Earnings Expectations for the Week of December 12

Again this week, things will be fairly quiet on the earnings front. Among the week's most high profile quarterly reports are those from Best Buy BBY and Darden Restaurants DRI, which are forecast to post lower per-share earnings, as well as Discover Financial DFS and FedEx FDX, which are expected to report year-over-year earnings growth. Best Buy Best Buy, a bellwether of the consumer economy, saw strong Black Friday results and offered free holiday shipping. When the Minnesota-based consumer electronics retailer announces its fiscal third-quarter results on Tuesday, it is expected to say that earnings fell three cents per share from a year ago to $0.51. Revenues are forecast to be marginally higher to $12.1 billion. And analysts so far anticipate sequential and year-over-year EPS and revenue growth in the current quarter. But Best Buy's earnings have fallen short of consensus estimates in half of the past six quarters. The P/E and PEG ratios are less than the industry average and the return on equity is 19.5%. The share price has risen 29% from the 52-week low in early October. Over the past six months, the stock has underperformed Amazon.com AMZN, Apple AAPL and Walmart WMT. Discover Analysts are looking for this Illinois-based direct banking and payment services company, scheduled to report Thursday, to post per-share earnings that increased 28.9% year over year to $0.90. And for the fourth quarter during which the company redesigned its online shopping portal ShopDiscover, revenues are expected to total $1.8 billion. That would be a 13.7% increase from a year ago. But revenues are so far forecast to be the same in the current quarter. Note that analysts have underestimated Discover's EPS in the past six quarters. And the P/E and PEG ratios are less than the industry average and the return on equity is 28.9%. Shares have traded mostly between $22 and $26 per share since August, but the price is up more than 34% year to date. The stock has underperformed competitors MasterCard MA and Visa V over the past six months. FedEx During the three months that ended in November, this Memphis-based company said it expected a strong holiday season and boosted holiday hiring. On Thursday, the ostensible economic bellwether is expected to post $1.52 per share earnings for the fiscal second quarter. That would be up from $1.16 per share in the year-ago quarter. Revenues are forecast to be up 9.9% to $10.6 billion. And analysts expect similar revenue growth in the current quarter as well. FedEx narrowly topped analysts' earnings estimates in the past two quarters, but missed in the previous three. Its long-term EPS growth forecast is 15.8% and the PEG ratio is 0.8. Shares are down about 10% year to date and have faced resistance around $85 per share since late October. Over the past six months, the stock's performance has been in line with the S&P 500 but it has underperformed competitor United Parcel Service UPS. Darden Restaurants The consensus forecast for Darden Restaurants, which operates the Red Lobster and Olive Garden chains, calls for $0.48 per share earnings in Friday's report. That is down from $0.54 in the fiscal second quarter of last year. But revenues are expected to have risen 5.8% to $1.8 billion for the quarter in which it announced it would acquire the Eddie V's Prime Seafood and Wildfish Seafood Grille restaurant brands. Darden's earnings have not fallen short of analysts' estimates in the past five quarters. The long-term EPS growth forecast is 12.4% and the return on equity is 25.0%. Shares are trading about three bucks (or 7%) north of the 52-week low after falling about 9% in the past week. Because of that pullback, the stock has underperformed competitors Brinker International EAT and DineEquity DIN over the past six months. And Others Other companies expected to post year-over-year earnings growth this week include Accenture ACN, Adobe Systems ADBE, Biglari BH, Diamond Foods DMND, FactSet Research FDS, Nordson NDSN, Pantry PTRY, Pier 1 Imports PIR, Scholastic SCHL and Verifone PAY. Lower earnings are forecast for Winnebago WGO, while net losses are expected from Hovnanian Enterprises HOV, Imperial Sugar IPSU and Rite Aid RAD.