The Week in Preview: FedEx vs. Nike, Gamestop, Discover

FedEx's long-term EPS growth forecast is 7.1% and its earnings multiple is 19x, which is less than the industry average. The First Call consensus recommendation is to buy FDX, and it has a mean price target is $97.13. Jesup & Lamont retained its buy rating on FDX ahead of the Q3 report, and iStockAnalyst expects an upside surprise. Shares have risen 9.7% in the past month and closed Friday at $86.18.

Also expected to post earnings growth this week are information providers FactSet Research Systems (FDS) and IHS Inc. (IHS), as well as discount apparel retailer Ross Stores Inc. (ROST).

Analysts anticipate smaller earnings in this week's report from Nike Inc. (NKE). The world's largest shoemaker outlined its global strategy and declared a quarterly dividend in the three months that ended in February. Analysts expect Nike to report fiscal fourth-quarter earnings of $0.88 per share, down 11.1% from the same period of last year. But quarterly revenue is expected to have grown 3.5% year over year to $4.6 billion. Looking ahead to the full fiscal year, analysts anticipate earnings of $3.70 per share (-2.9%) on $18.8 billion in revenue (-1.9%). But Nike has bested consensus earnings estimates in recently quarters, by as much as 20 cents per share.

Nike's long-term EPS growth forecast is 12.2%. Its earnings multiple of 18x is less than the industry average. Short interest has fallen since September, and it reported more cash on hand than long-term debt in the previous period, as well as a surge in net cash flow from operations. The consensus recommendation remains to buy NKE, and the mean price target is $71.23. A Susquehanna Financial Group analyst set his at EPS numbers at $0.90 for the quarter and $3.71 for the year. Shares hit a 52-week high of $69.99 on Friday and have run up 11.9% in the past month.

Analysts are looking for GameStop Corp. (GME), the Texas-based video game retailer, to report that its fiscal fourth-quarter earnings fell six cents per share from a year ago to $1.28. During the three months that ended in January, GameStop launched a new Call of Duty and announced share buybacks, and revenue for the period is expected to have slipped slightly to $3.5 billion. For the full fiscal year, analysts expect earnings of $2.26 per share (-5.8%) on $9.0 billion in revenue (+2.2%) GameStop beat earnings estimates in two of the previous three quarters, but only by a penny or two per share.

Gamestop's long-term EPS growth forecast is 12.0% and its earnings multiple is only 8.1x. Analysts on average recommend buying GME and have for more than 90 days. The mean price target is $25.10. GameStop has been the subject of takeover rumors recently. Shares are down 11.6% from three months ago, but up a couple of bucks from a 52-week low of $17.12 back in late February.

The outlook changed for Discover Financial Services (DFS) last week. In the three months that ended in February, the company announced an alliance with Korea's BC Card network, offered new card selection tools for consumers, and the Discover Card topped the customer loyalty list for the 13th straight year. Analysts had expected this dividend-payer to post fiscal first-quarter earnings of $0.09 per share, compared to a loss of $0.36 per share in the same period of last year. However, Discover then announced that it expects to report a loss of about $0.21 per share as it shores up its loan loss reserves. Revenue for the period is still expected to be 4.0% higher to $1.7 billion. And analysts are so far looking for EPS of $0.12, as well as year-over-year revenue growth, in the second quarter. Earnings results topped expectations in two of the past three quarters, but Discover missed the consensus EPS estimate by two cents in the fourth quarter.

Discover's long-term EPS growth forecast is 7.7%, and the earnings multiple is 24x, which is about the same as that of Visa Inc. (V). The consensus recommendation shifted from hold to buy DFS in the past 90 days. The mean price target is $16.68. FBR Capital recommends treating any weakness in Discover's results as a buy opportunity. Shares have climbed 14.9% in the past month, breaking above the 50-day moving average for the first time since December, and closed the week at $14.97.

Casual Male Retail Group Inc. (CMRG), Shoe Carnival (SCVL) and Stein Mart Inc. (SMRT) are still expected to report swinging to profits from a year ago.

FedEx notwithstanding, the bears may have the upper hand next week, suggests Jim Cramer. Of particular concern is whether any policy change signals will come out of the FOMC meeting on Tuesday afternoon.

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