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Welcome to the ORATS earnings report where we scan for companies with upcoming earnings announcements, check out historical earnings information, and find a potential options trade. Let’s start by running a scan on earnings reporting this week, which includes the total option volume indicator, sorted from greatest to least.

Focusing on KB Home, as we click through, we see this mid-cap company in the residential construction industry reports earnings on Wednesday, June 22, after the close.

The earnings and financials tab takes us to more detail showing the options market expecting a move of 7.9% in either direction. This move was breached in 2 out of the last 12 earnings.

During that time, the post-earnings move was outside of the implied range 5 times. In those cases, long straddles were profitable. The rest of the earnings moves likely yielded profitable short straddles. We can overlay quarterly financial data by clicking on the ratios below the earn move graph. Let’s look at the PE ratio, which is the stock price divided by the trailing twelve months earnings per share.

For KBH, the current PE ratio is 3.9, which is 48.7% under the average for the last twelve earnings observations. Returning to the overview tab, we can quickly run a scan to find the best option trades. Since earnings are right around the corner, we scan for neutral strategies, then filter the scan results by S%, or smoothed edge, by setting it between negative and positive 3%.

This helps narrow the results to trades that are fairly priced. The highest ranked trade is a Iron Condor with strikes at 18, 23, 28, and 33, expiring on 2022-07-15, for a credit of $1.5.

By pulling up the trade, we can see the theoretical values in more detail. The distribution edge, found by the expected value of the payoff picture on the stock’s historical distribution, has an edge of 10.7%. The forecast edge, which is derived from historical volatility, has an edge of 5.3%. Lastly, the smoothed edge, which is calculated by drawing a best fit curve through the monthly implied volatilities, has an edge of 1.3%. The edge is relative to the mid-market price of the trade. Greater positive edges are a theoretical benefit to the trader. We can also look at the payoff graph. The probability of profit sums the probability of the nodes for the part of the payoff picture above the zero profit line over three standard deviations. For this trade the probability of profit is 68.61%. The reward to risk divides the max gain by the max loss. Here the 1 to 2.3 is the ratio of the max gain of $150 to the max loss of $-350. There are two break evens for this Iron Condor at 21.5 and 29.5. The total greeks and ThinkOrSwim code complete the information on the trade analysis popout.

Next, let’s look at this trade in the trade builder. Over the last month, the stock price fell 20.7%, while the thirty-day implied volatility rose 30.5%. The average slope of the trendlines is negative. The heatmap on the right side of the graph is green where volatility and slope are undervalued, and red where they are overvalued. In this case, short term IV and slope are overvalued, while the long term is slightly overvalued.

We can also see this trade overlaid on the monthly implied volatility graph in the chain tab. The legs for this trade are circled. For any questions or issues with the article, please contact otto@orats.com. To subscribe to the dashboard, please visit https://orats.com/dashboard.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Despite firing on all cylinders with revenues and profits, which have risen strongly over the past several quarters, Accenture (ACN) stock hasn’t avoided the punishment that has ravaged the software sector and the overall market.

The stock has fallen 32% over the past six months and is down 34% year to date, compared to 23% decline in the S&P 500 index. Investors are wondering whether this is a buying opportunity. Accenture will look to answer that question it reports third quarter fiscal 2022 earnings results before of the opening bell Thursday. A leading specialist in IT consulting and outsourcing, Accenture’s business has benefited immensely from the rapid growing demand not only for IT services, but also from increased cloud adoption and digital transition.

The company’s consulting projects, which make up roughly 55% of total revenues, cover areas such as strategy and broad fields including blockchain, technology and digital transformation. In the most recent quarter, its revenue grew 24.5% year over year, while adjusted EPS grew 25% year over year. And this sort of growth is poised to continue through 2025, according to research firm Gartner, which predicts organizations will “increase their reliance on external consultants.” The company’s guidance on Thursday will determine whether Gartner’s prediction will prove true.

