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Earnings Preview

Earnings Preview 3/23/12

The fourth quarter earnings season is over, but now we start the first quarter season.  It is still very early in the game, but some firms with February fiscal period ends will start to report this week.  There will be 90 firms reporting, but 9 of them will be members of the S&P 500.

Firms reporting this week include: Best Buy (BBY - Analyst Report), Family Dollar (FDO - Analyst Report), Lennar (LEN - Analyst Report), McKesson (MCK - Analyst Report), Mosaic (MOS - Analyst Report), Paychex (PAYX - Snapshot Report) and Walgreens (WAG - Analyst Report).  That is an interesting cross-section of the economy and might offer some clues as to how the first quarter earnings season will go.

There will be several important economic reports out this week.  Last week’s focus on housing continues early in the week with reports on pending home sales and the Case Schiller home price index.  Then the focus shifts to new orders for Durable Goods, and then at the end of the week we find out about Personal Income and Spending.  Along the way we get the old news of the final look at GDP in the fourth quarter, and two gauges of consumer attitudes, the Consumer Confidence index and the University of Michigan Consumer Sentiment index..

Monday
  • Pending Home sales are expected to increase by 0.5% after rising 0.5% in January.  In recent months this has become a less useful indicator of future existing home sales.  This is because many home sales fall through due to an inability to get a mortgage.  Still, an increase is a hopeful sign.

Tuesday

  • The Case Schiller Home Price index is expected to show a year-over-year price decline of 3.8% in January versus a 4.0% decline in December.  While this is considered the gold standard of housing price information, it is very slow in being released.  The January numbers are actually a three-month moving average of November, December and January.  We are probably getting close to the end of housing price declines, but I would not look for a sharp rebound any time soon.
  • The Consumer Confidence Index is expected to slip to 70.0 from 70.8 in February.  What consumers say in this survey and what they actually do are often two very different things, so this is not an indicator I put a lot of weight on.  Historically it tends to be tied to trends in employment and to gasoline prices.  The consensus is expecting that the rise in gas prices will offset the generally positive employment news of late.

Wednesday

  • New Orders for Durable Goods are expected to rebound by 2.5% after plunging by 3.0% in January, in large part due to better orders for Aircraft.  Those can be very volatile and since each one is so expensive they can really make the headline number swing.  Excluding Transportation eEquipment, new orders are expected to rise by 1.0% after declining by 3.0% last month.

Thursday

  • Weekly Initial Claims for Unemployment Insurance were down 4,000 to 348,000 last week.  The consensus is looking for a slight rise to 350,000 this coming week.  The drop in weekly claims well below the key 400,000 level was the first clue that the jobs situation was getting significantly better.  If they fall again it would be a powerful sign that the momentum is continuing.  We are actually now well below the average level of claims for the last 35 years.   Keep an eye on the prior week’s revision as well as the change from the revised number.
  • Continuing Jobless Claims have been in a downtrend of late, but the road down has been bumpy. Last week they rose by 9,000 to 3.352 million. That is down 954,000, or 22.2% from a year ago. The consensus is looking for a slight increase to 3.385 million. Some (most?) of the longer-term decline is due to people simply exhausting their regular state benefits which run out after 26 weeks. Those, however, don’t last forever either. Federally paid extended claims fell by 74,000 to 3.329 million last week and are down 1.028 million, or 23.4% over the last year. 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. A better measure is the total number of people getting unemployment benefits -- currently at 7.424 million. The total number of people getting benefits is now 1.529 million below year-ago levels. What is not known is how many people have left the extended claims via the road to prosperity -- finding a new job -- and how many have left on the road to poverty, having simply exhausted even the extended benefits. Unless the program is renewed, all extended benefits will end at the start of March. Make sure to look at both sets of numbers! Many of the press reports will not, but we will here at Zacks.
  • The final look at fourth quarter GDP is expected to show no change from its 3.0% estimate in the second look.  Of as much interest as a change in the headline number will be any shifts in the composition of the growth rate, particularly if inventory growth added more or less than in the last estimate.  That is very low quality growth, so a shrinkage in the size of that is good news, even if it ends up lowering the overall growth rate.

Friday

  • Personal Income is expected to increase by 0.4% in February, up from 0.3% growth in January.  This is a very broad-based measure of income, not just from wages and salaries.  Proprietors (small business) income has lately been very strong, as has dividend income, while growth of interest income has been weak.  Wage income should start to do better given the job growth we have seen of late.  Income from transfer receipts was strong last month due to an increase in Social Security payments, but has been trending down.  Personal Spending is expected to accelerate to 0.6% growth from just 0.2% last month.  That implies that the savings rate will fall.  Over the long term we need a higher savings rate, but a falling savings rate helps economic growth in the short term.

Potential Positive or Negative Surprises

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. Similarly, a recent history of earnings disappointments, cuts in the average estimate for the quarter in the month before the report is due and a poor Zacks Rank (#4 or #5) are often red flags pointing to a potential disappointing earnings report.  Given how few companies are reporting, we omit this section this week.

