Wednesday, October 12
ADTRAN Inc. (NASDAQ: ADTN) might not seem like a market mover, but this is the first telecom and communications equipment provider we will have seen in weeks. It could be a sector-mover even though it won’t be a market-mover. Estimates are $0.56 EPS and $189.44 million in revenue; next quarter estimates are $0.53 EPS and $184.8 million in revenue. With shares close to $28.50, the 52-week range is $25.46
to $47.70 and this peaked around $42 in early July. This may feel like the tail wagging the dog, but we would watch Tellabs Inc. (NASDAQ: TLAB) and CIENA Corp. (NASDAQ: CIEN) on the news.
Host Hotels and Resorts Inc. (NYSE: HST) is going to be the first hotel chain to report this earnings season. Estimates are $0.16 EPS and $1.13 billion in revenue; next quarter estimates are $0.33 EPS and $1.68 billion in revenue. With shares just under $11.00 on Friday, the 52-week range is $9.78 to $19.88 and shares were above $17 at the start of July. We would watch Marriott International, Inc. (NYSE: MAR) and Choice Hotels International Inc. (NYSE: CHH) among other hotel chain owners on the news.
Pepsico Inc. (NYSE: PEP) has not lived up to its true defensive nature of late. Estimates are $1.30 EPS and $17.27 billion in revenue; next quarter estimates are $1.16 EPS and $20.47 billion in revenue. With shares around $61.00, the 52-week range is $58.50 to $71.89 and shares were trading above $70 as recently as July. The most obvious player to watch is The Coca-Cola Company (NYSE: KO).
Thursday, October 13
Google Inc. (NASDAQ: GOOG) is going to tell us whether internet search and online advertising are in trouble or not. Always remember that revenues to be used ar ex-TAC to remove traffic acquisitions costs, but we want to stress that the Motorola buy is a game-changer for what lies ahead. Estimates are $8.74 EPS and $7.19 billion in revenue; next quarter estimates are $10.05 EPS and $8.1 billion in revenue. Shares have recently recovered and the stock is back around $515.00. The 52-week range is $473.02 to $642.96 and Google peaked around $620 in July. Analysts still have an upside target of about $723.00.
J B Hunt Transport Services Inc. (NASDAQ: JBHT) will be the first trucking transport company to report this month. It will not really be a market mover but can influence its peers. Estimates are $0.57 EPS and $1.17 billion in revenue; next quarter estimates are $0.59 EPS and $1.2 billion in revenue. With shares around $37.75, the 52-week range is $34.42 to $49.12 and this stock was around $48 in early July. This is the first of the truckers to report so we would watch companies like Landstar System, Inc. (NASDAQ: LSTR) and might even look at railroads.
JPMorgan Chase & Co. (NYSE: JPM) is going to set the tone for the banks, but then the banks will have to act on their own after each report as Jamie Dimon is considered the safe-harbor. Estimates are $0.96 EPS and $23.73 billion in revenue; next quarter estimates are $1.13 EPS and $24.66 billion in revenue. With shares around $31.25 on Friday, the 52-week range is $27.85 to $48.36 and analysts still have a price target above $49.00. Shares were above $42 in late-July before the sell-off killed it. We would look for the secondary effect to be for traders to look at Wells Fargo & Company (NYSE: WFC), Citigroup, Inc. (NYSE: C), and Bank of America Corporation (NYSE: BAC).
Safeway Inc. (NYSE: SWY) will be the first of the normal grocers and we would watch Kroger Co. (NYSE: KR) after the Safeway report. Estimates for Safeway are $0.35 EPS and $9.84 billion in revenue; next quarter estimates are $0.64 EPS and $13.28 billion in revenue. With shares around $17.50 on Friday, the 52-week range is $15.93 to $25.43 and shares were as high as $24 as recently as late-July.
Friday, October 14
Mattel Inc. (NASDAQ: MAT) is the first of the two toy giants to report this earnings season. Estimates are $0.86 EPS and $1.97 billion in revenue; next quarter estimates for the big money quarter are $1.02 EPS and $2.23 billion in revenue. With shares around $26.65, the 52-week range is $22.01 to $28.49. This is one of the few that have not been pounded down as much, but rival Hasbro Inc. (NASDAQ: HAS) has been pounded down from highs. Shares did fall from $28 in early July to about $23 in August, but the stock has recovered.
Key Takeaways and Observations
We have several takeaways here. The markets remain headline-sensitive to international market pressures. The verdict is still out on whether or not we are going back into a recession or whether we are just going to be in a period of slow growth. Many companies have talked down their numbers and expectations have been lowered. It is a debate over whether estimates have come down by enough or not yet.
The areas to look for over the next week and the week after that are the companies that manage to stay positive and which say that their business remains strong. Many companies have said business is better than the headlines would lead you to believe, but many companies have also issued warnings.
So many of these stocks have been beaten up. Our issue to date is that the markets remain with a negative bias even though this week brought a bounce. The pessimism remains that China is still weak and that Europe is holding the financial markets hostage. Stocks are cheap, particularly the leaders, but right now investors just aren’t willing to offer any premium valuations for stocks. The valuations are actually being discounted.
JON C. OGG
