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Even in a holiday shortened week so close to the end of the calendar year, there are still some earnings reports dribbling in. Question is, will any of the companies reporting quarterly results this week offer up a gift for investors?
Apropos of the season, analysts surveyed by Thomson Reuters have high expectations for American Greetings Corp.'s (AM) fiscal third quarter 2010 earnings. The nation's second largest provider of greeting cards announced record second quarter results and declared a quarterly dividend during the three months that ended in November. American Greetings is expected to report that earnings rose 43.9% from a year ago to $0.66 per share. Revenue for the quarter is expected to total $445.4 million, or 1.9% lower than a year ago. So far, the full-year forecast is for its profit to more than double to $2.00 per share while revenue falls 5.6% from a year ago to $1.6 billion. This Cleveland-based company creamed earnings estimates in the past two quarters.
The next year's EPS growth forecast for American Greetings is 12.5% and its earnings multiple is 10x, which is lower than the industry average. The First Call consensus recommendation is to buy AM and has been for more than 90 days. The mean price target is $28.50. Shares closed Friday at $22.01 and have been trading in that neighborhood since late September.
In the three months that ended in November, Walgreen Co. (WAG) saw executive changes, announced a share buyback program and relaunched Walgreens.com. Analysts expect this Deerfield, Ill.-based drug store operator to report fiscal first-quarter 2010 earnings of $0.48 per share, up from $0.41 per share in the same period of last year. Revenue for the period is expected to be 8.7% higher to $16.3 billion. And the forecast is for sequential and year-over-year growth of both EPS and revenue in the second quarter. But Walgreen has fallen short of consensus earnings estimates in three of the past four quarters, though it beat the Street in the fourth quarter.
Walgreen's long-term EPS growth forecast of 14.2% is better than that of competitors CVS Caremark Corp. (CVS) and Rite-Aid Corp. (RAD). Walgreen has an earnings multiple of 15x, which is less than the industry average. The consensus recommendation is to buy WAG, with a mean price target of $42.72. TheStreet.com prefers CVS to WAG, though. Walgreen shares have also reached a plateau since the end of September, in this case trading mostly between $37.00 and $40.00.
This week, ConAgra Foods (CAG) is also expected to report fiscal second-quarter earnings that are a few cents higher than a year ago.
Analysts expect to see Micron Technology Inc. (MU) finally scratch its way into the black. The Boise-based chipmaker continued to release innovative product in the three months that ended in November, and the consensus forecast is for earnings of $0.06 per share. That compares to a loss $0.09 per share in the previous quarter and a $0.72 per-share loss in the year-ago period. Sales for the fiscal first-quarter 2010 are expected to have jumped 13.3% to $1.6 billion. The forecast is for another profit in the second quarter, as well as revenue that more than doubled from a year ago. Micron's losses have been shrinking for the past three quarters.
Micron's long-term EPS growth forecast is 13.0%, which is better than the sector average. Analysts, on average, recommend buying MU, with a mean price target of $10.43. Raymond James raised its price target on the stock due to stronger-than-expected DRAM pricing. Micron shares have risen 64.7% in the past six months and closed Friday at $8.78.
Navistar International Corp. (NAV) is also forecast to have swung to a profit in the most recent quarter.
Jabil Circuit Inc. (JBL) is expected to post a small decline in earnings, but could please investors with an upside surprise or positive outlook. The St. Petersburg, Fla.-based company declared a quarterly dividend in its fiscal first quarter. Earnings are expected to have fallen a penny per share from a year ago to $0.29 per share. And sales for the three months that ended in November are expected to have fallen 8.1% to $3.1 billion. So far, analysts anticipate year-over-year EPS growth and flat earnings in the second quarter. Jabil Circuit has topped earnings estimates in the past three quarters, by as much as seven cents per share.
Jabil's long-term EPS growth forecast is 17.0% and its earnings multiple is 14x. The consensus recommendation is to buy JBL, and the mean price target is $15.32. BoA/Merril just initiated coverage of JBL. Shares recently reached a 52-week high of $15.45 and closed Friday at $14.80.
It may be a blue Christmas for investors in fellow tech stocks Progress Software Corp. (PRGS), Red Hat Inc. (RHT) and Tibco Software Inc. (TIBX), as well as in Cintas Corp. (CTAS) and Lindsay Corp. (LNN), which are all expected to report lower earnings this week. Commercial Metals Co. (CMC) and CPI Corp. (CPY) are expected to post losses.
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