Analysts were expecting Inverness Medical Innovations Inc. (IMA) [Chart - News - Analysis] to report earnings of $0.61 for last quarter, but IMA beat expectations with actual earnings of $0.74---13 cents above the consensus estimate.
If you compare last quarter's earnings to the $0.46 the company made per share during the same quarter a year ago, you can see that IMA’s earnings are up this year.
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Also, if you compare IMA's 18.90% projected earnings-per-share (EPS) growth rate for the next five years with the projected EPS growth rate of 14.19% for the Medical Laboratories & Research industry as a whole during that same time frame, you can see that analysts expect IMA to outperform the industry in the future---which is a good sign for the stock.
Drilling down a little deeper into the Medical Laboratories & Research industry, you can see how analysts believe IMA will stack up against some of the other stocks in the industry, like Bio-Reference Laboratories Inc. (BRLI) [Chart - News - Analysis] and eResearchTechnology, Inc. (ERES) [Chart - News - Analysis], in the future. Analysts believe BRLI's earnings are going to grow at a rate of 18.25% while ERES's earnings are going to grow at a rate of 20.00%.
Earnings season can be a volatile time in the stock market. Check out these videos and articles to be better prepared to take advantage of the large price moves that tend to accompany earnings announcements.
Recent market volatility has some traders a little spooked - Try option spreads in situations like this.
Call buyers are snapping up options on Cardionet, Inc. (BEAT) with almost four times the open interest of the at the money puts for this month's expiration. This is clearly bullish, which makes traders wonder if there is something going on out there that they might want to know about. Call buyers profit when a stock rises and the September expiration indicates that investors expect a move in the near term.
Implied volatility is relatively high in these options, which means the premiums are also very high. Higher implied volatility can make it difficult for option buyers to make profits unless the stock makes a very large move.
Cardionet, Inc (BEAT) competes in the medical devices industry with eResearch Technology, Inc. (ERES) and Metronic, Inc (MDT).
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Although there are no magic trading bullets to deal with short term volatility there are some things you can do as an options trader to take additional control over your risk. Option spreads are one way to take more control. A spread combines more than one option contract or an option and a stock into a single trade. Some spreads are directional (bullish or bearish) and others are neutral towards market direction but will profit if volatility falls (or rises.)
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Some option spreads like long straddles and strangles are designed to provide unlimited profits when you think the market is going to make some very big moves in the near term but you have almost no idea what direction the breakout will be. A long straddle or strangle has a fixed amount of risk but can be very expensive if the market moves very little.
Vertical spreads and covered calls can be used to limit risk, provide income and still take advantage of a bullish or bearish trend. Traders have to be careful when trading these strategies as they are a higher cost trade but they can offer the unique benefits of income (with short vertical spreads and covered calls) or a reduction in the negative effects of time value (with long vertical spreads.)
Read these articles to understand more about trading option spreads in today's market:
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In the aftermath of a Leerink Swann mid-July downgrade that wiped out about 25% of EResearch Technology Inc. (ERES) market cap, the stock is trying to recover. In what could be called a reassuring conference call on Monday, management announced positive guidance – reiterating full year 2008 revenue of between $133 million to $140 million, said new bookings came in at $49.0 million for the
eResearch Technology Inc. (ERES) – the cardiac services provider got the steam taken out of it recently on a Jul. 16 analyst downgrade from Leerink Swann. The rating and price target was cut because of concerns that the FDA could approve automated trial studies that could pressure pricing. Management will need to address this during the second quarter conference call on Aug. 4, but with the
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