We have seen a “sell the news” reaction so far this earnings season, but this week is at least getting off to a fresh start ahead of the deluge of major earnings reports on tap.
With Exxon Mobil (XOM) beating earnings expectations this morning at $1.27 EPS vs. $1.19 estimates from Thomson Reuters, we may have some rays of hope that troubled refinery operations are not going to hit all big oil companies just because they have refining exposure.
This week there are several key broad economic earnings reports including Dow Chemical (DOW), Comcast (CMCSA), Pfizer (PFE), Cisco Systems (CSCO), Yum! Brands (YUM), Visa (V) and MasterCard (MA). This article includes Thomson Reuters consensus estimates and other standout observations where applicable for each of these stocks. Also included are four important sector-movers and active trader stocks. That is, these stocks can move their sectors, but are not market movers and generally see very volatile reactions to the reports: JDS Uniphase (JDSU), Broadcom Corp. (BRCM), MEMC Electronic Materials (WFR) and Activision Blizzard (ATVI).
Major Market-Moving Stocks to Watch (DOW, CMCSA, PFE, CSCO, YUM, V, MA)
Dow Chemical (DOW) is on deck for Tuesday morning with estimates at $0.11 EPS and $11.81 billion in revenues. What’s interesting about Dow Chemical is what actually lies ahead since this will hopefully mark its second profitable quarter in a row. In short, Dow is expected to move back to “normalized earnings” with estimates for the current quarter at $0.29 EPS and $11.77 billion in revenues. Any big changes to that figure have the ability to grossly change the 2010 estimates of $1.38 EPS and $50 billion in revenues. With shares around $27.60, it is still closer to highs as the 52-week range is $5.89 to $31.66. This was over $40 before the big bear market started.
Comcast (CMCSA) earnings are of more importance than in previous quarters because of its pending NBC-Universal majority buyout from General Electric (GE). The company has been successful so far in defending its cable-TV turf war against AT&T (T) for U-verse and Verizon (VZ) for FiOS. Comcast estimates are $0.27 EPS and $8.97 billion in revenues. With shares close to $16.00, the stock is about 11% under its top with a 52-week range of $11.10 to $17.88.
Pfizer (PFE) reports Wednesday morning. The DJIA-component just gave its new huge pipeline update a week ago with dozens of targeted trial programs in Phase II and Phase III studies. This quarter also includes some of the first actual reporting rather than forecasting of the combined Wyeth operations in the mega-merger of October 2009. Because of that merger and combined operations being included, investors should exercise some caution in earnings estimates. Thomson Reuters has estimates of $0.50 EPS and $15.97 billion in revenues, but watch out for merger-related charges galore, location consolidation, partnership cancellation items and more. At $18.80, the stock is less than 10% off highs as the 52-week range is $11.62 to $20.36.
Cisco Systems (CSCO) is the big kahuna for technology stocks this week after the close on Wednesday. Just last week at Davos, John Chambers remained very positive and upbeat about his growth prospects for Cisco. Despite a “sell-the-news” mentality for tech giants after earnings so far, the options traders still have had a large bias toward CALL options rather than PUT options. That is either counterintuitive, a refusal to accept a trend or the hope that the post-earnings bias is ready to change. Estimates here are $0.35 EPS and $9.4 billion in revenue, while the current quarter estimates are $0.36 EPS and $9.48 billion in revenues. At $22.50, the 52-week range is $13.61 to $25.10.
Yum! Brands (YUM) reports Wednesday, and this company has a very spotty post-earnings reputation. Estimates are $0.48 EPS and $3.33 billion in revenues. At $35.05, the 52-week range is $23.37 to $36.96. We have already seen McDonald’s (MCD) offer some support for this stock.
Visa (V) reports Wednesday after the close, and rival MasterCard (MA) is up Thursday before the market opens. Both of these companies have been deemed as being “the immune stocks to policy,” and that may be true except for the attacks on merchant and interchange fees. Visa just got added to the S&P 500 Index in December, generating the likelihood that it could see more volatile trading because of having a whole new group of large shareholders. Both stocks are within about 6% of 52-week highs. Estimates for Visa are $0.91 EPS and $1.92 billion in revenue, while estimates for MasterCard are $2.46 EPS and $1.3 billion in revenue.
Active Trader Stocks (JDSU, BRCM, WFR, ATVI)
Next there are the big “trading-oriented” earnings on deck for companies that will have very active trading that are not quite as sector- or market-moving. These companies include: JDS Uniphase (JDSU), Broadcom Corp. (BRCM), MEMC Electronic Materials (WFR) and Activision Blizzard (ATVI).
JDS Uniphase (JDSU) reports Tuesday afternoon, and this stock still has many buried shareholders from long before its reverse stock split took shares into double-digits before the latest drop. The rumor mill has also tried to make this sound like a merger candidate, and Jim Cramer has recently brought at least some added interest to JDSU. Around $8.10, its 52-week range is $2.21 to $9.13. Thomson Reuters estimates are $0.09 EPS and $334.2 million.
Broadcom Corp. (BRCM) is also on deck Wednesday after the close. The bias here has been set after sell-the-news from major chip stocks, but then Qualcomm (QCOM) posting awful numbers set the tone for a near-10% drop last week from peak to trough. Estimates are $0.44 EPS and $1.32 billion in revenues. For the current quarter ahead, estimates are $0.36 EPS and $1.24 billion in revenue. At $27.60, the 52-week range is $15.31 to $32.49.
MEMC Electronic Materials (WFR), which reports Wednesday afternoon, is the old chip materials supplier that rapidly became the big solar wafer materials supplier. That turned it into a cult-like stock, and almost everyone knows how bad this one fell from grace. At $12.90, its 52-week trading range is $11.78 to $21.36, and its high just before 2008 was over $80.00. Estimates here are very important because it is expected break even after a period of major earnings misses. Estimates are $0.00 EPS and $335.5 million in revenue.
Activision Blizzard (ATVI) is now the largest game publisher in the world post-merger ahead of Electronic Arts (ERTS). It has also not been immune from the video game softness, at close to $10.00; the 52-week trading range is $8.67 to $13.14. Estimates here are $0.44 EPS and $2.23 billion in revenue; next quarter estimates are $0.09 EPS and $756.87 million in revenue. The earnings estimates have not been brought down much here despite competitor weakness. The bar is likely set low based on competitor weakness, so the company might not need to beat earnings expectations by much for the investor community to revisit this stock.
All estimates were based on data from Thomson Reuters consensus data. As a reminder, these may change slightly each day as more earnings are released and as analysts make last-minute changes.
