Lots of quarterly reports to come this week, and if you're one of those looking to earnings for signs of the direction of the markets or of the economy, well its going to be a rough week. Analysts surveyed by Thomson Reuters, by and large, expect earnings declines to be deeper and more numerous than earnings gains. And that's true across sectors: Caterpillar Inc. (NYSE: CAT), Amazon.com Inc. (NASDAQ: AMZN), U.S. Steel Corp. (NYSE: X), Wells Fargo & Co. (NYSE: WFC), New York Times Co. (NYSE: NYT), Starbucks Corp. (NASDAQ: SBUX), Boeing Co. (NYSE: BA), Starwood Hotels & Resorts Worldwide Inc. (NYSE: HOT), American Express Co. (NYSE: AXP), Altria Group Inc. (NYSE: MO), and Texas Instruments Inc. (NYSE: TXN) are all expected to post double-digit declines this week.
Even the petroleum industry is not immune, with Chevron Corp. (NYSE: CVX), Valero Energy Corp. (NYSE: VLO), ExxonMobil Corp. (NYSE: XOM), Murphy Oil Corp. (NYSE: MUR), ConocoPhillips (NYSE: COP), Occidental Petroleum Corp. (NYSE: OXY), and Hess Corp. (NYSE: HES) expected to report profits that were as much as 65.3% lower in the fourth quarter.
And analysts expect Freeport-McMoRan Copper & Gold Inc. (NYSE: FCX), Tyson Foods Inc. (NYSE: TSN), DuPont (NYSE: DD), and Sun Microsystems Inc. (NASDAQ: JAVA) to have swung to losses for the most recent quarter, from profits in the same period a year ago. And Ford Motor Co. (NYSE: F) is expect to have deepened its net loss.
But not all is doom and gloom. There are some anticipated EPS gainers as well. Here's a closer look at a few of them.
McDonald's Corp. (NYSE: MCD), like other companies on this list, is sometimes considered recession-proof. Analysts anticipate that the world's largest fast-food purveyor will report a fourth-quarter profit that is 12.0% higher that a year ago, or $0.83 per share. Sales are expected to total $5.7 billion, about the same as last year. For the full year, the profit is expected to be $3.63 per share (+20.4%) on revenue of $23.7 billion (+3.8%). McDonald's earnings have beat estimates in the past five quarters, by as much as 16.2%. The consensus recommendation of analysts is to buy MCD, and the long-range EPS growth forecast is 9.3%. McDonald's shares have risen 9.4% in the past three months, and the share price is 7.4% higher than it was a year ago.
Eli Lilly & Co. (NYSE: LLY), the Indianapolis-based maker of such drugs as Prozac, Cymbalta, and Cialis, is expected to post fourth-quarter earnings of $1.05 per share on sales of $5.4 billion. That's up from $0.90 per share on $5.2 billion in the same period of last year. For the full year, analysts expect $4.00 per share (+1.5%) on $20.6 billion (+10.2%). Eli Lilly's earnings have met or beat estimates in four of the past five quarters. But its long-range EPS growth forecast is only 5.6%, less than half that of the S&P 500, but better than that of rival GlaxoSmithKline (NYSE: GSK). Eli Lilly's share price has risen 17.9% in the past three months, but is 27.1% lower than a year ago. Eli Lilly increased its quarterly dividend in December, and also completed its acquisition of Imclone Systems Inc. during the fourth quarter.
Eli Llly's New York-based competitor Pfizer Inc. (NYSE: PFE) also reports fourth-quarter results this week. The maker of Viagra, Zoloft, and Lipitor is expected to post a profit of $0.59 per share and revenue of $12.5 billion. That compares to $0.52 per share and revenue of $13.0 billion a year ago. Pfizer missed earnings estimates in only one of the past five quarters. For the full year, a profit of $2.38 per share (+11.9%) on sales of $48.6 billion (+0.4%) is expected. Analysts on average recommend buying PFE despite a negative long-range EPS growth forecast. Shares have been trading marginally higher than a multiyear low, and are 24.3% lower than a year ago. In December, Pfizer continued its long, uninterrupted stretch of quarterly dividends, but more recently it was among those companies announcing layoffs. Pfizer has also expressed interest in acquiring its rival Wyeth (NYSE: WYE), whose fourth-quarter earnings are expect to be about the same as last year.
