $7.7B. On January 8th, someone rolled out 2,500 Jan 2015 $20 calls ($0.60 credit) into 2,500 Apr 2015 $20 calls ($1.40 debit). Open interest currently stands at 3,384 contracts (highest OI of any option contract in Interpublic). The consensus analyst price target is $21.62 and on January 28th, JPMorgan Chase raised their price target to $23 from $21.

Interpublic Group

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