business week
2010
A busy week ahead
Earnings Preview 1/22/10
Next week is the heart of the 4Q09 earnings season. There will be a total of 503 reports, including 136 members companies of the S & P 500, and a good third of the Dow 30. These include such impetus that DuPont (DD), Johnson & Johnson (JNJ), Verizon (VZ), Boeing (BA), Caterpillar (CAT), United Technologies (UTX), 3M (MMM), Altria (MO), Procter & Gamble (PG) and Chevron (CVX). And these are the names Dow reports on the results.
Earlier this week, economic data on housing will be front and center, while the middle of the week brings a Fed meeting, and at the end of the week we get the first look at the fourth quarter of GDP. Overall, a very busy week ahead.
Monday
• Data on home sales existing in December is released. The pending home sales data suggests a decline, due in part to the first tax credit for purchase almost expiring, and the hangover caused by people rushing to buy in front of the deadline was subsequently extended. Consensus is for sales fell at an annual rate of 6.00 million pace in November from 6.54 million. However, sales of used homes have little direct impact on growth economy.
Tuesday
• The Case-Schiller housing price index for November was released. The decrease from year to year in housing prices should have slowed to 5.20% compared to the rate of 7.28% in October for the 20 metropolitan title. Sequentially, which implies a slight increase in housing prices.
• The consumer confidence index is expected to have declined slightly in January to 52.9 from 53.3 in December.
Wednesday
• Home sales should have increased at a seasonally adjusted annual rate of 370,000 in December from a rate of 355,000 in November. New home sales, unlike sales of used houses, are extremely important for economic growth. An increase would be fine, but we will still be at extremely low absolute levels.
• The Federal Reserve will almost certainly maintain the federal funds rate in the range between 0 and 0.25%. However, Fed watchers will carefully dissect the policy statement General to see if there is no change in the outlook for the economy and the Fed for clues on how long the "period of time" that they will keep rates at "extremely low levels."
Thursday
• initial weekly claims for unemployment insurance out. They have increased in the last week, but before that have been in a downtrend very steep. Last week, there were 482,000 initial applications. Look down the back. Continuing claims have also been in a downtrend for the abrupt end. However, it is partly thanks to people simply exhausted their regular state benefits accruing after 26 weeks. If one takes into account the claims extended paid by the federal government as part of the recovery program, applications rose last week. By simply looking at the number of continuing claims Regular is a serious mistake. They understand a little more than half of the unemployed today unprecedented view of the high life unemployment figures. Last week, continuing claims were regularly 4,599,000 while the extended applications (funded by federal funds ARRA) were 5.917 million. Be sure to watch the two sets of numbers!
Friday
• We get the first look in the fourth quarter of GDP. In the third quarter, growth was estimated at 3.5%, but was revised down sharply in the next two look, finally settling at 2.2% growth. This time is expected at 4.5%, at least for the first glance. The details and composition report are very important. Growth caused by a rebound in stocks is much less important than whether we get a rebound in fixed investment.
• The inflation gauge integrated into the GDP report, the chain deflator, is expected to show inflation at 1.3%, against 0.4% in third quarter. Even a very low absolute level.
• Chicago Purchasing Managers Index is expected to grow in the Midwest continues in January, but at a slower pace than in December, with an expected reading of 56.0, down from 58.7. Any reading over 50.0 indicates expansion.
• The University of Michigan Consumer Sentiment Index is expected to show a slight increase in January, up from 72.8 to 73.0 in December.
Potential Positive Surprises
Historically, the best indicators of companies likely to report positive surprises have a recent history of surprises positive and estimates of the increase is in the report. The Zacks Rank is also a good indicator of potential surprises. While normally companies that report their Earnings better than expected rise in response, which has not been the case so far during the quarter. Some companies that have these characteristics include
Corning (GLW) is expected to report EPS of $ 0.42, up $ 0.13 per share a year earlier. during the last GLW posted a positive surprise of 7.69% and last month the average estimate of earnings in the fourth quarter was up by 1.04%. GLW has Zacks Rank of 1.
MeadWestvaco (MWV) is expected to report earnings per share before non-recurring items of $ 0.24, up $ 0.10 a year ago in the third quarter, VWD posted a positive surprise of 85.19% and last month, the consensus estimate of earnings is in 4Q up 4.83%. GE is a Zacks Rank stock # 1.
Estee Lauder (EL) is expected to earn $ 1.26 per share this year, up $ 0.80 a year ago. The third quarter of the company blew the estimates of water with a massive 150.0% positive surprise. During the past month, the average estimate for the fourth quarter was up 43.27%. EL also holds the coveted Zacks # 1 Rank.
Potential surprises
Mead Johnson (JN) is expected to show EPS of $ 0.51 per share, an improvement from an EPS of $ 0.36 per share a year earlier. The last time the society disappointed by 1.85%. For this Zacks # 4 Rank stock, analysts have reduced estimates for this quarter by 1.4% compared to last month.
Smith International (SII) is expected to earn $ 0.09 per share this quarter, down sharply from last year's $ 1.00. The company disappointed 53.33% for the last time, and analysts reduced their estimates for the quarter of 6.63% compared to last month. The stock is a Zacks rank of 4.
FPL Group (FPL) is expected to report earnings per share of $ 0.73 against $ 0.90 last year. Florida 0.72% Utility disappointed the last time and by analysts last month reduced the estimate of Zacks # 4 Rank stock 17.27%.
About the Author
Dirk van Dijk, CFA is the Chief Equity Strategist for Zacks.com. With more than 25 years investment experience he has become a popular commentator appearing in the Wall Street Journal and on CNBC. Dirk is also the Editor in charge of the market-beating Zacks Strategic Investor service. For more information, visit http://www.zacks.com.
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