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I agree that the technicals look pretty good right now, but I feel that the estimate of .28 to .30 is pretty high, and they have a good chance of missing that number. In the last 10-Q report there was mention of charges that were going to be taken against 3Q earnings for restructuring and Executive compensation, among others. They only came in with .01 in the previous quarter, so why is the estimate so high for this quarter? Of course this is seasonally their best quarter, and the numbers were good with quarterly revenue of 187.2 million (a 12.5% increase over last year's revenue #). But higher revenues unfortunately do not always equate to higher net income upon which earnings are based on. I fear that the analysts have not taken all the charges (including higher interest expenses) into account with their estimates. They have trimmed them down a bit, but not enough based on my analysis. I saw it happen to Oakley. Oakley earned .01 in Q1, and analysts had Q2 at .15 which Oakley missed by 2 cents. The stock got hammered and still hasn't recovered. It actually got a brief bounce when SSS of RAYS were announced a few weeks ago, but is right back to the 11's. It had run-up (much like RAYS) in the weeks prior to earnings before backing off before earnings. Needless to say, with the dissapointment in the earnings, it didn't take much to drop it down. Regarding RAYS, considering the # of shares that were recently bought above current prices, it seems pretty obvious that if RAYS misses earnings, the stock will tumble back to 6 pretty quickly. I hope that doesn't happen, I hope that they beat expectations handily enough to get the stock out of the single digits forever. The company is clearly turning around nicely, and postive earnings would be followed by upgrades and new life in what has been a dog for so long. Please don't take this post as a negative toward the stock, and NO, I am NOT SHORT. I am probably going to take a small position as a gamble play and hope for the best, but I wouldn't buy large. It just seems too risky, too make or break. Best of Luck............ |
