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Earnings Preview 12/14 - 12/18

Next week will be a light one on the earnings front, with a total of only 40 companies reporting, including 9 S&P 500 firms. Among the more noteworthy names that are going to report are: Federal Express (FDX - Free Report) , General Mills (GIS - Free Report) and Nike (NKE - Free Report) . There will also be several potentially market-moving economic reports.


Monday
•    Nothing of significance.

Tuesday
•    The Producer Price Index (PPI) is released for November. The headline PPI is expected to show an increase of 0.9%, on top of last month’s 0.3% increase. However, most of that is expected to come from food and energy price increases. The core PPI is expected to post an increase of just 0.2% after falling 0.6% in October.
•    The Empire State Manufacturing Survey is expected to show that manufacturing activity in the New York area increased at a slightly faster pace in its December survey than it did in its November survey, with a reading or 25.0, up from 23.5.
•    Capacity Utilization is expected to have risen to 71.1% overall in November, up from 70.7% in October. This is still an extremely low reading, but has been showing signs of rebounding in recent months. If the consensus expectations are met it will be the 5th straight monthly increase since it bottomed in June at 68.3%, an all-time record low. Total Capacity Utilization normally runs at around 80% in a healthy economy. Manufacturing Capacity utilization was 67.6% in October, up from a low of 65.1% in June. This report is far more important than the amount of attention it usually receives.
•    Industrial production is expected to have expanded by 0.6% in November after a 0.1% increase in October.

Wednesday
•    Housing Starts are expected to rebound to an annualized rate of 575,000 after a very disappointing level of just 529,000 in October. Recent strength in new home sales have given builders a bit more leeway in starting additional homes.
•    Building Permits, the best indicator of future housing starts, are expected to rise to a 570,000 annual rate, up from 552,000 in October.
•    The Consumer Price Index (CPI) will probably rise by 0.3% in November on a headline basis after rising 0.2% in October. Core (ex-food and energy) CPI is expected to be up a more tame 0.1% after a 0.3% increase in October. Within the report, pay special attention to how Rent and Owner's Equivalent Rent are doing. Together they make up almost 30% of the total CPI and almost 40% of the core CPI, and should be keeping overall inflation in check.
•    The Federal Reserve finishes up their two-day policy meeting. There is almost no chance that they will raise the Fed Funds rate from its current 0 to 0.25% range. Economists will be reading the tea leaves in the Fed statement closely for any change in tone that might indicate when the Fed will start tightening again.

Thursday
•    Weekly initial claims for unemployment insurance come out. These have been in a steep downward trend of late, although still at historically high levels. Last week there were 474,000 initial claims -- the first increase in five weeks. 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. Look for a further decline in regular continuing claims from the current level of 5.157 million, offset by a smaller rise in the extended claims which now total 4.586 million.
•    The Index of Leading Economic Indicators is expected to post a gain of 0.7% following a 0.3% gain last month.

Friday
•    No reports of any significance.


Potential Positive Surprises

Historically, the best indicators of firms which are 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:

Federal Express (FDX - Free Report) is expected to post EPS of  $1.06, down from $1.58 last year. That low expectation sets it up for a positive surprise.  Last time out they just met expectations, but the stock holds a coveted Zacks Rank #1 and over the last month the expectations for the about-to-be-reported quarter have jumped by 25.7%. 

General Mills (GIS - Free Report) is expected to report EPS of $1.45 vs. $1.36 a year ago. The mean estimate for the quarter has edged up by 0.8% over the last month and last time out the company posted a positive surprise of 24.3%. The stock holds a Zacks Rank of 2.

Joy Global (JOYG), the maker of mining machines, is expected to see EPS drop to $1.01 from $1.23 last year. However, last time out it posted a 26% positive surprise and the estimates for this quarter have edged up by 0.8% over the last month. The stock holds a Zacks Rank of 2.

Potential Negative Surprises

In keeping with the overall very positive tone of this earnings season, the potential negative firms are less clear cut. However:

Applied Signal (APSG) is expected to post EPS of $0.24 a share, up from $0.20 a year ago. Last time they disappointed by 3.85%. The mean estimate for the quarter is down 0.9% over the last month and the stock has a weak Zacks Rank of 4.

