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The week in preview: High hopes for MasterCard, Avon, Aflac, Northrop Grumman

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If you've been watching earnings this past week, or if you read last week's Week in Preview, then this coming week may leave you feeling a bit like Bill Murray in Groundhog's Day. That is, again analysts surveyed by Thomson Reuters expect earnings declines to be more frequent and deeper than earnings gains.

Motorola Inc. (NYSE: MOT), Dow Chemical Co. (NYSE: DOW), Anadarko Petroleum Corp. (NYSE: APC), IAC Interactivecorp (NASDAQ: IACI), Moody's Corp. (NYSE: MCO), Elizabeth Arden Inc. (NASDAQ: RDEN), Devon Energy Corp. (NYSE: DVN), Diebold Inc. (NYSE: DBD), Tyco International Ltd. (NYSE: TYC), United Parcel Service (NYSE: UPS), Cisco Systems Inc. (NASDAQ: CSCO), Polo Ralph Lauren Corp. (NYSE: RL), ITT Corp. (NYSE: ITT), and Walt Disney Co. (NYSE: DIS) are scheduled to report quarterly results this week, and they're all expected to report double-digit declines in earnings.

But again this week, let's take a look who Wall Street feels may have done well in the past quarter.

Analysts anticipate that Sunoco Inc. (NYSE: SUN), Philadelphia-based independent oil refiner and gasoline retailer, will report a fourth-quarter profit that is 90.5% higher that a year ago, or $2.11 per share. Revenue is expected to total $12.5 billion, down 5.3% from last year. For the full year, the profit is expected to be $6.61 per share on revenue of $56.8 billion, which compares to $6.91 per share on $44.7 billion in 2007. Sunoco's earnings beat estimates in the past two quarters, almost doubling estimates in the third quarter on improved margins. But the consensus recommendation of analysts remains to hold SUN. The share price has risen 51.9% in the past three months, but it is 25.5% lower than it was a year ago. Sunoco recently declared another $0.30 per share quarterly dividend.

Unlike BP (NYSE: BP), which is expected to post lower fourth-quarter earnings this week, Marathon Oil Corp. (NYSE: MRO), is expected to post a fourth-quarter profit of $0.90 per share, which is 22.2% higher that a year ago. Revenue is expected to come to $13.3 billion, a drop of 27.5%. For the full year, the profit is expected to be $6.01 per share (+9.7%) on revenue of $72.2 billion (+10.7%). Marathon's earnings have beat estimates in three of the past five quarters, by 19.1% in the third quarter. The consensus recommendation of analysts remains to buy MRO, and the long-range EPS growth forecast is 9.0%. The share price has fallen 6.4% in the past three months, and it is 42.2% lower than it was a year ago.

Analysts anticipate that Avon Products Inc. (NYSE: AVP) will report a fourth-quarter profit that is 49.2% higher that a year ago, or $0.59 per share. Sales, however, are forecast to have slipped 6.4% to $2.9 billion. The New-York-based cosmetics distributor declared a quarterly dividend of $0.20 per share in the fourth quarter. For the full year, the profit is expected to be 41.8% higher than a year ago to $2.08 per share, while revenue is expected to have risen 9.2% to $10.8 billion. Avon's earnings have beat estimates in four of the past five quarters, by as much as $0.08 per share. The consensus recommendation of analysts remains to buy AVP, and the long-range EPS growth forecast is 13.0%, which is better than the S&P 500. Avon's shares have fallen 17.6% in the past three months, and are 41.6% lower than a year ago. Avon's upscale rival Estee Lauder Companies Inc. (NYSE: EL) is also scheduled to report this week, and analysts expect earnings and revenue to have fallen.

