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The earnings season crunch is upon us once again, and among those companies reporting next week are Altria Group Inc. (NYSE: MO) and Pfizer Inc. (NYSE: PFE).
In its second quarter report in July, Atria reported earnings per share of $1.15, beating Wall Street's expectations by a couple of pennies. However, Altria has had five-year earnings per share growth of only 1.9 percent, well below the tobacco industry average and the S&P 500. For the third quarter, analysts surveyed by Thomson Financial expect Intel to report EPS of $1.14, about the same as last quarter, and less than the $1.39 actual EPS from the same period last year.
Yet, the handful of analysts surveyed by Thomson Financial recommend buying Altria: two rate it a strong buy, six a buy, and four a hold. Altria's share price is up from a 52-week low of $63.13 in July, but well off of its 52-week high of $90.50 in January. It closed Friday at $70.06.
For more on Supreme Court decisions, cigarette taxes, and other news that might affect Altria's quarterly report, check out BloggingStocks' Altria coverage.
The earnings season crunch is upon us once more, and among those reporting next week are Intel Corp. (NASDAQ: INTC) and Johnson & Johnson (NYSE: JNJ).
In its second quarter report in July, Intel reported earnings per share of 22 cents, beating Wall Street's expectation by three cents. In fact, Intel has beat analysts' expectations in the past four quarters, and also has had one-year earnings per share growth of 32 percent, which was better than the S&P 500 and the semiconductor industry average. For the third quarter, analysts surveyed by Thomson Financial expect Intel to report EPS of 30 cents -- profit growth of 35 percent and revenue growth of 10 percent -- which is in line with Intel's updated guidance.
Analysts surveyed by Thomson Financial recommend buying INTC: 15 rate it a strong buy, 16 a buy, and only 7 a hold. The share price is trading near its 52-week high of $26.58, up from a 52-week low of $18.75 in March. The share price closed Friday at $25.55.
For more on what's been going on with Intel, check out BloggingStocks' Intel coverage.
Yum Brands Inc. (NYSE: YUM) beat Wall Street's EPS expectations by a nickel, due largely to strength overseas. Profit was up 17%, revenue 13%, from a year ago.
Just in time for the presidential debating season, and the accompanying protests, Gerber Scientific Inc. (NYSE: GRB) is unveiling a new super printer, the Solara Ion, capable of printing high-quality, dry-upon-contact, wide-format posters, banners, and jumbo-sized wall hangings. (Think "Mission Accomplished.") The flatbed platform printer can accommodate flexible as well as rigid materials up to 1 inch thick, 5 feet wide and 10 feet long. The printer has output capacity of 639 square feet per hour and uses a patented low temperature, low energy printing process.
Gerber Scientific produces manufacturing systems for mass customizations. The company is hoping that sales of this printer will help boost profits, which were flat in the company's recently released 1Q FY 2008 earnings report. Operating income was $4.4 million on $153.7 million worth of revenue. The year previous, the company also posted operating income of $4.4 million on $137.5 million worth of revenue. $16 million more in revenue and not a penny more in profits? Sounds like it's time to hold management's feet to the fire.
CEO Marc Giles believes Gerber is on the right track. Revenues are up, sales volume is up. Giles pointed to the introduction of the new printer as well as Gerber's expansion into the specialty graphics market in China as positive signs. Revenue and order volume as well as equipment orders are up 62% in China. In the near future, Gerber needs to transform these increases into the all important increase in profits.
Earnings are released this week and for the next several. Investors will be scouring the headlines, looking for their stocks' results. Here are some things to check.
Earnings: They're the first number every investor wants to see. But just seeing the earnings per share (eps) isn't enough. You want to know how those earnings were achieved. The ideal: eps grew because more widgets were sold or more hours were billed or more of whatever the company sells is being sold. That's in contrast to eps increasing because of asset sales or a division being sold or some other extraordinary event. Those will only happen one time and won't continue to increase earnings in the future. You'd like to see earnings growing faster than revenues. It shows better efficiencies at the company and suggests future growth will be as profitable or more so because of these efficiencies.
