Things will be pretty quiet again on the earnings front during this holiday-shortened week, so not much chance of fireworks there.
The one report analysts surveyed by Thomson Reuters seem to have the highest hopes for is that from Apollo Group Inc. (NASDAQ: APOL), as people look to education to better position themselves to survive the economic slump. For its fiscal third quarter, during which a new co-CEO was named, the Phoenix, Ariz.-based educational services provider is expected to report a profit of $1.12 per share, which is 24.1% higher than a year ago. Revenue is expected to be 24.3% higher to $1.0 billion. The full-year forecast is currently for $3.97 per share (+28.5%) on sales of $3.9 billion (+24.4%). Earnings have topped expectations in the past four quarters, by as much as 13 cents per share. The long-term EPS growth forecast is 15.9%, which is double the industry average, and the forward PE ratio estimate is 15.0. The First Call consensus recommendation remains to buy APOL; InvestorPlace calls it a stock you can trust. At $68.50, shares are down 10.6% since the beginning of the year, but they peeked above the 100-day moving average at the end of this week for the first time since March.
Unlike some others in the consumer products space, General Mills Inc. (NYSE: GIS) seems to be holding up during the recession. Analysts expect the largest breakfast cereal maker in the U.S. to report earnings of $0.80 per share for its fiscal fourth quarter, which is 8.8% higher than a year ago. Revenue is expected to 6.4% higher to $3.7 billion. For the full year, analysts expect to see $3.92 per share (+10.2%) on $14.7 billion (+8.0%). The Minneapolis-based, dividend-paying company's earnings beat estimates in four of the five past quarters, but fell short by 8 cents per share in the third quarter. The long-term EPS growth forecast is only 6.8% and the forward PE ratio estimate is 13.0, both of which are lower than rival Kellogg Co. (NYSE: K). But analysts on average recommend buying GIS. Shares are 9.6% higher than three months ago to $55.28, but 7.7% lower than a year ago.
Falling under the category of companies expected to post marginally smaller profits, but which could please investors if they offer an upside surprise and/or positive guidance, is H&R Block Inc. (NYSE: HRB). For the fiscal fourth quarter that included April 15 tax-filing deadline in the U.S. (its most profitable period), analysts expect the Kansas City-based tax preparer to report that earnings slipped six cents per share from a year ago to $2.05. Revenue is expected to have fallen 3.7% to $2.5 billion. The full-year forecast is for $1.47 per share (+5.4%) on $4.2 billion (-4.6%). This dividend-paying company has beat earnings estimates in most recent quarters. The long-term EPS growth forecast is 10.0% and the forward PE ratio estimate is 10.0, both of which are higher than those of rival Jackson Hewitt Tax Service Inc. (NYSE: JTX). The analysts' consensus recommendation is to buy HRB, one of Warren Buffett's favorites. The share price is up marginally from its 52-week low of $13.73 back in May, but it is 25.9% higher than a year ago.
Leading wine and spirits maker Constellation Brands Inc. (NYSE: STZ) is also expected to post a narrowly smaller profit. Analysts are looking for fiscal first quarter earnings to be two cents per share lower year over year, or $0.32 per share. Revenue is expected to have fallen 16.2% to $780.7 million. Looking ahead to the second quarter, the forecast is for $0.40 per share on $814.7 million in sales. Constellation Brands beat earnings estimates in most recent quarters, but missed by about a penny per share in the fourth quarter. The long-term EPS growth forecast is 8.4%, which is about the same as rival Fortune Brands Inc. (NYSE: FO) and the company's forward PE ratio estimate is 7.6. The consensus recommendation remains to hold STZ, but a Stifel Nicolaus analyst recently upgraded it due to its cash flow and valuation. Shares surged in early June, breaking above the 100-day moving average, but closed Friday at $12.28, which is 22.1% lower year to date.
Companies expected to report deeper declines in earnings this week include Acuity Brands Inc. (NYSE: AYI), Ameron International Inc. (NYSE: AMN), MSC Industrial Direct Co. Inc. (NYSE: MSM), and UniFirst Corp. (NYSE: UNF).
The turn of the calendar page will bring plenty of economic data this week, which may provide more opportunity for some fireworks in the markets.
Employment data will include the Monster Employment Index and the Challenger Job Cut Announcements for June on Wednesday morning, as well as employment situation numbers for June and initial jobless claims for last week on Thursday morning.
Industrial numbers will include the Chicago PMI for June on Tuesday morning, the ISM Manufacturing Survey for June on Wednesday morning, and factory orders in May on Thursday morning.
Also watch for the Consumer Confidence Index for June on Tuesday morning, construction spending and pending home sales for May on Wednesday morning, and new motor vehicle sales for June on Wednesday afternoon.
The week will be a busy one for Federal Reserve Bank presidents as well:
- Federal Reserve Bank of St. Louis President James Bullard speaks at a Global Interdependence Center event
- Federal Reserve Bank of Kansas City President Thomas Hoenig speaks on bankruptcy and financial crisis
- Federal Reserve Bank of San Francisco President Janet Yellen speaks at the Commonwealth Club of California
- Federal Reserve Bank of Chicago President Charles Evans speaks on the credit crunch and policy actions
And of course the U.S. markets are closed on Friday in observance of the Independence Day holiday. So any fireworks on Friday will no doubt be literal pyrotechnic displays. Enjoy.
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