Benzinga Weekly Preview: Europe's Central Banks In The Spotlight

The European Central Bank and the Bank of England are both set to make interest rate decisions next week.

Although both banks are expected to keep rates constant, investors will be watching the ECB expectantly as President Mario Draghi has hinted at using other tools to help spur the region’s recovery and fight falling inflation.

Key Earnings Reports

Next week investors will be waiting for several key earnings reports including FedEx Corporation FDX, Thor Industries, Inc. THO, American Eagle Outfitters AEO, and Big Lots, Inc. BIG.

FedEx Corporation

FedEx is expected to report second quarter EPS of $1.63 on revenue of $11.43 billion, compared to last year’s EPS of $1.39 on revenue of $11.11 billion.

JP Morgan reiterated FedEx with an Overweight rating with a $153.00 price target on November 14.  The firm noted that 13F filings showed that although there was a rise of hedge fund positions in FDX, the size of the positions were quite modest.

“Activist positions are modest…. Earlier this week Dan Loeb of Third Point disclosed he had taken a position in FDX and he had met with FDX Chairman and CEO Fred Smith. As of September 30, Third Point owned a modest 2.0 mm shares or 0.6%. Other high profile hedge funds also established positions in 3QCY13 that were smaller than Third Point including Pointstate, Soros, Paulson, and Eminence. The combined position of all of these funds, along with the 1.3% owned by Perry Capital and 0.5% owned by Highfields, was 4.0% as of September 30, 2013.”

Thor Industries, Inc.

Thor Industries is expected to report first quarter EPS of $0.70 on revenue of $844.74 million, compared to last year’s EPS of $0.58 on revenue of $875.61 million.

Analysts at Wedbush reiterated Thor Industries with an Outperform rating with a $69.00 12 month price target at the beginning of November. The team at Wedbush noted that order backlogs indicate that the company will see stronger growth later this year.

“While Q1 Towables sales were softer than expected, order backlog in Towables accelerated sharply, indicating stronger sales growth to come in upcoming quarters. Total order backlog, a leading indicator for sales in future quarters, rose an impressive 42%, sequentially higher than 32% growth in Q4:13. In Towables, backlog rose a stronger than expected 14%, sharply higher than flat backlog a quarter ago, indicating sales growth in this segment should similarly accelerate in upcoming quarters.”

American Eagle Outfitters

American Eagle is expected to report third quarter EPS of $0.19 on revenue of $846.75 million, compared to last year’s EPS of $0.41 on revenue of $910.37 million.

Goldman Sachs reiterated American Eagle with a Neutral rating with a $17.00 price target at the beginning of November, noting that the company has responded well to stalling consumer spending.

“We are positively surprised by the better performance in 3Q, particularly in light of ANF’s announcement that 3Q comps deteriorated to -14% and gross margins were worse than feared. AEO’s proactive management of the softer consumer backdrop, which included aggressive discounting through August and September, appears to have given them a competitive edge as others took longer to follow suit. AEO mentioned on the 2Q call it had re-assorted 4Q in response to the softer environment, but we do not believe much of that effort benefited 3Q. It may influence the 4Q outcome.”

On November 7, Jefferies took a similar stance and reiterated American Eagle with a Hold rating with a $17.00 price target.

“AEO reported upward revised 3Q EPS guidance, which sends an encouraging signal for a potential turn around in this name. As sales trends become less negative, we think margins have troughed, inventories are controlled and earnings revisions can start to move higher once again. However, we remain on the sidelines until we see more consistent improvement and a more compelling entry point. Maintain Hold, raising PT to $17.”

Big Lots, Inc.

Big Lots is expected to report a third quarter loss of $0.08 per share on revenue of $1.17 billion, compared to last year’s loss of $0.10 per share on revenue of $1.13 billion.

Analysts at Deutsche Bank reiterated Big Lots with a Hold rating with a $38.00 price target on November 12, noting that the company had long term potential.

“After a trip to CA to understand the depth of BIG's recent cooler tests, we believe certain strategic changes could propel a fundamental turnaround at the retailer. To this point, the addition of coolers in conjunction with a store remodel program based on category refinement, an improved marketing strategy, as well the development of an online business, should boost recent stagnant SPSF performance. We remain sidelined for now given ongoing SSS headwinds and a likely multi-year timetable for changes to take hold.”

Economic Releases

PMI data will be in focus next week as several countries will report their manufacturing PMI figures, including the US. US manufacturing PMI likely dropped in November, something that will likely cause taper watchers to push back their estimates for the Fed’s cutback.

Daily Schedule

Monday

• Earnings Releases Expected: FedEx Corporation FDX, Goldmans Stores, Inc. GMAN, Thor Industries, Inc. (NYSE, THO), Krispy Kreme Doughnuts, Inc. KKD, Shoe Carnival, Inc. SCVL
• Economic Releases Expected: Spanish manufacturing PMI, French manufacturing PMI, German manufacturing PMI, eurozone manufacturing PMI, British manufacturing PMI, US ISM manufacturing PMI, Reserve Bank of Australia interest rate decision.

Tuesday

• Earnings Expected From: Bank of Montreal BMO, United Natural Foods, Inc. UNFI, OmniVision Technology, Inc. OVTI, Universal Technical Institute, Inc. UTI
• Economic Releases Expected: Chinese HSBC Services PMI, Australian GDP, Brazilian GDP, eurozone PPI, British construction PMI.

Wednesday

• Earnings Expected From: Christopher & Banks Corporation CBK, Brown Forman Corporation BFB, Express, Inc. EXPR, Avago Technologies AVGO
• Economic Releases Expected: US nonfarm employment change, US trade balance, Canadian trade balance, US new home sales, US ISM non-manufacturing PMI

Thursday

• Earnings Expected From: UTi Worldwide Inc. UTIW, Renesola Ltd. SOL, Royal Bank of Canada RY, Kroger Company KR, Dollar General Corporation DG, Diamond Foods, Inc. DMND
• Economic Releases Expected: US factory orders, French unemployment rate, Bank of England interest rate decision, US GDP

Friday

• Earnings Expected From: Big Lots, Inc. BIG, Bank of Nova Scotia BNS, American Eagle Outfitters AEO
• Economic Releases Expected: French trade balance, Swiss CPI, US non-farm payrolls, US unemployment rate