PDUFA date for Merck & Co Inc's (NYSE: MRK) Januvia (Sitagliptin Phosphate) an adjunct to diet and exercise and as add-on therapy to a sulfonylurea in non-insulin dependent diabetes melliltus (NIDDM)/Type 2 Diabetes; add-on therapy to the combination of a sulfonylurea plus metformin in non-insulin depedent diabetes mellitus (NIDDM)Type 2 diabetes
Tuesday October 9
PDUFA date for YY (NYSE: NVS) Tasigna (Nilotinib) for chronic myleoid leukemia/acute lymphoblastic leukemia
Johnson & Johnson to report Q3 earnings; conference call at 8:30am
Yahoo! Inc (NASDAQ: YHOO) to report Q3 earnings; conference call at 5pm
PDUFA date for Cardiome Pharma Corporation's (NASDAQ: CRME) IV Vernakalant, an intravenous formulation of an investigational drug being evaluated for the acute conversion of atrial fibrillation
PDUFA date for Indevus Pharmaceuticals Inc's (NASDAQ: IDEV) Valstar, for the therapy of bacillus Calmette-Guerin - refractory carcinoma in situ of the urinary bladder in patients for whom immediate cystectomy would be associated with unacceptable morbidity or mortality.
PDUFA date for DOR BioPharma Inc's (OTC: DORB) orBec (Oral Beclomethasone Dipropionate) for Gastrointestinal Graft-Vs-Host Disease
PDUFA date for Bristol Myers Squibb's Ixabepilone; monotherapy to treat patients with metastatic or locally advanced breast cancer after failure of chemotherapies
PDUFA date for Genentech Inc's (NYSE: DNA)/Roche Holdings Ltd's (OTC: RHHBY) Herceptin (Trastuzumab); in combination with taxotere as first-line treatment of HER-2 positive metastatic breast cancer
After seeing PepsiCo Inc. (NYSE: PEP) beat analyst estimates earlier this week for its third quarter, there are going to be some big expectations for its main rival, Coca Cola Co. (NYSE: KO) when it reports its third quarter numbers next Wednesday.
The stock has been impressing analysts at Citigroup lately. Just yesterday the broker lifted its price target on the stock to $67 a share (the stock is currently trading at $57.50), citing improved fundamentals in its Japanese businesses. The broker currently has a buy rating on the company.
Analysts are expecting the soft drink giant to come through with earnings of 68 cents per share for its most recent quarter, and based on the company's solid earnings history, I would not bet against it this time around. The company last reported earnings back on July 17, posting EPS of 85 cents and easily beating Q2 analysts' estimates by 3 cents. In fact, if you look back at the company's history you will find that it has beat estimates for each of its last seventeen quarters. That's a pretty nice run.
After the closing bell on Thursday, JB Hunt (NYSE: JBHT) announced earnings that missed analyst expectations as profit fell 12% in the quarter, but analysts remain generally optimistic on the stock. A Goldman Sachs analyst maintained his buy rating on the company, saying that the weak trucking results may hurt shares for a few days, but the intermodal railroads, which carry goods between other modes of transportation, are more important to the company. A KeyBanc Capital Markets analyst said he was also impressed with the company's gains in the intermodal market. If you agree with these analysts and think that the company won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on JBHT.
After hitting a one-year high of $31.94 in July, the stock has been slipping over the past few months. JBHT opened this morning at $26.86. So far today the stock has hit a low of $26.36 and a high of $27.07. As of 11:30, JBHT is trading at $27.49, up $0.40 (1.48%). The chart for JBHT looks bearish but improving, while S&P gives the stock a neutral 3 STARS (out of 5) hold rating.
