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Update on Cummins and Yum Brands, Post-Earnings

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Cummins offered a weaker than expected outlook for 2012. Yum Brands offered better than expected numbers.

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MINYANVILLE ORIGINAL Cummins (NYSE:CMI) stock closed down 3.20% to 87.79 on a weaker than expected outlook for 2012. On October 2 we moved to a Strong Sell on the name. Conversely, Tuesday night we saw better than expected numbers from Yum Brands (NYSE:YUM) due to increased strength out of Asia. We moved to a Buy back on September 19 at $67.70. So where are we going with this?

First, let us say that no one can forecast earnings enough to trade ahead of earnings. You'd be better off going to Vegas. We never trade ahead of earnings, however, if we are long term investors we will hold into earnings.

With this being said, sometimes the price action of a stock will show certain quantitative signals prior to earnings. Why is this? Well the hard-working ladies and gentlemen who are making $5, $10, and $20 million a year on the buy-side cover a select few names and have a good idea going into earnings where their names stand on the earnings front. This is not inside information; this is homework that none of us can possibly do without having access to the best sell-side analysts and the CFOs of Cummins and Yum Brands on speeddial. Our algorithm is our advantage and we believe price action leads fundamentals.




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No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

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