This is our short term rating system that serves as a timeliness indicator for stocks over the next 1 to 3 months. How good is it? See rankings and related performance below.
|Zacks Rank||Definition||Annualized Return|
Zacks Rank Education - Learn more about the Zacks Rank
Zacks Rank Home - All Zacks Rank resources in one place
Zacks Premium - The only way to get access to the Zacks Rank
This page is temporarily not available. Please check later as it should be available shortly. If you have any questions, please email customer support at firstname.lastname@example.org or call 800-767-3771 ext. 9339.
Earnings Preview 1/08/10
Next week is the kickoff for the 4Q09 earnings season, when Alcoa (AA - Analyst Report) announces on Monday. In all, 32 firms will report their results next week, including 6 S&P 500 members. Reporting activity will then pick up speed, and next week’s trickle of earnings data will turn into a flood. In addition to the start of earnings season, it will be a fairly busy week for economic data.
•Nothing of significance.
•The highlight of the day will be the report on the monthly trade deficit for November. In October, our imports exceeded our exports to the tune of $32.9 billion. While it has been creeping back up in recent months, that is a substantial improvement from where we were a year ago. The consensus expectations are for the trade deficit to be $34.8 billion. Given that both the Manufacturing and Service ISM reports showed lots of strength in imports and weakness in exports, combined with a rebound in oil prices, makes me think that the trade deficit will be worse than the consensus expectations.
•If Tuesday is about the trade deficit, then Wednesday will be about that other deficit, the big budget one. Consensus expectations are that the red ink will be $70.8 billion for December. While that is a big improvement over the $120.3 billion gap in November, the Treasury numbers are very seasonal, so do not read much into the sequential improvement. It is better to look at it relative to December 2008, when the gap was $51.8 billion. In November, the gap was actually below the November 2008 level of $125.2 billion.
•The Fed will release its largely anecdotal collection of regional data known as the Beige Book. Very little hard data in it, but it does give a good feel for how the economy is doing. The trend in recent months has for each Beige Book to be somewhat more upbeat than the previous ones, but then again, back in the spring, the books were more depressing than your average suicide note.
•Weekly initial claims for unemployment insurance come out. They rose slightly in each of the last week, but before that were in a very steep downtrend. Last week there were 434,000 initial claims. Look for the decline to resume. Continuing claims have also been in a steep downtrend of late, even if one factors in the extended claims paid by the Federal government as part of the Stimulus program, but that also reversed last week. Looking at just the regular continuing claims numbers is a serious mistake. They only include a little over half of the unemployed now given the unprecedentedly high duration of unemployment figures. Last week regular continuing claims were 4.802 million while extended claims (paid from Federal ARRA funds) were 5.440 million. Make sure to look at both sets of numbers!
•Retail sales for the all important month of December are due out. The consensus is for a seasonally adjusted increase of 0.4%, on top of a 1.3% increase in November.
•Retail sales excluding autos are expected to be up at a seasonally adjusted rate of 0.3% on top of a 1.2% increase in November. Given what we have seen from many of the major retail chains so far, I think the numbers for December will be better than the consensus expectations.
•We get the first inflation numbers of the year with the CPI for December. It is expected to be up 0.2% after a 0.4% increase in November. Stripping out food and energy (especially energy) the CPI is expected to be up 0.1% after being unchanged in November. I think the headline number the consensus has is a bit too low, and the core number is a bit too high. My guess is 0.3 on headline and unchanged again on core. Housing makes up almost 40% of core CPI and rents have been under downward pressure. Energy prices, though, have been on the rise.
•Capacity Utilization is expected to have risen to 71.8% in December from 71.3% in November. While this is still an extremely low level, it will mark the sixth straight increase in utilization. Keep an eye not just on the headline number but also the number for manufacturing, since the total includes utilities where weather is often the most important factor. In November, the nation's factories were operating at just 68.4% of capacity.
•Industrial Production is expected to have increased by 0.6% in December after a 0.8% increase in December. It still remains well below year-ago levels, however.
Potential Positive Surprises
Historically, the best indicators of firms likely to report positive surprises are a recent history of positive surprises and rising estimates going into the report. The Zacks Rank is also a good indicator of potential surprises. Some of the companies that have these characteristics include:
H.B. Fuller (FUL - Snapshot Report) is expected to report EPS of $0.42, almost double the year ago level of $0.24. Last time out, they posted a positive surprise of 33.3%, and over the last month the mean estimate for its fourth quarter earnings is up 1.02%. FUL has a Zacks Rank of 2.
Sealy Corp (ZZ) should allow its investors to sleep well going into earnings season. This Zacks Rank #2 stock is expected to return to marginal profitability ($0.01) after posting a loss of $0.13 a share last year. While it was right on the mark relative to expectations last time out, the mean estimate for this quarter has increased by 22.1% over the last month.
Potential Negative Surprises
In keeping with the overall very positive tone of last earnings season, the potential negative firms are less clear cut. However:
Supervalu (SVU - Analyst Report) is expected to post earnings of $0.43 a share, down from earnings of $0.62 a share a year ago. Last time they disappointed by 2.78%. Worse for this Zacks Rank #4 stock, analysts have cut the estimates for this quarter by 1.72% over the last month.
Charles Schwab (SCHW - Analyst Report) is expected to earn $0.15 a share this year versus EPS of $0.27 last year. They disappointed by 5.56% last time out, and analysts have cut the estimate for this quarter by 15.8% over the last month. The stock holds a Zacks Rank #5.
|Company||Ticker||Qtr End||EPS Est|| Year Ago |
| Last EPS |
|Next EPS Report Date||Time||Daily Price|
|Helen Of Troy||HELE||200911||0.72||0.47||30.77%||1/11/2010||BTO||24.36|
|Material Sci Cp||MASC||200911||-0.09||-0.3||-993.75%||1/11/2010||2.25|
|Wd 40 Co||WDFC||200911||0.51||0.46||15.00%||1/11/2010||AMC||31.45|
|Great Atl & Pac||GAP||200911||-0.72||-1.35||-302.70%||1/12/2010||12.87|
|Linear Tec Corp||LLTC||200912||0.3||0.35||8.00%||1/12/2010||30.5|
|Briggs & Stratt||BGG||200912||0.05||0.06||32.00%||1/14/2010||BTO||18.36|
|Cra Intl Inc||CRAI||200911||0.31||0.56||-34.04%||1/14/2010||BTO||26.87|
|Shaw Comms-Cl B||SJR||200911||0.31||0.25||-13.33%||1/14/2010||BTO||20.11|
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.
Please login to Zacks.com or register to post a comment.