For a bullish hedged play on this stock, I would consider a February bull-put credit spread below the $22.50 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. This particular trade will make a 19% return over just 4 months as long as JBHT is above $22.50 at February expiration. The stock would have to fall by more than 19% before we would start to lose money.
JBHT hasn't been below $22.50 since January and has shown support around $25.50 recently. This trade could be risky if the company's next earnings (due out a few weeks before February expiration) disappoint, but even if that happens, the stock would have to break through strong historic support before this position is in trouble.
Meg Massie is an options analyst and writer at Investors Observer. DISCLOSURE: At publication time, Meg neither owns nor controls positions in JBHT.
I remember the last time I had a burger at a McDonald's Corp. (NYSE: MCD) restaurant. It was two and a half years ago and I just couldn't stomach it. After the first bite, it went into the garbage with me feeling utterly nauseous. Yet, even I, a person who purports to eat healthy, don't boycott McDonald's altogether. While I had the last McDonald's burger on that fateful day, I came back for breakfasts, the salads and even the coffee. Indeed, I am not embarrassed to admit that I prefer it to Starbucks' (NASDAQ: SBUX) coffee, though not to Tim Hortons' (NYSE: THI).
Well, it seems that McDonald's has indeed managed to offer something for everyone, even granolas like me. The results could be seen in its latest reported same-store sales report, which have continued the fast food chain's hot streak. McDonald's global sales from restaurants open more than a year rose 5.9% in September. The world has been kinder to McDonald's than its domestic sales. While U.S. sales rose 3.5% -- increasing consecutively for the 54th month -- same-store sales rose 5.7% in Europe and 12% in its Asia/Pacific, Middle East and Africa division. Its total systemwide sales rose 11.5% for the month and 11.8% for the quarter.
Following these impressive numbers, the company now expects to exceed Wall Street's estimates for third-quarter profit. It now expects to earn 83 cents per share in the quarter when it reports October 19. Including a 6 cents per share gain from the sale of Boston Market, it should report 89 cents per share for the quarter, beating estimates.
No doubt, the company has found a way to offer something for everyone. Its value menu, breakfast offerings and drinks helped boost sales, as did premium coffee. The long hours, the promotions and new products like the wraps I occasionally enjoy, also drove sales growth.
McDonald's shares are trading up 29 cents to $56.54, 0.52% higher. This isn't perhaps the surge some had hoped for, but as the company has been doing so well, much of that surprise was already priced in. MCD shares have gained nearly 28% year-to-date and over 34% the past year. It may just continue this performance a while longer, especially as it encroaches further on Starbucks' business.
Centex (NYSE: CTX) of Dallas joinsthe growing list of home builders that will be taking charges. The Wall Street Journal reported this morning that Centex plans to take $1 billion in charges [subscription required]because of the deteriorating housing market. Charges reported by the Journal include:
$850 million impairment on its neighborhood and land inventory plus $40 million more on land held by joint ventures.
$40 million write-off in pre-acquisition costs and option deposits
$60 million provision for future mortgages.
These loses are on top of the $193 million in write-offs for the first fiscal quarter.
Yesterday, Moody's downgraded Centex's credit rating to junk status and said it expects to see weak conditions in the housing industry until at least 2009. Moody's also told the Journal that Centex, "has had difficulty unloading excess inventory, is facing rapidly declining home deliveries and revenue generation, and has close to a seven-year lot supply."
Centex reports its results officially on October 23. Expect bad news and falling stock prices between now and then.
General Electric Co. (NYSE: GE) will be reporting earnings here in a few minutes, and below I'll be covering the results and analyst Q&A session live. The company is set to have a handsome profit after the $11.6 billion sale of its plastics division. CEO Jeff Immelt has focused on selling slower-growth divisions in recent years to focus on faster growth areas like water-processing technology, health care and eco-products (products that help communities save energy).