In the Earnings Calendar below, $999.00 should be read as N.A.

Earnings Calendar

Company Ticker Qtr End EPS Est Year Ago
EPS
Last EPS
Surprise %
Next EPS Report Date Time Daily Price
APOLLO GROUP APOL 201202 $0.39 $0.83 8.47 20120326 AMC $42.99
CAL-MAINE FOODS CALM 201202 $1.13 $1.27 40.58 20120326 BTO $41.15
CHINA XD PLASTC CXDC 201112 $0.33 $0.35 9.68 20120326 BTO $5.18
CTI INDUSTRIES CTIB 201112 $0.10 $0.12 -50 20120326 $4.45
GOL LINHAS-ADR GOL 201112 $0.02 $0.29 -373.91 20120326 $7.45
KIOR INC-A KIOR 201112 ($0.16) ($0.10) -7.14 20120326 AMC $10.76
LANDEC CORP LNDC 201202 $0.13 $0.09 8.33 20120326 AMC $6.54
MULTIBAND CP MBND 201112 $0.06 $0.31 45.45 20120326 AMC $3.36
PACIFIC DRILLNG PACD 201112 $0.12 $999.00 N/A 20120326 AMC $10.80
SARATOGA RESRCS SARA 201112 $0.06 $999.00 N/A 20120326 $6.44
TENGION INC TNGN 201112 ($0.24) ($0.48) 22.22 20120326 $0.57
AETERNA ZENTARS AEZS 201112 ($0.09) ($0.03) 111.11 20120327 $1.93
AROTECH CORP ARTX 201112 $0.01 ($0.03) -375 20120327 AMC $1.23
ATHERSYS INC ATHX 201112 ($0.14) ($0.11) 41.18 20120327 AMC $1.73
CHARMING SHOPPE CHRS 201201 ($0.02) ($0.08) 11.11 20120327 BTO $5.89
CHINA XINIYA FS XNY 201112 $0.23 $0.27 -14.29 20120327 BTO $1.92
CHRISTOPHER&BNK CBK 201202 ($0.47) ($0.41) 10 20120327 AMC $2.14
EPAM SYSTEMS EPAM 201112 $0.28 $999.00 N/A 20120327 BTO $16.60
EXFO INC EXFO 201202 $0.04 $0.07 25 20120327 AMC $7.34
GENTIUM SPA-ADR GENT 201112 $0.04 $0.07 -60 20120327 BTO $8.20
LENNAR CORP -A LEN 201202 $0.05 ($0.06) -5.88 20120327 BTO $26.12
MCCORMICK & CO MKC 201202 $0.53 $0.57 6.19 20120327 BTO $52.07
MCEWEN MINING MUX 201203 ($0.15) ($0.07) 21.43 20120327 BTO $3.74
NEOGEN CORP NEOG 201202 $0.22 $0.21 -18.52 20120327 BTO $36.03
OXFORD INDS INC OXM 201201 $0.55 $0.32 14.29 20120327 AMC $48.72
PACIRA PHARMACT PCRX 201112 ($0.54) ($11.95) 6.78 20120327 BTO $10.98
POWER SOL INTL PSIX 201112 $0.15 $999.00 58.33 20120327 BTO $14.75
PVH CORP PVH 201201 $1.09 $0.93 4.42 20120327 AMC $89.97
RESPONSE GENETC RGDX 201112 ($0.04) ($0.06) -250 20120327 BTO $2.05
ROBBINS & MYERS RBN 201202 $0.74 $0.62 11.59 20120327 AMC $44.29
SEALY CORP ZZ 201202 ($0.02) $0.00 -1500 20120327 AMC $1.76
SYNNEX CORP SNX 201202 $0.91 $0.81 21.24 20120327 AMC $42.13
US HOME SYS INC USHS 201112 $0.13 $0.07 46.67 20120327 AMC $12.32
WALGREEN CO WAG 201202 $0.77 $0.80 -5.97 20120327 BTO $33.38
WILLDAN GROUP WLDN 201112 $0.09 $0.04 107.14 20120327 AMC $3.65
AURICO GOLD INC AUQ 201112 $0.16 $0.17 36.36 20120328 BTO $8.69
CARDIOME PHARMA CRME 201112 ($0.10) ($0.12) -20 20120328 BTO $0.80
COMMERCIAL METL CMC 201202 $0.09 ($0.40) 11.11 20120328 BTO $13.74
FAMILY DOLLAR FDO 201202 $1.13 $0.98 0 20120328 BTO $57.63
HUNTINGTON INGL HII 201112 $0.94 $999.00 23.53 20120328 BTO $37.18
LGL GROUP INC LGL 201112 $0.00 $1.87 -89.29 20120328 AMC $7.43
LINDSAY CORP LNN 201202 $0.83 $0.89 30.43 20120328 BTO $63.99
MOSAIC CO/THE MOS 201202 $0.77 $1.21 7.69 20120328 AMC $56.27
