Walmart's New Health Food Push: Is It Too Hard to Swallow?
Bonds Are a 'Safe' Investment: A Big Lie Gets Even Bigger
Memphis-based package delivery giant FedEx Corp. (NYSE: FDX) is generally seen as an indicator of the state of commerce in the U.S. Last week, not only did the Fed's Beige Book report suggest that the economy had stabilized over the summer, with signs of recovery in some districts, But FedEx also boosted its earnings guidance due to stronger-than-expected volume in its international priority-delivery service. So a question going in to FedEx's fiscal first-quarter report this week is whether the company is still a bellwether.
For the three months that ended in August, when FedEx opened distribution hubs in Chicago and Toledo and declared a quarterly dividend, analysts surveyed by Thomson Reuters are looking for it to report that earnings fell 60.2% from a year ago to $0.49 per share. That's also down 23.4% from the previous quarter, as well as less than the recently updated outlook. First quarter revenue is expected to be down 18.3% from a year ago to $8.2 billion.
So far, the forecast is for sequential EPS and sales growth in the second quarter. FedEx has only fallen short of expectations in one of the past four quarters, beating by 12 cents per share in the previous quarter. Its long-term EPS growth forecast is 5.5%, which is better than the transportation industry average but less that that of competitor United Parcel Service (NYSE: UPS). FedEx has had more cash on hand than long-term debt in recent quarters. The First Call consensus recommendation remains to hold FDX, but analysts at OptionsZone liked it for its performance and think the low profit expectations may result in an upside surprise. Zacks also anticipates an upside surprise. Shares are at a nine-month high of $77.32, but the share price is still 14.9% lower than a year ago.
Adobe Systems Inc. (NASDAQ: ADBE) and Best Buy Inc. (NYSE: BBY) are also expected to post year-over-year earnings declines this week.
Dress Barn Inc. (NASDAQ: DBRN), on the other hand is expected to post a modest earnings gain this week. Dress Barn announced a merger with Tween Brands Inc. (NYSE: TWB) during the three months that ended in July, and analysts expect to see a fiscal fourth-quarter profit of $0.37 per share, compared to $0.34 per share a year ago. Revenue for the quarter is expected to be 4.8% higher, or $400.7 million. The forecast for the full year is for $1.05 per share (-8.7%) on $1.5 billion (+3.6%). Earnings have topped estimates in most recent quarters, by as much as 13 cents per share. The long-term EPS growth forecast is 11.0%, which is better than rival JCPenney Co. Inc. (NYSE: JCP), and its earnings multiple is 15x. Dress Barn had more cash on hand than long-term debt in the previous quarter. The consensus recommendation has been to buy DBRN for more than 90 days. After climbing 65.6% since the beginning of the year, shares reached a 52-week high of $17.88 last week.
Cincinnati-based Kroger Co. (NYSE: KR) saw executive changes in its second quarter, and its earnings are expected to come to $0.44 per share, up from $0.42 per share in the year-ago period. Revenue for the period ending in July is expected to be slightly higher to $18.2 billion. So far, the full year forecast is for a profit of $2.05 per share (+7.3%) on sales of $77.0 billion (+1.4%). Earnings have beat estimates in recent quarters, by as much as 7.6%. The long-term EPS growth forecast is 9.5%, which is better than that of competitors Safeway Inc. (NYSE: SWY) and Supervalu Inc. (NYSE: SVU). Kroger's earnings multiple is 10x. The consensus recommendation remains to buy KR; last week the Motley Fool identified Kroger as a stock on the upswing. Shares have struggled with resistance around $22 since July, and they are 21.9% lower than a year ago.
In its fiscal fourth quarter, Cracker Barrel Old Country Store Inc. (NASDAQ: CBRL) completed the sale-leaseback of a distribution center and several store locations, as well as declared a quarterly dividend. Analysts are looking for $0.95 per share for the three months that ended in July, compared to $0.91 per share in the year-ago period. But revenue for the quarter is expected to slipped just a bit to $599.6 million. The forecast for the full year is for $2.85 per share (+1.1%) on $2.4 billion (-0.6%). Cracker Barrel's profits have beat estimates in the past three quarters, by as much as eight cents per share. The earnings multiple is 10x and the long-term EPS growth forecast is 9.3% and its. The consensus recommendation recently swung from hold to buy CBRL. At $31.53, shares are up 12.3% from three months ago, recently rising above the 100-day moving average for the first time since July.
Analysts expect Oracle Corp. (NASDAQ: ORCL), the Redwood City, Calif.-based enterprise software giant that is acquiring Sun Microsystems Inc. (NASDAQ: JAVA), to report that its fiscal first-quarter earnings came to $0.30 per share, up just a penny from a year ago. Revenue for the period ending in August is expected to be down 3.3% to $5.2 billion. So far, the forecast is for sequential growth of both EPS and revenue in the second quarter. Oracle's earnings have not missed estimates in recent quarters. The long-term EPS growth forecast is 13.7%, which is better than that of rivals SAP (NYSE: SAP) and Microsoft Corp. (NASDAQ: MSFT). Oracle's earnings multiple is 14x. Short interest has been falling since early in the year. Oracle has kept enough cash on hand to cover its long-term debt in recent quarters, and its net cash flow from operations has been increasing too. The consensus recommendation remains to buy ORCL; TheStreet.com recently pegged it as a top stock. Shares reached a 52-week high of $22.95 Friday.
Discover Financial Services (NYSE: DFS), Palm Inc. (NASDAQ: PALM), and Pier 1 Imports Inc. (NYSE: PIR) are expected to post net losses this week.
Goldman Earnings Sink After Buffett Dividend
Johnson & Johnson's Income Falls 23%
Burberry Shares Leap on Sales Update