The company's Q3 results are expected to include a $1.7 billion to $1.9 billion in collective charges, with a good 20% of that figure related to its exit from the mortgage business it operates under the WMC Mortgage Securities brand. Like every mortgage company with a subprime arm, GE's mortgage portfolio has lost money in recent times as consumers went belly-up with mortgage loan resets and foreclosures. In addition to charges related to that division, there are many other financial transactions that will affect quarterly numbers as well.
Average analyst expectations call for an EPS of $0.50 on $42.42 billion in quarterly revenue. Specifically referenced as a major contributor to GE's expected results was the performance of its global infrastructure unit (everything from aircraft engines to steam turbines). Will the company match or beat expectations? Find out below. Remember to use the "Refresh" key on your web browser to ensure you see all the minute-by-minute updates to the post below. All times are in EDT.
Citigroup (NYSE: C) reorganized its management, probably in reaction to the huge write offs it took in the last quarter. Almost everyone got a new job, other than CEO Chuck Prince.
Citi is pushing out its head of trading and one of its fixed income chiefs even though as Reuterspoints out "Citi's warning last week left some investors calling for Prince's ouster." As one analyst told the news agency: "Clearing the bench may be therapeutic, but it doesn't necessarily improve Citi's ability to fix the mistakes that were made or seize opportunities in these markets."
All of the demands that Prince leave neglect to consider that Citi's shares have done no worse than those of other big banks. While its shares are off about 3% over the last year, so are the stocks of Bank of America (NYSE: BAC) and JP Morgan (NYSE: JPM).
Prince may be a poor manager, but he is also a victim of his times. If he goes, so should the heads of other large banks, or the market can wait to see if Prince can fix things.
Seems Cramer was right when he said to buy BEA Systems before it gets a bid Monday. Today Oracle Corp. (NASDAQ: ORCL) indeed said it has proposed to buy business software maker BEA Systems Inc. (NASDAQ: BEAS) for more than $6.66 billion. If you had listened to Cramer, you could have sold your BEAS shares today 22% higher as indicated by premarket action.
Morgan Stanley upped Apple Inc. (NASDAQ: AAPL) shares target price from $150 to $180, saying the "iPhone will drive more ancillary revenue than it previously modeled." AAPL shares are up nearly half a percent in premarket trading.
McDonald's (NYSE: MCD) has revised its third quarter earnings to 89 cents per share (83 cents from continuing operations and a gain of 6 cents a share) as momentum continues. The fast food chain has posted a 5.9% climb in September global same-store sales. Sales for its restaurants worldwide rose 11.5% in the month. European same-store sales grew 5.7% in the month.
Allegheny Technologies Inc. (NYSE: ATI) warned its earnings will be lower than expected in the second half of the year, and forecast full-year earnings well below Wall Street estimates. Soft demand for standard stainless sheet was cited as the reason. Third-quarter earnings will range between $1.85 and $1.88 per share, the company said, while Wall Street expected $1.96 per share. No doubt shares could come under pressure.
Nokia Corp. (NYSE: NOK) shares are down 1.3% in premarket trading after Enskilda downgraded Nokia to Hold from Buy, saying it believes strong third-quarter results are already priced in the shares.
General Motors Corp. (NYSE: GM) sold nearly 2 1/2 times the number of cars it sold in India in the same period last year, despite a sharp rise in interest rates. GM's market share in India has grown to 3.6%, topping Ford Motor Co.'s (NYSE: F).
JPMorgan Chase & Co. (NYSE: JPM) yesterday said it is cutting positions at its investment banking division after suffering Wall Street's biggest slump in the leveraged loan market.
Another toy recall was announced yesterday, this time hitting J.C. Penney Co. Inc. (NYSE: JCP) and shares closed down nearly 7%. More than 90,000 children's products, most imported by J.C. Penney are being recalled for containing dangerous levels of lead.
U.S. stock futures were lower this morning, indicating Wall Street may continue yesterday's late afternoon declines and start lower. This morning investors will weigh in GE's results, the shakeup at Citigroup as well as retail sales and PPI data that is due in about an hour.