Last week saw rail companies Burlington Northern Santa Fe Corp. (NYSE: BNI ), Canadian National Railway Co. (NYSE: CNI), and Union Pacific Corp. (NYSE: UNP) top analysts' EPS estimates. This week it's Norfolk Southern Corp.'s (NYSE: NSC) turn to report. The Virginia-based company's fourth-quarter earnings are expected to be 13.6% higher, or $1.18 per share, with revenues of $2.6 billion, which is 5.8% higher than a year ago. Earnings have beat estimates in the past four quarters, by as much as 13.4%. For the full year, analysts expect $4.50 per share (+17.1%) on $10.7 billion (+12.9%). Though the long-range EPS growth forecast is only 9.7%, the consensus recommendation is to buy NSC. Shares reached a 52-week low last week, and are 32.7% lower than a year ago.
Netflix Inc. (NASDAQ: NFLX), distributor of rental DVDs via mail, increasingly has been making inroads toward sending movies directly to TVs. Analysts are looking for fourth-quarter earnings from the Los Gatos, Calif., company to be 29.4% higher to $0.34 per share. Revenue is expected to total $354.2 million, which is 17.1% higher than a year ago. Netflix profits have topped expectations in the past five quarters, by as much as 9 cents per share. For the full year, analysts are looking for $1.29 per share (+24.8%) and $1.4 billion (+12.8%). The long-range EPS growth forecast is 18.0%, which is better than that of the S&P 500 and of rival Blockbuster Inc. (NYSE: BBI). Netflix shares are closer to their 52-week high of $40.90 than the 52-week low of $17.90, having risen 60.6% in the past three months.
Cincinnati-based Proctor & Gamble Co. (NYSE: PG), the world's leading maker of household products, is expected to be among the week's biggest earnings winners, with a fiscal second-quarter profit of $1.58 per share. That's 38.0% higher than in the same period of the previous year. However, revenue is expected to have dropped 4.3% to $20.6 billion. The company's earnings have topped estimates in the past five quarters, by as much as 18.3%. The long-range EPS growth forecast is 10.0%, and the consensus recommendation is to buy PG. The share price is 15.2% lower than it was a year ago. Proctor & Gamble Co. has been paying quarterly dividends since 1890.
Other expected earnings gainers reporting this week include General Dynamics Corp. (NYSE: GD), Allstate Corp. (NYSE: ALL), Colgate-Palmolive Co. (NYSE: CL), Dun & Bradstreet Corp. (NYSE: DNB), Amgen Inc. (NASDAQ: AMGN), and Halliburton Co. (NYSE: HAL).
On the other hand, this week's other expected earnings decliners include AT&T Inc. (NYSE: T), Yahoo! Inc. (NASDAQ: YHOO), Qualcomm Inc. (NASDAQ: QCOM), 3M Co. (NYSE: MMM), Raytheon Co. (NYSE: RTN), Travelers Companies Inc. (NYSE: TRV), T. Rowe Price Group Inc. (NASDAQ: TROW), and Fortune Brands Inc. (NYSE: FO).
So, find your hope where you can.
Entrepreneur's Journal: Putting together a solid sales contract
The week in preview: Earnings from Walmart, Macy's, and other retailers
Six top trades for the rest of 2009
Reader Comments (Page 1 of 1)
1-26-2009 @ 11:39AM
Iridium said...
McDonalds is shooting themselves in the foot. Raising the cost of nearly every meal by 35% should bankrupt the company. If the American people decide to pay 35% more for the food at McDonalds then they are idiots.
I refuse to spend $5.35 for a Big Mac meal when it was $3.85 two years ago. For $5.35 I can get a much better burger at a few dozen independent restaurants.
The only thing that keeps fast food companies in business is value. McDonalds has thrown value out the window in the middle of a recession, not a smart play.