Early Earnings News

HES and TXU Could be In Play

By Bryan Bottarelli
Wednesday, January 31, 2007 9:33 AM EST
Wed, 31 Jan 2007 14:33:00 GMT

Dear Bottarelli Research Member,

Let’s get updated on today’s earnings.

First up is Hess Corp. (HES – NYSE), and although the headlines will read something like “Hess 4th-Quarter Profit Declines Due to Weaker Refining Margins,” the stock is actually up $0.22 in pre-market trading because the company reported earnings of $1.13 per share — beating the consensus estimate of $1.11 per share. We might see some volatility at the open of trading, so let’s place a $2.00 sell order on our HES March 55 Calls (IGG CK) and see if it triggers today.

PLAY: Sell your HES March 55 Calls (IGG CK) at or above $2.00, good for the day.

Our two major Dow Utility components are also reporting earnings today — and the numbers look pretty bad. Dominion Resources (D — NYSE) reported a big drop in profits as earnings fell from $0.74 last year to $0.09 this year. At the same time, Public Service Enterprise Group (PEG – NYSE) saw earnings fall from $0.92 a share last year to $0.69 a share this year. Both numbers came in well below consensus estimates, so we could see the Dow Utility weakness I’ve been calling for in today’s trading. Keep an eye on your TXU February 55 Puts (TXF NK) and I’ll be out with more updates as the day progresses. Until then…

Lock and load

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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