Yesterday stocks had a volatile session starting with a rally that sent the Dow Jones industrial average up over 100 points to record highs. Then, due to renewed inflation fears late in the session, stocks took a dramatic reversal that saw stocks plunge. The Dow closed 63 points lower, or 0.45%, the S&P 500 0.52% lower and the Nasdaq was hardest hit with a 1.4% decline on the day.
Several closely watched economic reports are due this morning.
At 8:30 a.m. EDT and a day after many retailers have reported disappointing September sales, the Department of Commerce will release its September retail sales data. Economists surveyed by Briefing.com forecast that retail sales posted a 0.2% gain in the month, down from a 0.3% rise in August.
Also at 8:30 a.m. EDT, the U.S. Department of Labor will release September Producer Price Index, a measure inflation at the wholesale level. PPI is expected to show a 0.5% rise compared to a 1.4% drop in prices in August. Core PPI, which excludes the volatile food and energy prices, is forecast to post a 0.2% rise, same as in August.
At 10:00 a.m. EDT two more indicators will be reported, August business inventories and the University of Michigan's October consumer confidence survey.
Although not an economic report, many will tune in to listen to a speech by Federal Reserve President Ben Bernanke to a Dallas Fed conference at 9:00 a.m. EDT. Investors will dissect the speech for any clues to the Fed's next move.
Overseas, Asian markets declined from their record highs set in yesterday's session. European stocks mostly fell in early trading.
General Electric Co. (NYSE: GE), the industrial conglomerate, has long been viewed as a bellwether for the U.S. economy, hence the Street's interest. General Electric said profit from continuing operations rose 7.1% in the third quarter on overseas sales of locomotives, airplane engines and turbines for power-generation plants. Including the sale of its plastic division, third-quarter earnings rose 14%. Revenue rose 12% to $42.5 billion. GE reaffirmed its profit outlook for the year.
Citigroup Inc. (NYSE: C), another Dow 30 stock, yesterday announced a shakeup of its organization. The company said that it has merged its investment-banking and alternative-investments businesses into an Institutional Clients Group. C shares are down 1.9% in premarket trading.
GE's (NYSE: GE) earnings from continuing operations were $5.1 billion, up 7% from $4.7 billion in third quarter 2006. Continuing revenues grew 12% to $42.5 billion. Operating profits lagging sales growth is never a good thing.
The company's largest unit, infrastructure, had a revenue improvement of 19% to $14.5 billion. But its segment operating income was up only 12% to $2.6 billion. The company's big commercial finance unit had a similar problem. Revenue advanced 17% to $7 billion, but operating profit rose only 12% to less than $1.5 billion.
GE's industrial unit continues to go nowhere. Revenue was flat at $6.2 billion. Segment profit was up 6% to $513 million.
While GE Money made a big move in revenue, up 23% to $6.2 billion, profits rose a more modest 13%.
As Reuterspointed out, GE met "Wall Street's expectations and boosted by demand for heavy equipment like gas turbines and jet engines, as well as strong activity at its financial units."
But anyone expecting a break-out quarter will be disappointed.
In its second quarter report in July, Atria reported earnings per share of $1.15, beating Wall Street's expectations by a couple of pennies. However, Altria has had five-year earnings per share growth of only 1.9 percent, well below the tobacco industry average and the S&P 500. For the third quarter, analysts surveyed by Thomson Financial expect Intel to report EPS of $1.14, about the same as last quarter, and less than the $1.39 actual EPS from the same period last year. 
In its second quarter report in July, 
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Seems Cramer was right when he said to 
Banks to the rescue: A plan to back mortgage secuities and prevent fire sales
Coca Cola (KO) third quarter earnings preview
Investing in Ontario: Royal Bank of Canada (RY), Manulife Financial (MFC), Toronto-Dominion Bank (TD)
