Six Key Reports To Kick Off Earnings Season (AA, ADTN, MAR, NG, JPM, WFC, GE, INTC, GOOG)

Forget about your Fourth of July time off! Earnings season is starting this week and it is the tough summer trends that investors have to worry about.  While many  businesses have held up fine as China and BRIC nations’ growth are slowing and as Europe has been in meltdown mode, the concern is what happens this summer.  Some companies have been lowering their earnings and sales expectations, while others are still maintaining that their business is holding up well.

24/7 Wall St. is looking at the few key earnings that investors need to watch this week.  Estimates and consensus targets are from Thomson Reuters and performance and valuation commentary is using data from Finviz.  When you remember the term “Sell in May and go away!” this may perhaps be the most important earnings season of 2012.

Alcoa Inc. (NYSE: AA) is the first DJIA component to report earnings after the close on Monday.  Some investors believe that “As goes Alcoa, as goes earnings season!”  Thomson Reuters has a consensus target of $0.06 EPS versus $0.32 EPS a year ago; revenues are expected to be down almost 12% to $5.81 billion.  Alcoa shares are trading down 0.7% at $8.66 the morning ahead of earnings and the 52-week range is $8.21 to $16.16.  Yep, shares are down almost in half from the highs of the last year. The consensus price target is $11.27 for this stock.  Alcoa is actually barely positive so far in 2012 but it is down over 9% the last quarter.

As far as how the earnings season will perform for stocks, here is what the S&P 500 chart is telling you.

On Wednesday we get ADTRAN Inc. (NASDAQ: ADTN) as the first of the networking equipment solutions providers in technology.  the $1.8 billion market cap would be too small to matter much on its own, but investors try to key off the company’s stance from time to time.  Earnings estimates are $0.35 EPS versus 0.56 EPS a year ago; revenues are expected to be up 3.3% to $190.3 million.  ADTRAN shares are down over 5% so far in 2012 and down about 2.6% over the last quarter. At $27.99 the 52-week range is $25.46 to $42.04. The consensus analyst price target is up at $33.50 here.

Marriott International Inc (NYSE: MAR) reports on Wednesday and if one company can reflect the entire travel sector it is Marriott with a $12.9 billion market value.  At $39.15, it has a 52-week range of $25.49 to $40.45.  Analysts have a price target of about $42.15 on the stock.  Estimates are $0.42 EPS versus $0.37 EPS a year ago; revenue estimates are expecting a drop of more than 4% to $2.84 billion. Marriott shares are holding up rather well with a gain of 35% so far in 2012 and a gain of almost 5% over the last quarter.

NovaGold Resources Inc. (NYSE: NG) reports on Thursday.  This is only worth about $1.6 billion in market value but this Canadian outfit is the first of the gold exploration and development companies to report earnings.  Unfortunately it is too thinly covered to provide any estimates on as a true ‘consensus’ reading.  At $5.70, its 52-week range is $4.98 to $11.77. This gold company is down over 32% so far this year and is down 16% over the last quarter.

On Friday, investors may want to pay attention to key bank earnings if they are superstitious.  This Friday is Friday the 13th and we have the two key banks of J.P. Morgan Chase & Co. (NYSE: JPM) and Wells Fargo & Co. (NYSE: WFC) reporting earnings in the morning hours.  This earnings season is going to show why there was a change in The Safest Banks In America.

J.P. Morgan Chase & Co. (NYSE: JPM) is effectively a total wild card now.  It trades below its book value again due to the multi-billion trading losses from The London Whale.  Estimates are $0.79 EPS versus $1.27 EPS a year ago and revenues are expected to be down 20% to $21.91 billion.  Jamie Dimon’s share performance is actually still up over 4% so far in 2012 but shares are down about 22% over the last quarter due to the huge trading losses under The London Whale. At $33.75, the 52-week range is $27.85 to $46.49.  Analysts still have a price target of about $45.50 on this key bank.  We would caution that shares were at $40.40 in mid-May before the multi-billion loss confession was issued and shares dropped to $36.65 the day after that news.  Some reports show that the loss might go as high as $9 billion, but others are more in the $4 billion to $6 billion range.

Wells Fargo & Co. (NYSE: WFC) is expected to report earnings growth of about 15% to $0.81 EPS on revenue growth of about 4.6% to $21.3 billion.  The premium is due to this outfit not having as much trading exposure under Dodd-Frank and also because it is mostly considered a North American play more than any of the other major money-center banks.  Wells Fargo shares are up about 21% year to date and are down only about 1% or so over the last quarter. At $33.25, its 52-week range is $22.58 to $34.59 and this bank trades at a premium to its book value.  Analysts have a consensus price target of almost $38.00 on this key bank.

Read Also: The 7 Safest Banks in America

Some of the other giants are not yet scheduled which we used to routinely see leading off the flow of earnings each quarter.  Google Inc. (NASDAQ: GOOG) is not yet on the books, and General Electric Co. (NYSE: GE) and Intel Corporation (NASDAQ: INTC) will report earnings next week.

JON C. OGG