The second half of the calendar year has begun, and earnings return to the spotlight this week. As usual, Alcoa Inc. (NYSE: AA) is among the first of the S&P 500 to report quarterly results. For the second quarter in which Alcoa agreed to sell its wire harness and electrical distribution business and its fastening systems business expanded into Morocco, analysts surveyed by Thomson Reuters expect the New York-based aluminum producer to report swinging to a net loss of $0.34 per share from a profit of $0.66 per share in the year-ago period. Second quarter revenue is expected to have fallen 48.3% to $3.9 billion. The full-year forecast is currently for a loss of $1.04 per share and revenue of $16.7 billion (-38.0%). Alcoa has missed expectations in the past three quarters, by as much as 17 cents per share. The long-term EPS growth forecast is 10.0%, which is better than the sector average. Alcoa slashed its dividend earlier this year, and the First Call consensus recommendation remains to hold AA. However, TheStreet.com recommends it as an against-the-grain pick. At $9.86, shares are down 12.4% since the beginning of the year, and recently have been bumping up against the 200-day moving average.
ISM posts
The week in preview: Focus returns to earnings: Alcoa, Chevron, Family Dollar
Continue reading The week in preview: Focus returns to earnings: Alcoa, Chevron, Family Dollar
Manufacturing Index rises in January, but still reflects weak conditions
In economics, as in broader statistical analysis, researchers caution against reading too much into any one data point. The reasons are obvious enough: anomalies occur, preliminary statistics are often revised and trends take months, if not quarters, to form.
With the above as a backdrop, January's Institute for Supply Management index was a mild positive, nudging higher to 35.6 from 32.9 in December.
An ISM reading below 50 indicates a contraction; above 50, an expansion. The ISM had fallen for the past year, and has been below the 50 demarcation level since February 2008. Economists surveyed by Bloomberg News had expected the index to drop to 32.6 in January.
Continue reading Manufacturing Index rises in January, but still reflects weak conditions
Employment, motor vehicle sales, consumer credit on this week's schedule
Here's a look at what's on the economic calendar for the week of January 5, 2009:
- Construction spending (Nov. 2008): Monday, 10:00 AM
- Ford Motor Co. U.S. sales (Dec. 2008): Monday, 1:00 PM
- New motor vehicle sales (Dec. 2008): Monday, 4:00 PM
- Factory orders (Nov. 2008): Tuesday, 10:00 AM
- Pending home sales (Nov. 2008): Tuesday, 10:00 AM
- ISM Non-Manufacturing Survey (Dec. 2008): Tuesday, 10:00 AM
- Monster Employment Index (Dec. 2008): Wednesday, 6:00 AM
- Challenger job-cut announcement (Dec. 2008): Wednesday, 7:30 AM
- Public debt (Dec. 2008): Wednesday, 3:00 PM
- Consumer credit (Nov. 2008): Thursday, 3:00 PM
- Employment situation (Dec. 2008): Friday, 8:30 AM
- Wholesale trade (Nov. 2008): Friday, 10:00 AM
For expectations from some of this week's earnings releases, see The week in preview: Family Dollar, Bed Bath & Beyond, KB Home, and others.
The week in preview: Holiday sales, Cal-Maine Foods
As the calendar year winds down, the news no doubt will be full of stories (like the one below from AP) analyzing incoming holiday sales figures and speculating on what they mean for the big picture.
About the only confirmed company reporting quarterly earnings results next week is Cal-Maine Foods Inc. (NYSE: CALM), the largest producer/distributor of eggs in the U.S. Analysts surveyed by Thomson Reuters are, on average, looking for the Jackson, Miss.-based company to report earning $1.26 per share in its fiscal second quarter. That's 25.4% lower than in the same period of the previous year. In its first-quarter report back in September, Cal-Maine also reported a drop in net income as rising feed costs offset increased demand. While the share price has fallen 22.2% in the past three months, it is up 14.0% from a year ago. Cal-Maine recently completed its acquisition of a Tampa Bay egg producer.