Earnings Calendar

Company Stock Zacks
Estimate
Year Ago
EPS
Last
Qtr
Surprise
Date Time Price
Brt Realty Trst BRT -0.39 $0.20 N/A 12/14/2009 AMC $4.58
Global Crossing GLBC -0.66 ($1.26) -92.19% 12/14/2009 $11.98
Intl Asset Hldg IAAC 0.38 ($0.01) N/A 12/14/2009 AMC $15.50
Verifone Hldgs PAY 0.2 $0.19 53.85% 12/14/2009 AMC $14.19
Steak N Shake SNS 0.12 ($0.18) 116.67% 12/14/2009 AMC $11.49
Adobe Systems ADBE 0.31 $0.54 0.00% 12/15/2009 AMC $35.80
Aar Corp AIR 0.31 $0.49 8.00% 12/15/2009 AMC $19.74
Best Buy BBY 0.42 $0.35 -11.90% 12/15/2009 BTO $43.21
Emcore Corp EMKR -0.12 ($0.30) 35.71% 12/15/2009 AMC $0.93
Factset Resh FDS 0.74 $0.70 1.37% 12/15/2009 BTO $75.04
Rentech Inc RTK -0.01 ($0.03) 214.29% 12/15/2009 $1.69
Wpcs Intl Inc WPCS 0.08 $0.05 500.00% 12/15/2009 AMC $3.01
Apogee Entrprs APOG 0.22 $0.58 84.00% 12/16/2009 AMC $13.90
Hovnanian Entrp HOV -1.49 ($5.79) -48.13% 12/16/2009 AMC $3.65
Joy Global Inc JOYG 1.01 $1.23 26.04% 12/16/2009 BTO $52.14
Martek Bioscs MATK 0.33 $0.27 3.85% 12/16/2009 AMC $17.09
Herman Miller MLHR 0.19 $0.60 15.79% 12/16/2009 AMC $16.25
Nordson Corp NDSN 0.88 $1.00 44.90% 12/16/2009 AMC $54.86
Paychex Inc PAYX 0.33 $0.39 0.00% 12/16/2009 AMC $31.84
Accenture Plc ACN 0.65 $0.74 0.00% 12/17/2009 AMC $42.68
Appld Signal APSG 0.24 $0.20 -3.85% 12/17/2009 AMC $20.49
Actuant Corp ATU 0.16 $0.45 12.50% 12/17/2009 BTO $16.92
Discover Fin Sv DFS 0.15 ($0.19) 500.00% 12/17/2009 BTO $15.60
Darden Restrnt DRI 0.42 $0.44 3.08% 12/17/2009 AMC $32.13
Fedex Corp (FDX - Free Report) 1.06 $1.58 0.00% 12/17/2009 BTO $88.04
Genl Mills (GIS - Free Report) 1.45 $1.36 24.27% 12/17/2009 BTO $68.73
Marcus Corp MCS 0.08 $0.08 -2.86% 12/17/2009 BTO $12.79
Nike Inc-B (NKE - Free Report) 0.71 $0.80 7.07% 12/17/2009 AMC $62.70
Oracle Corp ORCL 0.35 $0.34 0.00% 12/17/2009 AMC $22.59
Palm Inc PALM -0.41 ($0.78) 18.18% 12/17/2009 AMC $12.17
Pier 1 Imports PIR -0.03 ($0.41) 13.64% 12/17/2009 BTO $4.63
Rite Aid Corp RAD -0.18 ($0.17) 6.67% 12/17/2009 BTO $1.31
Research In Mot RIMM 1.04 $0.83 3.00% 12/17/2009 AMC $65.80
Steelcase Inc SCS 0 $0.03 -200.00% 12/17/2009 AMC $5.88
Smart Modular SMOD 0.05 $0.02 100.00% 12/17/2009 AMC $4.97
Winnebago WGO -0.07 ($0.33) 17.39% 12/17/2009 BTO $10.49
Carmax Gp (Cc) KMX 0.12 ($0.10) 161.11% 12/18/2009 BTO $20.60
Neogen Corp NEOG 0.29 $0.26 11.54% 12/18/2009 BTO $32.34
Rosetta Genomic ROSG -0.25 ($0.25) -86.67% 12/18/2009 BTO $2.15
Stewart Entrp A STEI 0.06 ($0.39) -25.00% 12/18/2009 BTO $4.99

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.



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