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The week in preview: A bottom for the housing sector?

Posted Sep 21st 2008 12:30PM by Trey ThoelckeTrey Thoelcke RSS Feed
Filed under: Earnings reports, Forecasts, Economic data, Housing

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Earnings reports continue to dribble in as the quarter winds down. Much of the attention this week will be on homebuilders KB Home (NYSE: KBH) and Lennar Corp. (NYSE: LEN) as investors look for any sign that the housing sector has bottomed (home sales numbers are also due out this week; see below). Analysts surveyed by Thomson Financial anticipate that both companies will report that they narrowed their losses in the most recent quarter.

KB Home's expected $1.25 per share loss, on revenue of $725.5 million, compares to the previous quarter loss of $3.30 and to a year-ago loss of $6.19. However, KB Home's losses in the past few quarters have been deeper than expected. The Los Angeles-based homebuilder's long-range earnings growth forecast is 10.5%, less than the S&P 500. Analysts continue to recommend holding KB Home, and have for at least 120 days. Shares, however, reached a new 52-week high of $31.69 on Friday, and they are up 10.5% year to date.

Lennar is expected to post a loss of 52 cents per share, on revenue of $1.1 billion. That compares to the previous quarter's per-share loss of 76 cents and to a year-ago loss of $3.25. While Lennar also has tended in the past few quarters to miss expectations, the Miami-based company managed a positive surprise in the first quarter of 2008. Lennar's long-range earnings growth forecast is 10.3%, about the same as KB Home's. Analysts also recommend holding Lennar. Friday, shares of Lennar also reached a 52-week high, $27.75, but they are down 6.4% year to date.

Ontario-based Research in Motion (RIM) must have been very surprised to learn this past week that U.S. presidential candidate John McCain "invented" the BlackBerry. RIM, which produces the BlackBerry as well as other devices and software tools, is among tech companies scheduled to report quarterly results this coming week. Analysts surveyed by Thomson Financial expect RIM, as well as 3Com, Aehr Test Systems (which is a strong buy), Jabil Circuit (which is building new headquarters) and other techs, to report earnings growth in the most recent quarter, as compared to the year ago quarter.

Here's a look at this coming week's expected earnings gainers.

Not all techs reporting this week are expected to post profit growth, though. Smart Modular Technologies (which recently cut its guidance) and Analogic (which has been restructuring) are among this week's anticipated earnings decliners.

Along with KB Home and Lennar, discussed above, ski resort operator Vail Resorts Inc. (NYSE: MTN) is also expected to post a narrower loss, 18 cents per share in this case, compared to 88 cents per share a year ago. But analysts expect New York-based publisher Scholastic Corp. (NASDAQ: SCHL) and #3 drugstore chain Rite Aid Corp. (NYSE: RAD) to have widened their losses in the past quarter. Scholastic, which was no doubt disappointed by the delay of the next Harry Potter movie, is expected to report a loss of $1.00 per share, 93.0% deeper than a year ago. And Rite Aid, which recently partnered with drugstore.com (NASDAQ: DSCM), is expected to post a loss of 15 cents per share, 33.3% deeper than a year ago.

Other economic data scheduled to be released this week include:

This week, I'm most interested in:

Visit AOL Money & Finance for more earnings coverage.

Tags: 3Com, Accenture, ACN, Aehr, ALOG, AM, American Greetings, Analogic, AutoZone, AZO, AZZ, BBBY, Bed Bath Beyond, Bernanke, BlackBerry, CarMax, CBK, Chattem, Christopher and Banks, CHTT, COMS, Copart, CPRT, CRA, CRAI, DFS, Diamond Foods, Discover, DMND, drugstore.com, DSCM, earnings, earnings reports, FactSet Research, Fannie Mae, FDS, featured, Finish Line, FINL, FNM, FRE, Freddie Mac, FUL, Fuller, Harry Potter, housing, Jabil, JBL, John McCain, KB, KB Home, KMX, LEN, Lennar, McCormick, MKC, MTN, NEOG, Neogen, Nike, NKE, Paulson, Paychex, PAYX, RAD, Research in Motion, RIM, RIMM, Rite Aid, SCHL, Scholastic, Smart Modular, SMOD, SNX, SPEC, Spectrum Control, Synnex, Texas Industries, Tibco, TIBX, TXI, Vail Resorts, WOR, Worthington

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Last updated: July 12, 2009: 05:41 AM

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