Although the U.S. economy has added jobs in recent months, the unemployment rate remains uncomfortably high at 9.8%. The rate for December is due out on Friday and is expected to drop to 9.7%. However, no one seems to expect significant improvement until well into the new year.
Other economic data on this week's schedule include:
- Monday: ISM Manufacturing Index, construction spending and auto sales data
- Tuesday: Factory orders, weekly chain-store sales, release of the minutes of the Dec. 14 FOMC meeting
- Wednesday: ISM Non-Manufacturing Survey, Challenger job-cuts announcement, ADP employment report
- Thursday: Last week's initial jobless claims, consumer credit outstanding, monthly chain-store sales
- Friday: Fed Chair Bernanke testifies before Senate budget committee
Retail and auto sales are expected to be stronger.
The new earnings season doesn't get started for another week, but who do analysts surveyed by Thomson Reuters expect to start out the new year with strong quarterly reports this week? Mosaic (MOS), Family Dollar (FDO) and Constellation Brands (STZ), among a few others.
The Mosaic Company
During its fiscal second quarter, Mosaic reported strong demand due to higher agricultural commodity prices and it sold assets. Analysts forecast that earnings for the period will come in at 91 cents per share, a 64.8% increase from the same period of last year. The Minnesota-based crop nutrient producer also is expected to post revenue of $2.4 billion for the three months that ended in November, which is 42.5% more than a year earlier.
Looking ahead to the third quarter, analysts expect both sequential and year-over-year growth in earnings. However, Mosaic's earnings results have fallen short of consensus estimates in four of the past five quarters, by as much as 11 cents per share.
Mosaic has an long-term EPS growth forecast of 8.0% and a forward price-to-earnings (P/E) ratio of 17.9. That's less than the trailing P/E ratio and the industry average, meaning the company has become a better value. The company's dividend yield is 0.1% and short interest fell in December to about 3.2% of the float. Though the First Call consensus recommendation is to hold MOS, the Motley Fool and Investopedia are keeping on eye on the stock. Shares reached a 52-week high of $76.80 last week after climbing about 30% in the past three months.
Family Dollar
Analysts anticipate that Family Dollar, the nation's number two dollar-store chain, will report Wednesday that its fiscal first-quarter earnings grew 19.7% year over year to 61 cents per share. Family Dollar saw strong sales and bought back shares during the three months that ended in November, and revenue for that period is estimated to total $1.9 billion, up 8.8% from the year-ago quarter.
So far, analysts expect to see year-over-year growth of both earnings and revenue in the second quarter, as well. In recent quarters, earnings results have met or topped consensus expectations.
Family Dollar's long-term EPS growth forecast of 14.3% is higher than that of Walmart (WMT). The forward P/E ratio is 15.9, but that's less than the trailing P/E. The company has a PEG ratio of 1.1, a dividend yield of 1.2% and return on equity of 21.4%. The consensus recommendation is to buy the stock; the Motley Fool likes the dividend. Shares have marched higher over the past year and are trading near the 52-week high of $51.81.
Constellation Brands
During the three months that ended in November, Constellation Brands (STZ) also bought back shares, as well as expanded a solar energy initiative. The wine and spirits maker is expected to post fiscal third-quarter earnings of 62 cents per share. That's up from a year-ago profit of 54 cents per share. Also, analysts predict that revenue increased marginally to $992.8 million.
Looking ahead to the full year, Wall Street expects to see earnings of $1.73 per share (+2.3%) on revenue of $3.4 billion (about the same as a year ago). But earnings results have topped consensus estimates in the past five quarters, by as much as 13 cents per share.
The long-term EPS growth forecast is 10.0% and the forward P/E is 12.3, which is less than the industry average. The PEG ratio is 1.2. But analysts on average recommend holding STZ. There have been rumors that Constellation Brands may be taken private. The stock is trading near the 52-week high of $22.52 per share after rising more 20% in the past three months.
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