The Calm Before the Earnings Season Storm

Thursday, the major indices opened down as investors collectively held their breath for third-quarter earnings season to start tonight. And I must admit that I can’t blame them. Analysts expect the S&P 500 as a whole to see profits contract 2.1% compared with last year.

So now more than ever, it’s crucial to keep track of earnings. But considering that upwards 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. Instead, I’ll do that for you and hit the highlights in this daily blog.

However, before I do, let me say that Walmart Stores, Inc. (WMT) made headlines Thursday with its lackluster earnings outlook for the next two fiscal years. WMT shares fell after the company announced that it would open fewer stores, and focus more on its online business. Walmart will release its Q3 results in mid-November, and it will be interesting to see how this report shakes out.

In the meantime, I consider WMT a B-rated (cautious) buy.

Today, I’ll preview the biggest names to keep on your radar over the next several trading days:

There are only five names scheduled to report today, including Oil-Dri Corporation of America (ODC), Straight Path Communications Inc (STRP) and TSR Inc (TSRI). Respectively, these stocks are rated A, C and B in Portfolio Grader.

Monday: This Monday will also be a relatively quiet day for earnings. You can click here to see the full lineup.

Tuesday: Before Tuesday’s open, Alcoa Inc (AA) kicks off the official start to earnings season by announcing its third-quarter operating results. Now, Alcoa’s earnings are expected to improve from 7 cents per share a year ago to 13 cents per share.

However, if you currently hold shares of the world’s leading aluminum producer, you may want to brace yourself: AA fails in Portfolio Grader (it currently is a D-rated Sell). This is due to a combination of anemic buying pressure and mixed fundamentals.

For the rest of next week, we’ll have several more high-profile earnings reports.

On Wednesday, October 12, CSX Corporaton (CSX) and Delta Air Lines, Inc. (DAL) will release their quarterly results.

On Thursday, we’ll hear from Progressive Corp (PGR) and Wynn Resorts, Ltd (WYNN).

Friday will be a big day for the banking industry, with Citigroup Inc (C), JPMorgan Chase & Co. (JPM), PNC Financial Services Group Inc (PNC) and Wells Fargo & Co (WFC) all reporting before the market opens.

As a whole, this earnings season is going to be very challenging, especially for energy and financial stocks. There are exceptions to the rule. In Wednesday’s blog, I featured Constellation Brands, Inc.’s (STZ) Q2 earnings report. The stock is still rising after its 7% earnings surprise and its 3% sales surprise.

I currently recommend STZ in Blue Chip Growth and it is a B-rated Buy in Portfolio Grader.

Make no mistake—the next several weeks will shake up the market as earnings take center stage. So be sure to check in on this blog from time to time to help you locate the best profit opportunities in this shifting market.

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