Economic data scheduled to be released this week include:
Continue reading The week in preview: Holiday sales, Cal-Maine Foods
Employment numbers, consumer credit, home sales on this week's schedule
Because so much of the recent market volatility has been tied to announcements of employment numbers, consumer credit, and other such economic data, here's a look at the schedule for some of the economic data to be released the week of November 3, 2008.
- ISM manufacturing survey (Oct. 2008): Monday, 10:00 AM
- Construction spending (Sept. 2008): Monday, 10:00 AM
- Ford Motor Co. sales (Oct. 2008): Monday, 1:00 PM
- New motor vehicle sales (Oct. 2008): Monday, 4:00 PM
- Factory orders (Sept. 2008): Tuesday, 10:00 AM
- Challenger job cut announcement (Oct. 2008): Wednesday, 7:30 AM
- ISM nonmanufacturing survey (Oct. 2008): Wednesday, 10:00 AM
- Monster employment index (Oct. 2008): Thursday, 6:00 AM
- Preliminary productivity and costs (Q3): Thursday, 8:30 AM
- Public debt (Oct. 2008): Thursday, 3:00 PM
- Employment situation (Oct. 2008): Friday, 8:30 AM
- Wholesale trade (Sept. 2008): Friday, 10:00 AM
- Pending home sales (Sept. 2008): Friday, 10:00 AM
- Consumer credit outstanding (Sept. 2008): Friday, 3:00 PM
For a look at expectations for this coming week's earnings releases, see The week in preview: Expectations remain high for energy and oil.
The week in preview: End-of-quarter expectations
Even if the national headlines weren't already providing enough focus on the economy, plenty of economic data is due out as the month and the quarter wind down. U.S. economic data scheduled to be released this week include:
- Personal income (Aug. 2008): Monday 8:30 AM
- Consumer confidence index (Sept, 2008): Tuesday 10:00 AM
- Challenger job cut announcement (Sept, 2008): Wednesday 7:30 AM
- ISM manufacturing survey (Sept. 2008): Wednesday 10:00 AM
- Construction spending (Aug. 2008): Wednesday 10:00 AM
- New motor vehicle sales (Sept. 2008): Wednesday 4:00 PM
- Monster employment index (Sept. 2008): Thursday 6:00 AM
- Factory orders (Aug. 2008): Thursday 10:00 AM
- Employment situation (Sept. 2008): Friday 8:30 AM
- ISM nonmanufacturing survey (Sept. 2008): Friday 10:00 AM
Other economic events scheduled for this week include:
- Fed's Hoenig speaks on "The Economy and Monetary Policy": Monday 9:45 PM
- Fed's Lockhart speaks on the economic outlook: Tuesday 1:00 PM
- Ford Motor Co. September 2008 Sales Conference Call: Wednesday 1:00 PM
- AMETEK Inc. at Oppenheimer Industrials Conference: Thursday 8:00 AM
- DuPont at Citigroup Ethanol on the Cob Conference: Thursday 12:50 PM
- Fed's Evans speaks at Agricultural Markets and Food Price Inflation conference: Thursday 1:00 PM
- Fed's Bullard speaks at Indiana University Department of Economics: Thursday 7:00 PM
- Fed's Hoenig speaks on "The Economy and Monetary Policy": Thursday 9:45 PM
- National Association for Business Economics 50th Annual Meeting to address Future Economic Challenges: Friday 9:00 PM
Continue reading The week in preview: End-of-quarter expectations
The week in preview: End of the quarter earnings
Given that it's the end of the quarter, as well as the U.S. Independence Day holiday on Friday, next week looks to be pretty quiet as far as earnings go. But there are a few things of note.
Tax preparation company H&R Block (NYSE: HRB) is scheduled to report its fiscal fourth-quarter results Monday after market close. Analysts surveyed by Thomson Financial on average expect the company to report net income of $2.03 per share on revenue of $2.5 billion. That's an increase of more than 10% over EPS a year ago. H&R Block has tended to fall short of estimates recently, and rival Jackson Hewitt (NYSE: JTX) missed its EPS estimates earlier this month. Still, analysts recommend buying HRB. Shares have risen 12.1% year to date, and the long-term EPS growth forecast is 11.7%.
