Complete Preparation for Panasonic's May 6 Earnings Announcement (PC)

Panasonic

is set to release its Q1 earnings report before the market open tomorrow, May 6th. Panasonic has been affected by a number of factors in recent months. On April 28th, Panasonic announced that it would layoff 17,000 workers. The layoffs will take place over the next two years and will reduce Panasonic's workforce by 4%. Most of the layoffs will occur outside of Japan, where the company is headquartered. The reduction in workforce is part of Panasonic's larger restructuring plan. The company recently announced a loss of nearly $500 million due to its restructuring plan. Panasonic has also cited a strong Yen as a catalyst for the company's pains. Panasonic, being primarily an exporter, has been hurt by the recent spike in the value of the Yen, increasing the costs of its electronics in foreign markets. Back in March, the Yen hit its highest level against the U.S. dollar since the Second World War at a rate of nearly 80 Yen to a single U.S. dollar. The Japanese central bank has consciously worked to weaken the Yen in the weeks following the currency's strong rally. However, since the beginning of the April, the Yen has begun to trend upward and appears to be on the way to reaching the highs of last March. The CurrencyShares Japanese Yen ETF

is a U.S.-traded security that roughly tracks the value of the yen. At last check, the year-to-date performance of this fund has been +1.1%. The increase in the value of the Yen coincided with the recent disasters on the east coast of the country. Panasonic cites the tsunami and subsequent nuclear issues as contributing to tightening profitability. The natural disasters in Japan have been widely attributed as an explanation for the strong selloff the Nikkei 225 experienced in mid-March. Although the Nikkei 225 has rallied back since, it is still below its yearly high. Like the Nikkei 225, Panasonic underwent a sharp decline in mid-March and has rallied back. Despite the factors currently affecting Panasonic, one analyst put a rating of “strong buy” on the stock. Analysts have pegged an earnings estimate of $0.54 and a P/E ratio of $22.93 which is roughly the same as the sector average of $22.91. The bullish outlook for Panasonic could be aligned with the belief that Japanese stocks continue to be undervalued.