Market Overview

Can Nike Or Pepsi Beat Low Earnings Expectations?

Can Nike Or Pepsi Beat Low Earnings Expectations?
  • Upcoming earnings highlights include the latest results from two consumer goods giants.
  • Consensus Wall Street forecasts see lower earnings from each of them.
  • But only one of them is expected to show some growth on the top line.

In another quiet week on the earnings front, reports from consumer goods giants Nike Inc (NYSE: NKE) and PepsiCo, Inc. (NYSE: PEP) will be highlights. Wall Street expectations for these results appear to be somewhat low, as both have shrinking earnings in their forecasts. A boost to the top line is anticipated from one of them, though.

Wall Street's consensus forecast calls for Nike to post $0.56 in earnings per share (EPS), which would be down more than 16 percent year over year. The athletic footwear, apparel and equipment maker topped consensus EPS forecasts in the past few quarters. Also, the consensus of 232 Estimize respondents calls for a penny more per share than the analysts for the fiscal first quarter.

Estimize narrowly overestimated the revenue in the previous quarter, and this time, respondents are looking for $8.86 billion. That would be around 5 percent higher than a year ago, as well as the highest level of quarterly revenue posted in the past two years. The Wall Street estimate is a tad higher, at $8.88 billion, and so far, the analysts see a year-on-year gain of almost 8 percent in the current quarter.

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When PepsiCo shares its third-quarter results, the Wall Street forecast is that its earnings will have retreated by four cents from a year ago to $1.31 per share, on $15.82 billion in revenue, which would be around a 3 percent decrease. Note that EPS have not fallen short of estimates in the past four quarters. Also note that the analysts so far see a year-over-year increase in EPS for the fourth quarter.

The forecast from 34 Estimize respondents sees earnings from the maker of Cheetos and Gatorade coming in at $1.34 per share. They are a bit more optimistic on revenue too, with a consensus forecast of $15.91 billion for the most recently ended quarter. Note that Estimize overestimated bottom-line results in the previous period.

Nike is scheduled to report its results after the closing bell on Tuesday, while PepsiCo is expected to post its numbers first thing on Thursday.

Other Names

Also this week, the consensus forecasts call for per-share earnings at Accenture, ConAgra Foods, McCormick and Paychex to be higher than a year ago in their reports. Costco EPS are expected be the same as a year ago, while earnings from Carnival will be smaller year over year. And net losses are in the cards for BlackBerry and Pier 1 Imports, if analysts are correct.

The following week, the first in October, keep an eye out for quarterly reports from the likes of Constellation Brands, Darden Restaurants, Micron Technology, Monsanto and Yum Brands. Third-quarter earnings reports don't really begin in earnest until the week after that.

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Disclosure: At the time of this writing, the author had no position in the mentioned equities.

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