Alcoholic beverage maker and distributor Constellation Brands (NYSE: STZ) is scheduled to report its fiscal first-quarter results Tuesday morning. Analysts are looking for earnings of 31 cents per share, up 32.3% from the same period of the previous year, on revenue of $906.1 million. Constellation has tended toward positive surprises recently, by 8 cents, or 33.8%, in the previous quarter. However, analysts recommend holding STZ and have for more than 90 days., even though the long-term EPS growth forecast is 12.3%. Although shares have risen 9.0% in the past three months, they are down 16.8% year to date.
Phoenix-based education company Apollo Group (NASDAQ: APOL) is scheduled to report its fiscal third-quarter results late Tuesday. Analysts on average are expecting the company to report net income of 78 cents per share -- the same as in the year ago period -- on revenue of $806.9 million. When it comes to meeting expectations, lately Apollo has a mixed record -- it fell short by 11 cents, or more than 20%, in the previous quarter. Analysts recommend buying APOL and have for more than 90 days. The long-term EPS growth forecast is 14.0%. Though shares have risen 4.2% in the past three months, they are down 31.6% year to date.
Continue reading The week in preview: End of the quarter earnings
Before the bell: Stocks head for lower open, again
U.S. stock futures indicate that stocks will likely continue Tuesday's declines as investors awaited economic data on employment and the service sector, and as oil prices recovered from their overnight losses. Investors are also still concerned about the financial services sector. It will likely not affect markets much, but it is important news: Barack Obama has clinched the Democratic presidential nominee and will face Sen. John McCain.It started Tuesday, when concerns about Lehman Brothers (NYSE: LEH) as well as commodity producers mounted after Federal Reserve Chairman Ben Bernanke gave a gloomy economic outlook and signaled discomfort with the weak U.S. The Dow industrials retreated 100 points, or 0.81%, the S&P 500 lost 8 points, 0.58%, and the Nasdaq Composite fell 11 points, or 0.44%.
Several economic indicators will be reported today: Around 8:15 a.m., May ADP employment survey will be released. Then, at 8:30, revised figures on first-quarter productivity are due and are expected to be better than when reported last. At 10:00 a.m., the Institute of Supply Management will report its non-manufacturing index for May. While the index is expected to be above 50, indicating expansion, it is expected to slip yet again.
Finally, at 10:30, weekly energy inventories data is due. Oil prices fell below $124 a barrel overnight on Bernanke's comments, but recovered by morning, rising above $127 a barrel.
U.S. manufacturing sector contracts for 3rd straight month, ISM says
Economists surveyed by Bloomberg News had expected the index to drop to 48.0 in April 2008.
Readings above 50 indicate economic growth; readings below 50, economic contraction.
With April 2008's 48.6 reading, the metric has indicated a contraction for three consecutive months.
Continue reading U.S. manufacturing sector contracts for 3rd straight month, ISM says
March ISM services index rises, but still points to contraction
The U.S. services sector improved slightly in March 2008, but remained at levels indicating a contraction, the Institute of Supply Management announced Thursday.The ISM Non-Manufacturing Index, which measures services, increased 0.3% to 49.6% in March 2008, a slight increase, but a reading still indicative of a contraction. Readings below 50% indicate a contraction; readings above it, expansion.
Economists surveyed by Bloomberg News had expected the ISM Non-Manufacturing Index to total 49.0% for March 2008. The index was at 49.3% in February 2008.
The new orders index increased 0.6% to 50.2%, while the employment index contracted for the third consecutive month, to 46.9%.
Continue reading March ISM services index rises, but still points to contraction
ISM Manufacturing Index falls to 48.3 in February, indicating contraction
Readings above 50 indicate economic growth; readings below 50, economic contraction. Economists surveyed by Bloomberg News had expected the index to drop to 48.1 in February 2008.
