Barron's: Whose Earnings Estimates Are Safe?

An article in

suggests that analysts will lower their 2013 earnings estimates in coming weeks. Earnings for the Standard & Poor's 500 stock index are projected to rise 13% next year, but there is little evidence to support such acceleration. For the recently ended third quarter, S&P 500 earnings are projected to have declined year-over-year for the first time since 2009. Cautious investors can avoid unwelcome surprises by favoring companies with earnings estimates that look safe. The article focused on four companies that recently have seen a modest increase in 2013 earnings and revenue forecasts, appear to be reasonably priced, based on earnings, and pay a dividend. They are Cisco Systems

, CVS Caremark (NYSE CVS), U.S. Bancorp

and Walmart

.

This networking-equipment maker beat profit and revenue estimates last quarter and raised its dividend 75 percent. The forecasts for the current quarter and full year call for modest earnings per share (EPS) and revenue growth. The dividend yield is about three percent and the long-term EPS growth forecast is less than nine percent. The return on equity is more than 16 percent. Of 47 analysts surveyed by Thomson/First Call, 29 of them recommend buying shares. The mean price target, or where analysts expect the share price to go, is more than 13 percent higher than the current share price, a level it has not seen since early 2011. Shares have traded mostly between $18.50 and $19.50 since mid August, but over the past six months, the stock has outperformed competitors Alcatel-Lucent

and Juniper Networks

.

A contract dispute between competitor Walgreen

and plan manager Express Scripts

sent some customers to CVS, which saw its revenue rise 16 percent last quarter. Double-digit percentage growth is predicted for both EPS and sales in the current quarter and in the full year. EPS are expected to increase more than 12 percent over the next five years. The price-to-earnings (P/E) ratio is lower than the industry average. The dividend yield is currently about 1.3 percent. Twenty-two of 25 analysts rate the shares at Buy or Strong Buy; none recommend selling them. Analysts feel the stock has some room to grow, as their mean price target is almost eight percent higher than the current share price. That would be an all-time high. Shares are now trading near the 52-week high after rising more than 17 percent year-to-date. The stock has outperformed rival Walgreen and the S&P 500 over the past six months

This Minneapolis-based financial company navigated the financial crisis of 2008 and 2009 without posting a quarterly loss. Analysts have underestimated U.S. Bancorp's EPS in the past nine quarters. For the current quarter and the full year they expect to see double-digit percentage growth of EPS and more modest growth in revenues. The dividend yield is more than two percent and the long-term EPS growth forecast is almost eight percent. The return on equity is more than 16 percent. But only 14 of 34 analysts surveyed recommend buying shares, and their mean price target is less than four percent higher than the current share price. That share price is more than 26 percent higher than at the beginning of the year and reached a 52-week high on Friday. Over the past six months, the stock has outperformed those of larger competitors Bank of America

and Wells Fargo

.

The largest retailer in the world reported a 4.5 percent revenue gain last quarter, including more than two percent growth at longstanding U.S. stores. Analysts expect to see modest EPS and revenue growth for the current quarter and full year. The dividend yield is about two percent. The long-term EPS growth forecast is almost nine percent and the return on equity is more than 23 percent. Eleven of the 28 analysts polled recommend buying shares. But the upside potential, based on the analysts' mean price target, is less than three percent. The share price reached a 52-week high on Friday after rising more than 24 percent year to date. The stock has outperformed such competitors as Costco Wholesale

and Target

, as well as the S&P 500, over the past six months.