For the quarter that ended May, Wall Street expects Accenture to earn $2.85 per share on revenue of $16.05 billion. This compares to the year-ago quarter when earnings came to $2.40 per share on revenue of $13.26 billion. For the full year, ending August, earnings are projected to be $10.35 per share, up 32% from $7.80 a year ago, while full-year revenue of $59.25 billion will rise 32.2% year over year.

While there is some evidence to suggests IT spending has improved, there’s also the concern of a massive pull-forward that has already occurred. The company has to convince the Street that not only can it sustain its current growth rate, but that growth rate can accelerate profitably. Accenture’s management team, which has raised guidance on multiple occasions over the past few quarters, continues to execute on their stated objectives, finding ways to leverage the digitalization trend and increased company’s competitive scale.

The company recently announced the formation of Accenture Cloud First, spending some $3 billion over three years, strategically positioning the company for sustained IT spending across all industries. The company’s investments aligns with predictions from research firm Gartner which forecasts IT spending growth “will continue through 2025, predicting organizations will increase their reliance on external consultants.” Beyond its consulting projects, Accenture also relies heavily on its other segments, which includes accounting, procurement and application services.

As noted, these collective businesses are growing impressively and have lead to six straight earnings beats. In the fiscal second quarter, its revenue grew 24.47% year over year to $15.05 billion, albeit marking a slight deceleration from previous quarter by three percentage points. Q2 adjusted EPS also topped estimates, rising 25% to $2.54 per share. The company benefited from record new bookings of $19.6 billion, up 22% year over year.

New bookings, a closely-watched metric which measures the strength of future revenue. Just as impressive, consulting bookings and outsourcing bookings, which came in respectively at $10.9 billion and $8.7 billion were company records. Accenture also indicated there is no sign of slowing down, raising the range for full-year revenue growth to 24% to 26%, while also raising EPS range to $10.61 to $10.81, above consensus range of $10.54 per share.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

A company’s own top management tend to have the best inside view into the business, so when company officers make major buys, investors are wise to take notice. Presumably the only reason an insider would take their hard-earned cash and use it to buy stock of their company in the open market, is that they expect to make money — maybe they find the stock very undervalued, or maybe they see exciting progress within the company, or maybe both. So in this series we look at the largest insider buys by the ”top brass” over the trailing six month period, one of which was a total of $265.2K invested across 2 purchases by H. E. Timanus Jr., Chairman at Prosperity Bancshares Inc. (Symbol: PB).

Purchased Insider Title Shares Price/Share Value 05/12/2022 H. E. Timanus Jr. Chairman 2,000 $67.00 $134,000.00 06/16/2022 H. E. Timanus Jr. Chairman 2,000 $65.60 $131,200.00

Timanus Jr.’s average cost works out to $66.30/share. Shares of Prosperity Bancshares Inc. were changing hands at $67.92 at last check, trading off about 0.6% on Wednesday. The chart below shows the one year performance of PB shares, versus its 200 day moving average:

Looking at the chart above, PB’s low point in its 52 week range is $64.40 per share, with $80.46 as the 52 week high point — that compares with a last trade of $67.92.

The current annualized dividend paid by Prosperity Bancshares Inc. is $2.08/share, currently paid in quarterly installments, and its most recent dividend ex-date was on 06/14/2022. Below is a long-term dividend history chart for PB, which can be of good help in judging whether the most recent dividend with approx. 3.0% annualized yield is likely to continue.

Click here to find out which other top insider buys by the ”top brass” you need to know about »

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In trading on Wednesday, the SPDR S&P Biotech ETF is outperforming other ETFs, up about 3% on the day. Components of that ETF showing particular strength include shares of Scholar Rock Holding, up about 16.8% and shares of Vbi Vaccines, up about 15.4% on the day.

And underperforming other ETFs today is the First Trust Natural Gas ETF, down about 5.4% in Wednesday afternoon trading. Among components of that ETF with the weakest showing on Wednesday were shares of Tellurian, lower by about 12.9%, and shares of Laredo Petroleum, lower by about 9.7% on the day.

VIDEO: Wednesday’s ETF Movers: XBI, FCG

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.