MasterCard Inc. (NYSE: MA) is expected to post a fourth-quarter profit that is 45.4% higher that a year ago, or $1.63 per share. Its revenue is expected to be $1.2 billion, which is 12.7% higher than last year. For the full year, the profit is expected to be $8.83 per share on revenue of $5.0 billion, up from $5.69 per share on $4.1 billion. MasterCard's earnings have beat estimates in the past five quarters, by as much as 29.5%. The consensus recommendation of analysts has been to buy MA for more than 90 days. The long-range EPS growth forecast is 17.5%, better than that of rival American Express Co. (NYSE: AXP), which posted lower earnings last week. MasterCard shares have fallen 5.0% since the beginning of the year and are 36.0% lower than a year ago. MasterCard also recently declared a quarterly dividend, as well as changes to adapt to the economic climate. Rival Visa Inc. (NYSE: V) is also expected to report this week, and analysts expect to see more modest earnings growth.

Aflac Inc. (NYSE: AFL), which specializes in selling supplemental insurance, is expected to report a fourth-quarter profit that is 22.0% higher that a year ago, or $1.00 per share. Sales are expected to total $4.6 billion, up 14% from last year. For the full year, earnings are expected to come to $4.01 per share on revenue of $17.2 billion, up from $3.27 per share on $15.4 billion. Aflac's earnings have come in very close to estimates in recent quarters. Analysts, on average, recommend buying AFL as well, and the long-range EPS growth forecast is 15.1%. Aflac shares fell to a 52-week low last week and are 62.0% lower than a year ago. Also, Standard & Poor recently lowered its ratings for Aflac. Analysts anticipate lower earnings from insurers MetLife Inc. (NYSE: MET), Cigna Corp. (NYSE: CI), Hartford Financial Services Group Inc. (NYSE: HIG), and Humana Inc. (NYSE: HUM) when they report this week, and a loss from Prudential Financial Inc. (NYSE: PRU).

St. Louis-based Ralcorp Holdings Inc. (NYSE: RAH), whose brands include Post cereals and many store brands, is expected to report a fiscal first-quarter profit of $0.84, which is 19.0% higher that a year ago. Its sales are expected to total $971.0 million, up 49.2% from last year. Ralcorp's earnings have come in very close to estimates in recent quarters. Ralcorp has a consensus buy recommendation as well, even though its long-range EPS growth forecast is only 8.0%. The share price has risen 1.4% since the beginning of the year and is 8.9% higher than it was a year ago. Kraft Foods Inc. (NYSE: KFT), from whom Ralcorp acquired Post Cereals, is expected to report earnings that are the same as in the year-ago period. Kellogg Co. (NYSE: K) is also expected to report higher earnings this week.

And finally, Northrop Grumman Corp. (NYSE: NOC), the Los Angeles-based marine and aerospace defense contractor, is expected to report a fourth-quarter profit that of $1.55 per share and revenue of $8.9 billion. That's up from $1.32 per share and $8.8 billion in the same period of the previous year. For the full year, the per-share profit is expected to be $5.20 on revenue of $33.6 billion, which is marginally higher than a year ago. Northrop Grumman's earnings have met or beat estimates in recent quarters. The consensus recommendation of analysts is to buy NOC. The long-range EPS growth forecast of 12.8% is better than that of rivals General Dynamics Corp. (NYSE: GD), which reported a better-than-expected profit last week, and Boeing Co. (NYSE: BA), which reported a loss. Northrop Grumman shares have risen 2.6% in the past three months, but the share price is 39.4% lower than it was a year ago.

This week's other EPS gainers include Bally Technologies Inc. (NYSE: BYI), Schering-Plough Corp. (NYSE: SGP), Western Union Co. (NYSE: WU), Burger King Holdings Inc. (NYSE: BKC), and Yum! Brands Inc. (NYSE: YUM).

On the other hand, additional decliners include Archer Daniels Midland Co. (NYSE: ADM), Merck & Co. (NYSE: MRK), Time Warner Inc. (NYSE: TWX), CME Group Inc. (NASDAQ: CME), Mattel Inc. (NYSE: MAT), Clorox Co. (NYSE: CLX), and Tupperware Brands Corp. (NYSE: TUP).

In Groundhog Day, Bill Murray's Phil the weatherman had this winter forecast: "It's gonna be cold, it's gonna be gray, and it's gonna last you for the rest of your life." If that's the way this economic downturn is starting to feel, just remember that Phil eventually had his happy ending.

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Last updated: November 27, 2009: 08:06 AM

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