Earnings season is in full swing, and this week will bring quarterly results from Amazon.com (AMZN), DeVry (DV), Freeport McMoRan (FCX), Hershey (HSY), Kimberley-Clark (KMB), Starbucks (SBUX), Union Pacific (UNP) and United Technologies (UTX), all of which, according to analysts surveyed by Thomson Reuters, are expected to post double-digit earnings growth from the same period of last year (when most stocks were at their recessionary lows).
After strong showings last week by Google (GOOG), Intel (INTC) and JPMorgan Chase (JPM), the earnings spotlight again will be on the tech and financial sectors. So, let's take a closer look at what's expected from impending results from Apple (AAPL), International Business Machines (IBM) and Western Digital (WDC), as well as Goldman Sachs (GS), American Express (AXP) and Morgan Stanley (MS).
Analysts are looking for Apple Inc. to report that its fiscal second-quarter earnings came to $2.44 per share, up 26.6% from a year ago. During the three months that ended in March, Apple posted its best results ever and unveiled the iPad, and revenue for the period is expected to have surged 47.7% to $12.1 billion. So far, analysts anticipate sequential and year-over-year growth of both EPS and revenue in the second quarter. Apple's earnings have topped consensus estimates in recent quarters, creaming them in the first quarter by more than 76%.
Apple's long-term EPS growth forecast of 18.3% is better than that of competitors Dell (DELL) and Hewlett-Packard (HPQ), and its earnings multiple of 19x is less than the industry average. Apple has shown strong growth in its net cash flow from operations over the past few reporting periods. The First Call consensus recommendation is, of course, to buy AAPL, and the mean price target is $275.53. The iPhone is expected to drive strong earnings, and Zacks expects an upside surprise. Shares have climbed pretty steadily over the past year, reaching a new 52-week high of $251.14 on Friday.
In the three months that ended in March, International Business Machines Corp. opened new facilities in China, completed acquisitions and declared a quarterly dividend. Analysts expect Big Blue to report that first-quarter earnings rose 11.9% from the same period of last year to $1.93 per share. Revenue for the period is expected to have grown 4.8% to $22.8 billion. And the consensus forecast is for sequential and year-over-year EPS and revenue growth in the second quarter as well. IBM earnings have been better than expected in the past five quarters, topping consensus estimates by as much as 30 cents per share.
IBM's long-term EPS growth forecast is 8.9% and the earnings multiple of 11x is less than the industry average. The consensus recommendation is to buy IBM as well, with a mean price target of $142.80. At least one fund manager considers IBM a bargain. Shares have met resistance around $130 since February but finally broke through last week and closed Friday at $130.63.
Data storage producer Western Digital Corp. introduced new mascots and unveiled new products in its fiscal third quarter. Earnings for that period are expected to come in at $1.55 per share, an impressive rise over a year ago's $0.30 per share. Revenue for the three months that ended in March is forecast to have jumped 59.5% to $2.5 billion. And analysts expect to see year-over-year growth of EPS and revenue in the second quarter. EPS have not only grown in the past four quarters but topped estimates as well, by as much as 48 cents per share.
But the long-term EPS growth forecast is 8.0% and Western Digital's earnings multiple is 6.5x. This California company keeps well more than enough cash on hand to cover long-term debt. The consensus recommendation has been to buy WDC for more than 90 days, and the current mean price target is $50.94. Despite recent upgrades and downgrades, some analysts expect an upside surprise from Western Digital this week. Shares have traded mostly between $38 and $42 since January.
Altera (ALTR) and Qualcomm (QCOM) are also expected to post double-digit earnings growth this week, while Sandisk (SNDK) and Seagate Technology (STX) are expected to have swung to profits in the most recent quarter. On the other hand, Microsoft (MSFT), Yahoo! (YHOO) and AT&T (T) are expected to show little EPS growth, while Verizon's (VZ) earnings are believed to have declined.
Analysts anticipate that New York-based Goldman Sachs, which got socked with fraud charges by the SEC on Friday, will report that its per-share earnings rose 15.5% from a year ago to $4.01 for the three months that ended in March. Revenue is expected to have risen 18.4% from last year to $11.2 billion for its first quarter. So far, analysts anticipate sequential EPS and revenue growth in the second quarter. Goldman Sachs has easily bested earnings estimates in the past four quarters, by as much as $3.00 per share.
Goldman's long-term EPS growth forecast (before the SEC charges) is 16.5%, which is better than Bank of America (BAC) and Citigroup (C). Goldman Sachs has an earnings multiple of 8.9x. Its net cash flow from operations swung into positive territory in the fourth quarter, and analysts on average recommend buying GS -- so far. Their mean price target is $210.30. Some see the pull back following the SEC charges as a buying opportunity. After climbing from $147 in January to $185 last week, shares fell nearly 13% following Friday's SEC announcement and closed at $160.70 .
New York-based credit card and travelers check provider American Express Co. launched a new line of business and a Macy's (M) cobranded credit card in the three months that ended in March. Analysts expect the company to report first-quarter earnings of $0.63 per share, nearly double the $0.32 per share in the same period of last year. Analysts are looking for quarterly revenue to total $6.3 billion, an annual increase of 6.8%. So far, second quarter EPS and revenue are expected to be sequentially higher as well. American Express bested consensus earnings estimates in three of the past four quarters, by as much as 16 cents per share.
The long-term EPS growth forecast is 9.9%, which is better than that of Discover Financial Services (DFS). Its earnings multiple of 16x is much less than the industry average. Short interest in this dividend payer has fallen steadily over the past year. The consensus recommendation is to buy AXP, and the mean price target is $45.32. Last week, Fitch revised its outlook on AXP and Citigroup raised its price target. After trading between $37 and $42 for most of the past six month, AXP rose 10.2% in recent weeks and closed Friday at $45.10.
In the three months that ended in March, Morgan Stanley brought fresh talent to its investment management business and also declared a quarterly dividend. Analysts expect this global investment bank to post first-quarter earnings of $0.57 per share, compared to last year's net loss of $0.57 per share. Revenue for the period is expected to have more than doubled to $7.9 billion. And analysts are looking for sequential EPS and revenue growth in the second quarter here as well. The first quarter will be Morgan Stanley's third straight profitable period.
Morgan Stanley's long-term EPS growth forecast is 15.3% and its earnings multiple is 10x. Though its net cash flow has been in negative territory in recent quarters, the consensus recommendation is to buy MS. The mean price target is $35.86. Morgan Stanley's CEO believes the worst is behind the sector. However, Zacks expects a downside surprise from Morgan Stanley this week. Shares fell 5.6% on Friday, like other financials, dragged down by the Goldman Sachs news. MS ended the week down 1.5% year to date to $29.16.
Capital One Financial (COF) is likewise forecast to have swung into the black, and Citigroup just might as well if it can offer a positive surprise this week. Huntington Bancshares (HBAN), Keycorp (KEY) and Zion Bancorp (ZION) are expected to post narrowed losses. But analysts are looking for Bank of New York Mellon (BK) to post EPS the same as last year, while earnings are believed to have declined at BB&T (BBT), State Street (STT) and Wells Fargo (WFC).
In other earnings reports scheduled for this week, the consensus forecast is that New York Times (NYT) also will have swung to a profit, while Boeing (BA), Eli Lilly (LLY), Halliburton (HAL), Harley-Davidson (HOG), Marriott International (MAR) and UnitedHealth Group (UNH) will post earnings declines.Visit DailyFinance for more earnings coverage.