The index registered declines in 11 of 18 categories and hit a 5-year low. New orders decreased to 49.1 from 49.5; production dropped to 50.7 from 55.2; prices paid declined to 75.5 from 76; employment fell to 46 from 47.1, and supplier deliveries dropped to 50.1 from 52.8.
"The manufacturing sector failed to grow during the month as the PMI fell below 50%, which indicates weaker performance in February when compared to January," Norbert J. Ore, ISM chairman said, in a statement. "Manufacturers' order backlogs continue to erode as the New Orders Index remained below 50% for the third consecutive month." Ore added that with manufacturing inventories at reasonable levels, the primary concern is rising prices and falling volume.
Economic Analysis: A decidedly bearish data point for the U.S economy. Now below 50, the reading indicates a clear contraction, and a significant deceleration in the GDP growth rate. The U.S. economy is clearly feeling the impact of the housing / residential construction market's slowdown, as it ripples through the economy, lowering demand for furniture, appliances, building materials, and home supplies.
ISM Services Index plunges in January, fanning recession fears
The non-manufacturing component, or the service sector, of the U.S. economy contracted substantially in January 2008, fanning fears that the nation's economic slowdown is worsening. The Institute of Supply Management's non-manufacturing index, which measures about 90% of economic activity, plunged to 41.9% in January 2008 from 54.4% in December 2007 -- its lowest reading since October 2001, the ISI announced Tuesday, in a statement.
Analysts had expected the index to fall to 53%. Readings below 50% indicate most companies are cutting back, or experiencing less business. Moreover, a sub-50% reading usually indicates the U.S. economy is contracting.
An unexpected drop
Economist Glen Langan told BloggingStocks Tuesday the substantial drop is not good news for the U.S. economy.
Continue reading ISM Services Index plunges in January, fanning recession fears
Manufacturing contracts to weakest level since April 2003
In all, only seven of 18 industrial segments expanded. Moreover, economic activity in the manufacturing sector failed to grow in December 2007 after 10 consecutive months of expansion, while the overall economy grew for the 74th consecutive month, the ISM announced.
Disappointing statistic
Economist Steve Affinito told BloggingStocks Wednesday that the ISM statistic will place more pressure on the U.S. Federal Reserve to continue to cut short-term interest rates.
"It's a disappointing statistic, no question. We were looking for something slightly north of [above] 50% and a reading below 50%, that has to concern the Fed. It's just one month but it indicates that manufacturing is contracting, and at minimum is likely to grow to slowly," Affinito said. "The Fed will have to cut interest rates at least two more times to help prevent an economic stall. The December ISM stat is not a number the Fed hawks can ignore."
Continue reading Manufacturing contracts to weakest level since April 2003
'Second Life' virtual Circuit City store to be launched soon
In a sign of the 'virtual' times IBM will be "building" virtual stores inside the "Second Life" virtual world for the nation's second-largest consumer electronics retailer, Circuit City Stores, Inc. (NYSE:CC).If you've ever heard of "Second Life", it is virtual, computer-generated world where actual lives go on about their business, commerce is carried out, and professional and personal relationships are made -- all without physical contact (hence, the term "virtual").
Why would retailers want to enter the world of virtual commerce instead of focusing on "real-world" commerce? well, with "Lindens" (aka, dollars), residents of the virtual world can actually buy real-world goods from retailers and others -- hey, margins are margins, right?
Wrong -- the product margin to have a customer buy goods from a website or a virtual world costs quite a bit less than taking that same transaction in the physical world, where electricity, employees, machinery and other costs can crimp your profit. In the virtual world, making that same sale -- without paying all the heavy-lifting costs -- is quite a smart move indeed. More retailer should be doing this.
Warren Buffett, tells us more!
Oil has dropped $13, so gasoline should drop 30 cents, Americans hope
Wal-Mart's new Supermercado concept could be huge