NEXXUS LIGHTING NEXS 201112 ($0.06) ($0.09) -20 20120328 BTO $1.01
PAYCHEX INC PAYX 201202 $0.37 $0.36 2.63 20120328 AMC $31.98
PERNIX THERAPTC PTX 201112 $0.14 $0.07 33.33 20120328 BTO $8.55
PROGRESS SOFTWA PRGS 201202 $0.20 $0.36 0 20120328 BTO $23.65
RED HAT INC RHT 201202 $0.20 $0.19 10.53 20120328 AMC $51.54
RESOURCES CNCTN RECN 201202 $0.08 $0.02 -8.33 20120328 AMC $12.92
SANCHEZ ENERGY SN 201112 $0.03 $999.00 N/A 20120328 $23.00
TEAVANA HOLDING TEA 201201 $0.31 $0.24 0 20120328 BTO $20.99
UNIFIRST CORP UNF 201202 $0.89 $0.82 20.37 20120328 BTO $59.60
ADECOAGRO SA AGRO 201112 $0.01 $999.00 -50 20120329 AMC $10.57
ASURE SOFTWARE ASUR 201112 $0.03 $0.02 50 20120329 BTO $8.12
AUXILIO INC AUXO 201112 ($0.05) ($0.05) 100 20120329 $1.20
BEST BUY BBY 201202 $2.16 $1.98 -7.84 20120329 BTO $26.96
CACHE INC CACH 201112 $0.18 ($0.16) -100 20120329 BTO $7.34
CENTURY CASINOS CNTY 201112 $0.02 $0.03 50 20120329 $3.01
CHINA TRANSINFO CTFO 201112 $0.20 $0.23 -13.33 20120329 BTO $4.76
CORONADO BIOSCI CNDO 201112 ($0.33) ($0.32) N/A 20120329 BTO $9.10
COSI INC COSI 201112 ($0.03) ($0.04) -133.33 20120329 AMC $1.22
CYTOMEDIX INC CMXI 201112 $0.00 ($0.05) -50 20120329 AMC $1.27
DREAMS INC DRJ 201112 $0.14 $0.10 33.33 20120329 AMC $2.95
FRANKLIN COVEY FC 201202 $0.03 $0.02 50 20120329 $8.69
JOS A BANK CLTH JOSB 201201 $1.59 $1.47 5.88 20120329 BTO $53.89
KID BRANDS INC KID 201112 $0.13 $0.18 0 20120329 BTO $2.72
LJ INTL INC JADE 201112 $0.02 $0.14 -144.44 20120329 BTO $2.35
NEWLINK GENETIC NLNK 201112 ($0.36) $999.00 N/A 20120329 AMC $10.17
RESEARCH IN MOT RIMM 201202 $0.82 $1.78 4.1 20120329 AMC $13.78
SABA SOFTWARE SABA 201202 ($0.06) $0.03 0 20120329 AMC $12.61
SEACHANGE INTL SEAC 201201 $0.16 $0.24 -30.77 20120329 BTO $8.20
SHAW GROUP INC SHAW 201202 $0.45 $0.40 9.3 20120329 BTO $31.14
SORL AUTO PARTS SORL 201112 $0.21 $0.31 0 20120329 BTO $3.44
TELENORTE L ADR TNE 201112 $0.07 $0.19 N/A 20120329 AMC $11.56
TEXAS INDS TXI 201202 ($0.82) ($0.75) -4.92 20120329 AMC $37.42
TIBCO SOFTWARE TIBX 201202 $0.14 $0.13 23.33 20120329 AMC $30.30
WORTHINGTON IND WOR 201202 $0.35 $0.35 0 20120329 BTO $17.69
XYRATEX LTD XRTX 201202 $0.22 $0.15 133.33 20120329 AMC $16.50
AMER ORIENT BIO AOB 201112 $0.10 $0.08 60 20120330 AMC $1.52
CLEARONE COMM CLRO 201112 $0.14 $0.26 N/A 20120330 $4.58
DEJOUR ENERGY DEJ 201112 $0.00 ($0.01) 100 20120330 $0.41
ENGLOBAL CORP ENG 201112 $0.03 ($0.02) -66.67 20120330 BTO $2.13
FEIHE INTL INC ADY 201112 $0.22 $0.07 -30 20120330 AMC $3.34
FINISH LINE-CLA FINL 201202 $0.79 $0.65 0 20120330 BTO $24.18
FORBES ENERGY FES 201112 $0.16 $0.00 N/A 20120330 AMC $5.40
GAS NATURAL INC EGAS 201112 $0.32 $0.24 0 20120330 AMC $11.43
GEOKINETICS INC GOK 201112 ($1.19) ($2.15) -13.61 20120330 AMC $1.91
NATUZZI SPA-ADR NTZ 201112 $0.00 ($0.04) N/A 20120330 AMC $2.80
PINNACLE AIRLNS PNCL 201112 ($0.19) $0.14 18.18 20120330 BTO $1.27
ZAP ZAAP 201112 ($0.04) ($0.09) N/A 20120330 $0.20

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