I’m keeping close tabs on earnings warnings, and with less than three weeks until the next reporting season starts, we have not yet had an abundance of negative pre announcements from major companies. Still, a couple of important companies have lowered expectations in recent days.
FedEx (NYSE:FDX), a pretty good barometer of economic activity around the world, reported earnings yesterday, and while last quarter’s results beat expectations, management did lower guidance. It is now expecting earnings for the current quarter of $1.45–$1.60 a share, below expectations for $1.70. However, in keeping with the action we’ve seen in stocks, FDX rallied 2.8% on Tuesday and was up again Wednesday. Management did indicate it is looking to lower costs, which have increased.
On the other hand, Procter & Gamble (NYSE:PG) lowered its earnings and sales forecasts and fell 3.5%.Some of the shortfall is related to the global economy right now, but some of it is company-specific as well, as it has suffered some missteps in recent years that have pressured the stock.
There are a lot of important stories that will continue to play out in the coming months, and at the moment, there is still plenty of uncertainty as to exactly how they will unfold.
In general, I continue to expect stocks to strengthen as we finish out 2012, though it will be more important than usual to be in the right stocks. We will focus on leading and innovative companies that are in strong financial shape, poised for solid growth even through potential economic difficulties, and have a high probability of meeting earnings expectations. I’m screening and analyzing a slew of companies now, and I expect us to add new opportunities in the coming weeks.