With shares of Siemens (NYSE:SI) trading around $120, is SI an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let's analyze the stock with the relevant sections of our CHEAT SHEET investing framework:
T = Trends for a Stock’s MovementSiemens is an integrated technology company with activities in the fields of industry, energy, and health care. Siemens operates in six segments: industry, energy, health care, equity investments, Siemens IT solutions and services, and Siemens financial services. The company has equity investments in telecommunications infrastructure and household appliance companies as well as in a company that provides open communications, network, and security solutions.
Siemens announced it will cut 7,500 jobs in the next fiscal year as the company undergoes restructuring to increase profitability and catch up to rival General Electric (NYSE:GE). CEO Joe Kaeser has said Siemens will cut 15,000 positions in total as a part of the reorganization, Bloomberg reports. Kaeser is working to regain investor confidence in the company after losses caused by his predecessor Peter Loescher, who lost his position after an announcement earlier this summer that Siemens would not reach its goal to make a profit equal to 12 percent of sales next year.
T = Technicals on the Stock Chart Are StrongSiemens stock has struggled to make significant progress in recent years. However, the stock is currently breaking higher is trading at highs for the year. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, Siemens is trading above its rising key averages, which signal neutral to bullish price action in the near-term.
(Source: Thinkorswim)
Taking a look at the implied volatility (red) and implied volatility skew levels of Siemens options may help determine if investors are bullish, neutral, or bearish.
| Implied Volatility (IV) | 30-Day IV Percentile | 90-Day IV Percentile | |
| Siemens Options | 23.06% | 90% | 89% |
What does this mean? This means that investors or traders are buying a very significant amount of call and put options contracts as compared to the last 30 and 90 trading days.
| Put IV Skew | Call IV Skew | |
| October Options | Flat | Average |
| November Options | Flat | Average |
As of today, there is an average demand from call buyers or sellers and low demand by put buyers or high demand by put sellers, all neutral to bullish over the next two months. To summarize, investors are buying a very significant amount of call and put option contracts and are leaning neutral to bullish over the next two months.
On the next page, let’s take a look at the earnings and revenue growth rates and the conclusion.
E = Earnings Are Mixed Quarter-Over-QuarterRising stock prices are often strongly correlated with rising earnings and revenue growth rates. Also, the last four quarterly earnings announcement reactions help gauge investor sentiment on Siemens’s stock. What do the last four quarterly earnings and revenue growth (Y-O-Y) figures for Siemens look like and more importantly, how did the markets like these numbers?
| 2013 Q2 | 2013 Q1 | 2012 Q4 | 2012 Q3 | |
| Earnings Growth (Y-O-Y) | 11.36% | -7.03% | -0.79% | 54.97% |
| Revenue Growth (Y-O-Y) | -10.15% | 3.83% | 2.24% | -5.11% |
| Earnings Reaction | 0.44% | -1.08% | 1.35% | -0.62% |
Siemens has seen mixed earnings and revenue figures over the last four quarters. From these numbers, the markets have been conflicted about Siemens’ recent earnings announcements.
P = Weak Relative Performance Versus Peers and SectorHow has Siemens stock done relative to its peers, General Electric (NYSE:GE), ABB (NYSE:ABB), Phillips (NYSE:PHG), and sector?
| Siemens | General Electric | ABB | Phillips | Sector | |
| Year-to-Date Return | 10.22% | 14.34% | 13.90% | 21.55% | 14.18% |
Siemens has been a poor relative performer, year-to-date.
ConclusionSiemens provides a range of valuable technology products and services to a number of industries around the world. The company is set to cut 7,500 jobs as it restructures in an effort to compete in the industry. The stock has struggled in recent years but is now trading at highs for the year. Over the last four quarters, earnings and revenues are mixed, which has produced conflicting feelings among investors in the company. Relative to its peers and sector, Siemens has been a weak year-to-date performer. WAIT AND SEE what Siemens does this quarter
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