This morning, the major indices opened flat as investors collectively held their breath for third-quarter earnings season to start tonight. And I must admit that I can’t blame them.
For the first time in three years, analysts expect the average S&P 500 company’s profits to contract 2.3% compared with last year. On top of this, we’ve already seen market bellwethers like FedEx (NYSE:FDX) and Hewlett-Packard (NYSE:HPQ) reduce their forward guidance in a warning to investors that bumpy times may be ahead.
So now more than ever, it’s crucial to keep track of earnings. But considering that upward of 50 companies will report operating results each and every trading day over the next several weeks, I don’t expect you to spend hours of your day combing through the data.
Today, let’s preview some of the biggest names to keep on your radar over the next four trading days:
Tuesday: After today’s close, Alcoa (NYSE:AA) kicks off the official start to earnings season by announcing its third-quarter operating results. But if you currently hold shares of the world’s leading aluminum producer, you might want to brace yourself: Analysts estimate that Alcoa’s sales dropped 13.7% and its earnings plummeted a shocking 100% compared with Q3 2011. During the past three months, analysts have cut their earnings estimates from 7 cents to breakeven — we’ll see if Alcoa can top expectations, but I’m not overly optimistic. We’ll also get the final verdict on fast-food titan Yum! Brands (NYSE:YUM) in the third quarter. If you’re interested to hear how the operator of Taco Bell and KFC fared last quarter, be sure to check out tomorrow’s Stock of the Day.
Wednesday: Tomorrow, I’m keeping Costco‘s (NASDAQ:COST) fourth-quarter earnings announcement at the top of my radar. As I mentioned last week, Costco is one of my recommendations for my Blue Chip Growth newsletter, and its earnings prospects are strong following its estimate-trumping September same-store sales. Currently, analysts are calling for 12.5% sales growth and 21.3% earnings growth — several analysts recently raised their earnings estimates, which bodes well for a potential earnings surprise.
Thursday: We have two of Wall Street’s newest additions reporting earnings on Thursday: Annies (NYSE:BNNY) and the infamous Groupon (NASDAQ:GRPN). I’m particularly interested to see how GRPN does because as beat down as this stock is, the company has trounced analyst estimates by at least 100% in the past two quarters. We’re just a few months away from when GRPN will have a full year’s worth of earnings data and will qualify for my Portfolio Grader tool. But, given that the stock has lost nearly 80% of its value since it went public last November, I don’t expect GRPN will be a highly-rated stock.
Friday: Finishing up this week’s earnings announcements, Wells Fargo (NYSE:WFC) reports its third-quarter operating results before Friday’s open. Currently the analyst community expects 9.3% sales growth and 20.8% earnings growth — but keep in mind that the Money Center Banks industry’s average profits are expected to soar more than 10 times that. We’ll probably also see Wells Fargo declare its next quarterly dividend payment in the next few weeks. With a 2.5% dividend yield, Wells Fargo falls in the top 10% of all banks.