In last week's preview we took a peek at expectations for Campbell Soup earnings, but now the company is scheduled to report fiscal fourth quarter results this coming Thursday. With Krispy Kreme also among the handful of companies scheduled to report this week, we may yet see whether consumers are turning to comfort foods in these uncertain times.
Campbell Soup Co. (NYSE: CPB), the world's biggest soup maker, is still expected by analysts surveyed by Thomson Financial to post net income of 25 cents per share (up 44.0% from a year ago) on revenue of $1.7 billion (up 7.4%). The Camden, N.J.-based company has just missed earnings estimates in the past few quarters. Its long-term EPS growth forecast is 7.9%, which is less than the industry average, but about the same as rivals Kraft Foods (NYSE: KFT) and HJ Heinz (NYSE: HNZ). The analysts' consensus recommendation is currently to buy Campbell.
Hip, Canadian apparel retailer Lululemon Athletica Inc. (NASDAQ: LULU) is also anticipated to be a big earnings gainer when it reports this week. Net income is expected to come in at 13 cents per share (up 46.2% from a year ago) on revenue of $88.2 million (up 50.3%). Lululemon met expectations when it reported 12 cents per share in the previous quarter. Its long-term EPS growth forecast is a healthy 40.2%, which is better than the industry average and that of rival Under Armour Inc. (NYSE: UA). The analysts' consensus recommendation is currently to buy Lululemon.
On Tuesday, retail auto parts and repair chain Pep Boys Manny, Moe & Jack (NYSE: PBY) reported that its fiscal first-quarter profit jumped on a gain from selling properties and then leasing them back. Meanwhile, Quality Systems Inc. (NASDAQ: QSII), a provider of software for medical and dental group practices, said its net income for the fiscal fourth quarter surged on strong maintenance revenue growth.
Philadelphia-based Pep Boys first-quarter net income rose 47% from a year ago to $4.7 million, or 9 cents per share, which included a $5.5 million net gain related to the sale-leaseback transactions.
For the quarter ended May 3, revenue fell 8% to $498 million, and same-store sales fell 5.6%.
Analysts polled by Thomson Financial, on average, had predicted a loss of 3 cents per share, on revenue of $497.2 million.
Shares rose 89 cents Tuesday, or 10.2%, to $9.62, then rose another 3 cents in after-hours trading. Shares are down 16.2% year to date.
At best it was a week that was difficult; at worst it was a very concerning sign about what is to come. We have finally seen a significant drop in the overall sentiment due to extraordinarily high oil prices mixed with an unemployment level at 5.5%. The mixture of these and other troubling economic projections has finally come to cause investors to pause and realize that this is no place to be accepting risk beyond what is absolutely necessary.
This week will show a significant amount of reservation by investors not accepting of any shortfalls on earnings or even outlooks that are not significantly rosy. The current picture and the economic outlook was the focus of The Disciplined Investor Podcast this week, with help from money manager and economist, Michael "Mish" Sheldock.
Monday, June 9
Shuffle Master Inc. (NASDAQ: SHFL) will be reporting earnings that are expected to be $.07 per share. This has continued to be a difficult market for them even as casino construction has been rising around the world and the use of many of the products of this company are beneficial to the net profits of their customers. The stock has suffered dramatically over the past 12 months and, unless there is a product shift or new technology announced, there should be no reason that we see a catalyst for growth. Look for revenues of $45.55 million.
Ashworth Inc. (NASDAQ: ASHW) is a high-brow retailer that is expected to show a significant turn toward the negative this quarter. First Call estimates are looking for a negative $.06 per share while a year ago they were earning $.03 per share. Once again, there doesn't seem to be any reason why this company should see a beneficial upside unless investors are willing to short cover at this point. Even if that is the case, that will probably end up being temporary anyway.
MOST NOTEWORTHY: Potash, Cadbury Schweppes and Zoran were today's noteworthy upgrades:
Citigroup upgraded shares of Potash (NYSE: POT) to Buy from Hold and raised its target to $178 from $141 to reflect their expectation for a more bullish outcome from the ongoing China Potash contract negotiations.
Cadbury Schweppes (NYSE: CSG) was raised to Overweight from Neutral at JP Morgan to reflect the company's takeout potential and cash returns.
Oppenheimer raised its rating on Zoran (NASDAQ: ZRAN) to Outperform from Perform on valuation, as they believe the recent weakness is overdone.
OTHER UPGRADES:
Pep Boys (NYSE: PBY) was upgraded to Market Weight from Underweight at Thomas Weisel.
JMP Securities upgraded Actuate (NASDAQ: ACTU) to Strong Buy from Outperform.
Goldman raised Broadcom (NASDAQ: BRCM) to Buy from Neutral.
MOST NOTEWORTHY: Siemens , Siliconware Precision and Palm were today's noteworthy upgrades:
Goldman upgraded Siemens AG (NYSE: SI) to Buy from Neutral and views shares as defensive in the current environment.
