The week in preview: A peek at apparel retail earnings

Posted May 10th 2009 12:30PM by Trey Thoelcke
Filed under: Earnings Reports, Forecasts, Wal-Mart (WMT)

As earnings season begins to wind down, some apparel retailers are scheduled to report quarterly results this week. Analysts polled by Thomson Reuters anticipate that Walmart Stores Inc. (NYSE: WMT), the 800-pound gorilla in the space, will report that it earned $0.77 per share in the first quarter, about the same as in the first quarter of last year. But JCPenney Co. (NYSE: JCP), Kohl's Corp. (NYSE: KSS), Nordstrom Inc. (NYSE: JWN), and Urban Outfitters Inc. (NASDAQ: URBN) are expected to report lower profits for the first quarter as consumers continued to hold off on spending. Macy's Inc. (NYSE: M) and Abercrombie & Fitch Co. (NYSE: ANF) are expected to have swung to a loss year over year.

Whole Foods Market Inc. (NASDAQ: WFMI) and Winn Dixie Stores Inc. (NASDAQ: WINN) are likewise expected to report declining earnings, while the Great Atlantic & Pacific Tea Co. (NYSE: GAP), parent of the A&P supermarket chain, is expected to have narrowed its net loss 68.9% to $0.28 per share.

Analysts are looking for a big fiscal fourth quarter from American Science and Engineering Inc. (NASDAQ: ASEI), which makes X-ray detection systems for airports and the Department of Homeland Security. Its profit is expected to be 71.2% higher than a year ago, or $1.04 per share. Revenue for the quarter is expected to be 60.9% higher, or $67.6 million. For the full year, the forecast is for $3.30 per share (+43.3%) on $226.1 million (+35.6%). Earnings of the Massachusetts-based company have topped expectations in the past two quarters, by 24.2% in the third quarter. The long-term EPS growth forecast is 15.0%, which is better than the industry average. Its potential earnings growth caught the eye of a Zacks analyst. While American Science and Engineering has paid a quarterly dividend of $0.20 per share for the past year and a half, its debt has also been shrinking over the past year. Shares have fallen from the 52-week high of $83.22 back in February, but at $65.00 are still 12.1% lower year to date.

Stanley Inc. (NYSE: SXE) reported record results in the previous quarter, and for the fiscal fourth quarter the IT provider to various government agencies is expected to report a profit of $0.42 per share, which is 21.4% higher than a year ago. Revenue is expected to be 22.0% higher to $211.6 million. For the full year, the forecast is for $1.54 per share (+27.3%) on $778.9 million (+28.9%). Stanley has beaten earnings expectations in the past five quarters, by as much as 13.6%. The long-term EPS growth forecast is 16.3%, which is better than the industry average. The forward PE ratio estimate is 14.0, which is higher than the industry average as well. The consensus recommendation is to buy SXE. Shares have been trading marginally above the 52-week low of $22.86 and are 14.6% lower than three months ago.

For a first quarter that saw a senior management shakeup at Fluor Corp. (NYSE: FLR), analysts expect the Texas-based construction and engineering company to report a profit of $0.93 per share, which is 19.4% higher than a year ago. Revenue is expected to come to $5.8 billion (+19.7%). Fluor's earnings have topped estimates in the past five quarters, by as much as 24.4%. The long-term EPS growth forecast is 12.5%. At last report, Fluor had way more cash than debt, and it's been paying a $0.125 per share quarterly dividend for the past year. While the consensus recommendation has recently shifted from buy to hold, the Motley Fool recently called it a magical stock. Shares have recently risen above the 100-day moving average, but at $45.17 they are still 44.9% lower than a year ago.

For a first quarter that saw Priceline.com Inc. (NASDAQ: PCLN) join the Superbowl advertising lineup, the Connecticut-based company's profit is expected to have risen 16.7% to $0.91 per share, while the revenue estimate, at $440.8 million, is up 9.3% from a year ago. Priceline.com's profits have topped expectations in recent quarters, by as much as 29 cents per share. The long-term EPS growth forecast is 16.8%, which is better than rivals Orbitz Worldwide Inc. (NYSE: OWW) and Expedia Inc. (NASDAQ: EXPE). The forward PE ratio estimate is 17.0. Analysts on average recommend buying PCLN; the Motley Fool recently called it a cash-rich bargain stock. The share price has been rising, but at $104.90 is still 24.3% lower than a year ago.

Warner Chilcott Ltd. (NASDAQ: WCRX) is a New Jersey-based maker of hormonal contraceptives and acne medications. For its first quarter, the company's earnings are expected to have risen 15.4% to $0.39 per share, while the forecast revenue of $249.9 million is 8.9% higher than a year ago. Warner Chilcott's earnings have topped expectations in recent quarters. The long-term EPS growth forecast is 12.3%, which is higher than the health care sector average. Analysts on average recommend buying WCRX. Shares have been falling since the beginning of the year, but jumped 7.7% in the past month to $11.37, rising above the 50-day moving average.

Other companies expected to report double-digit per-share earnings growth for the most recent quarter include American Italian Pasta Co. (NASDAQ: AIPC), Anglogold Ashanti Ltd. (NYSE: AU), Tidewater Inc. (NYSE: TDW), and Western Gas Partners LP (NYSE: WES), while analysts are looking for Ambac Financial Group Inc. (NYSE: ABK), Clearwire Corp. (NASDAQ: CLWR), and MBIA Inc. (NYSE: MBI) and to have greatly narrowed their first-quarter losses.