Market Overview

Earnings Expectations for the Week of January 9


The new earnings season kicks off this week when aluminum producer Alcoa (NYSE: AA) reports fourth-quarter results on Monday. JPMorgan Chase (NYSE: JPM) also is scheduled to post fourth-quarter results this week, and so is homebuilder Lennar (NYSE: LEN). Supermarket chain operator Supervalu (NYSE: SVU) will post its fiscal third-quarter results on Wednesday. Otherwise, the earnings news will be light again this week, offering little distraction from news from Europe and the data on U.S. retail sales and consumer sentiment.


Traders looking to the largest U.S. producer of aluminum for a sign of how the new earnings season may play out may want to buckle up for a bumpy ride. When the New York-based company releases its results Monday afternoon, it is expected to say that earnings tumbled from $0.21 per share a year ago to a net loss of $0.02. That estimate has dropped from a per-share profit of $0.10 just 60 days ago. But for the full year, analysts expect earnings to have risen 28% to $0.75 per share. And note that Alcoa's earnings have topped consensus estimates in four of the past six quarters. Revenues for the fourth quarter are forecast to have increased marginally to $5.7 billion, and to have risen 17.3% for the year to $24.7 billion. Despite a bump of more than 6% in the past week, the share price is more than 43% lower than six months ago. It has not been alone, though, as the stock's performance has been largely in line with that of competitor Aluminum Corp. of China (NYSE: ACH) in that time. (See also: Alcoa Earnings Preview.)


Analysts are looking for this, the first big bank to post fourth-quarter results, to say Friday morning that its per-share earnings declined almost 17% year over year to $0.93. But full-year earnings are forecast to have risen more than 12% to $4.52 per share. Both forecasts have slipped about a nickel per share from 60 days ago. And for the fourth quarter during which the company reported lending $50.03 billion to municipalities and nonprofits in 2011, revenues are expected to total $23.4 billion. That would be a 12.3% decrease from a year ago. But full-year revenues are expected to have fallen only 4.5% to $100.2 billion. Note that analysts have underestimated JPMorgan's earnings in the past ten quarters. Almost all analysts surveyed still recommend buying the stock. The share price is up about 10% in the past 90 days but still more than 18% lower than a year ago. Over the past six months, the stock has outperformed peers Bank of America (NYSE: BAC) and Citigroup (NYSE: C) but underperformed the broader markets.


During the three months that ended in November, this developer and homebuilder announced a $350 million note offering. On Wednesday morning, Lennar is expected to post $0.17 per share earnings and revenues of $913.9 million for that period. That compares to $0.17 per share and $860.1 million in the year-ago quarter. Analysts also expect full-year EPS and revenues to be about the same as in the previous year. Note that Lennar's earnings results have been better than expected in the past eight quarters. The share price has surged about 43% in the past 90 days. And over the past six months, the stock has outperformed competitors KB Homes (NYSE: KBH) and Pulte Group (NYSE: PHM). (See also: Five Stocks for a Real Estate Rebound.)


Analysts predict that this supermarket operator will report that its per-share earnings are about the same as a year ago, or $0.24. In the fiscal third quarter, the Minnesota-based company sold 107 of its fuel centers and opened a distribution center in Lexington, N.C. Revenues for that period are expected to total $8.4 billion, a 2.9% decrease from a year ago. Analysts have underestimated EPS in the past three quarters, but only three of 16 analysts recommend buying the stock. Shares have traded mostly between $7.00 and $8.50 since early October, and the share price is now down more than 11% from six months ago. The stock has underperformed competitors Kroger (NYSE: KR) and Safeway (NYSE: SWY) in that time.

And Others

Other companies scheduled to report quarterly results this week include Acuity Brands (NYSE: AYI), 99 Cents Only Stores (NYSE: NDN), Synnex (NYSE: SNX) and WD-40 (NASDAQ: WDFC). Analysts expect all of them to post year-over-year earnings growth.

The new earnings season picks up steam the following week, when quarterly reports are due from the likes of American Express (NYSE: AXP), Bank of America (NYSE: BAC), Citigroup (NYSE: C), eBay (NASDAQ: EBAY), General Electric (NYSE: GE), Goldman Sachs (NYSE: GS), Intel (NASDAQ: INTC), International Business Machines (NYSE: IBM), Microsoft (NASDAQ: MSFT), Southwest Airlines (NYSE: LUV), Wells Fargo (NYSE: WFC) and many others.

See also: A Look Ahead: Next Week's ETFs to Watch.


Related Articles (AA + ACH)

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