Merriman upgraded shares of Siliconware Precision (NASDAQ: SPIL) to Buy from Neutral on valuation, as they believe the negative sentiment regarding the U.S. economy is already priced into shares.
JP Morgan upgraded Palm (NASDAQ: PALM) to Overweight from Underweight citing new smart-phone products expected in 2008 and stronger-than-expected Centro sales.
OTHER UPGRADES:
Pep Boys (NYSE: PBY) was raised to Neutral from Underperform at Credit Suisse.
Jefferies upgraded Pioneer Drilling (NYSE: PDC) to Buy from Hold.
Deutsche Bank upgraded Cablevision (NYSE: CVC) to Buy from Hold.
MOST NOTEWORTHY: DPL Inc, IAC/InterActiveCorp, F5 Networks, Community Health and Parametric Technology were today's noteworthy upgrades:
Baird upgraded DPL Inc (NYSE: DPL) to Outperform from Neutral following better-than-expected guidance.
Citigroup upgraded IAC/InterActiveCorp (NASDAQ: IACI) to Buy from Hold as they believe HSN's turnaround, Lending Tree's stabilization and Ask's profitability ramp should drive EBITDA growth acceleration in 2008. The company was also upgraded to Overweight from Equal Weight at Lehman following IAC's better-than-expected Q3 report.
Citigroup upgraded shares of F5 Networks Inc (NASDAQ: FFIV) to Buy from Hold, as they believe now is the time to buy the stock with sentiment at a low-point heading into an attractive 2008 product cycle.
Stifel raised its rating on Community Health Systems Inc (NYSE: CYH) to Buy from Hold based on improved visibility from detailed 2008 guidance.
Chrysler LLC is discussing shuttering or selling Mopar, its auto parts unit, and Chrysler Transport, the overseer of supplies to Chrysler's plants, reported the Wall Street Journal (subscription required).
Tomorrow, troubled condo developer WCI Communities Inc (NYSE: WCI) is expected to vote Carl Icahn and two of his representatives to the company's board, reported the Wall Street Journal.
Barron's Online's (subscription required) "Inside Scoop" column reported that Pep Boys (NYSE: PBY) director James Mitarotonda, a director since August 2006, purchased over $1.2M in stock through his equity fund Barington Companies Equity Partners on Aug. 23 and 24 according to SEC data.
Nasdaq Stock Market Inc (NASDAQ: NDAQ) has agreed to seek the approval of London Stock Exchange CEO Clara Furse before it sells its minority stake in the British exchange to any single buyer, reported the Independent.
MOST NOTEWORTHY: Lee Enterprises (LEE), The Pep Boys (PBY), Cumulus Media (CMLS), VeraSun Energy (VSE) and Acuity Brands (AYI) were today's more noteworthy upgrades:
Wachovia upgraded Lee Enterprises (NYSE: LEE) to Market Perform from Underperform on valuation.
RBC Capital raised Pep Boys (NYSE: PBY) to Sector Perform from Underperform citing upside potential from its real estate monetization strategy.
Cumulus Media (NASDAQ: CMLS) was upgraded to Hold from Sell at Citigroup based on the proposed buyout offer.
VeraSun Energy (NYSE: VSE) was upgraded to Hold from Sell at Soleil based on the acquisition of three 110mgy ethanol projects from ASAlliance.
Gabelli upgraded Acuity Brands (NYSE: AYI) to Hold from Sell following the company's announcement that it will pursue a tax-free spin-off of its specialty products business...
MOST NOTEWORTHY: SanDisk (SNDK), Business Objects (BOBJ) and the Beverage Sector top today's list of downgrades.
SanDisk Corp. (NASDAQ:SNDK) was downgraded to Neutral from Buy at UBS, citing expectations for an oversupply of flash memory in 2006 and 2007.
Business Objects (NASDAQ:BOBJ) was downgraded to Sector Perform from Outperform at Pacific Crest, citing valuation concerns and increasing competition from Oracle (ORCL), Microsoft (MSFT) and open source competitors.
The Beverage Sector was downgraded to Cautious from Neutral at Goldman Sachs. The firm cited declining demand in core categories, raw material inflation and valuation.
Goldman downgraded PepsiAmericas, Inc. (NYSE:PAS) and Coca-Cola Enterprises, Inc. (NYSE:CCE) to Sell from Neutral
while COTT Corp (NYSE:COT) was added to their Conviction Sell List.
OTHER DOWNGRADES:
Kevin Dann & Partners downgraded shares of Pep Boys (NYSE:PBY) to Hold from Buy on valuation and the lack of near-term catalysts.
Thomas Weisel downgraded Ikanos Comm (NASDAQ:IKAN) to Peer Perform from Outperform citing a slowdown of VDSL deployments in Japan due to persisting inventory build at NTT.
In last week's preview we took a peek at expectations for Campbell Soup earnings, but now the company is scheduled to report fiscal fourth quarter results this coming Thursday. With Krispy Kreme also among the handful of companies scheduled to report this week, we may yet see whether consumers are turning to comfort foods in these uncertain times.
On Tuesday, retail auto parts and repair chain 
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