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| Looking at Echelon Corporation performance since earnings; ELON, BBOX, FNSRD, JNPR |
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Earnings releases can make investing tricky. Many investors try to time trades based on earnings filings, but usually find such trading is inconsistent and dangerous. It is often better to take a look at how the market has reacted to a company’s results a few weeks after the initial announcement. Echelon Corporation (ELON) released its earnings filing on 02/10. The company reported a change in quarter-over-quarter sales of 5.54% and posted an EPS (trailing twelve months) of - .79. Need trade ideas? Get this free report: 5 Profitable Options Trades for 2010 By now the market has had time to settle in and look closely at the numbers. A stock’s performance in the few weeks following an announcement, compared to other stocks in its industry, the industry as a whole, and market as a whole, really tells you how investors and analysts felt about the announcement. Compared to peers One way to gauge performance is look at a stock compared to other stocks in its industry with similar market caps. ELON peer Black Box Corp. (BBOX) has seen a 19.83% stock price gain over about the last month, while another peer, #N/A (FNSRD) saw a .00% #N/A. So with a return of 13.44%, Echelon Corporation saw less price gain than BBOX and #N/A FNSRD’s price performance over the last month. Juniper Networks, Inc. (JNPR) is one of the largest stocks in the industry in terms of market cap, and over the same period has returned 19.56% in price. Compared to the S&P 500 Index Now, let’s see how Echelon Corporation stock performance compares to the rest of the market by looking at it compared to the Standard & Poor’s 500 Index (.INX). Since 02/10, the S&P 500 index has returned around 6.5%, and again, ELON saw about a 13.44% gain during that time. Not bad. Compared to the rest of the “Networking & Communication Devices” industry Since the ELON announcement (about 30 days ago), the stock has posted a 13.44% gain. Over that same period, the stock’s industry, Networking & Communication Devices, saw a 11.81% gain. That means ELON that has outperformed its industry as a whole 13.80% since the earnings announcement. Small differences aren’t significant, but when the spread is large it indicates the stock is either much more or much less favored than its group as a whole.
So by putting the returns in context by these comparisons, we can see how a stock’s performance since earnings really measures up and make our investing decisions on PRXL accordingly. More articles on our home page... |
