Three Earnings Reports to Rule the Market This Week (HD, DELL, WMT, TGT, SHLD, LOW, HPQ, AAPL)

Earnings season may feel over, but this week is going to be riddled with key earnings reports that can move the market or move their sectors.  The key earnings are all hitting on Tuesday: Home Depot Inc. (NYSE: HD); Wal-Mart Stores Inc. (NYSE: WMT); and Dell Inc. (NASDAQ: DELL). 

We have given some earnings previews containing the Thomson Reuters consensus estimates for the past quarter and the current quarter which will be reported on in about three months.  We have also added in some color on each as well as consensus price targets and what to look for elsewhere after each report.

Home Depot Inc. (NYSE: HD) reports on Tuesday morning and this is on the heels of a positive reception from what really looked like a lackluster report from Lowe’s Companies, Inc. (NYSE: LOW) if you were just looking at the past reports as a comparison.

Thomson Reuters has estimates for the home improvement retail giant of $0.58 EPS and $17.1 billion in revenues; next quarter estimates are $0.40 EPS and $15.5 billion in revenue.  Shares trade around $38.50, its 52-week trading range is $28.13 to $39.38 and the consensus price target from Thomson Reuters is listed as $39.81.

All that can really be said is that Home Depot faces an incredibly poor housing market and a softening retail sales growth.  The company has only had one major storm in about three years now as well that would have contributed a significant amount to earnings.  And to top it off, shares are close to a cycle peak despite the negative headwinds.

Wal-Mart Stores Inc. (NYSE: WMT) is also reporting early on Tuesday morning.  Wal-Mart has become a bit of a conundrum.  If it is doing well, perhaps it is at the expense of other major retail chains like Target Corporation (NYSE: TGT) and Sears Holdings Inc. (NASDAQ: SHLD) because this represents that trade-down economy.

Thomson Reuters has estimates for the nation’s largest private sector employer and retailer of $0.98 EPS and $107.98 billion in revenues; next quarter estimates are $1.45 EPS and $122.63 billion in revenue.  Shares trade around $58.60, its 52-week trading range is $48.31 to $59.40 and the consensus price target from Thomson Reuters is listed as $59.95.

Wal-Mart is not the first retailer to report earnings this week but it is the Big Kahuna of the retail sector.  We will look for secondary action in the discounters, big box stores, and the dollar stores depending upon what the company reports.  It has been hard to ignore that shares are back up close to that cycle-peak of $60… Maybe this time is different but Wal-Mart holders have done well by selling when shares get to $60 or so and waiting for a cheaper buy-in.  Again, maybe this time is different.  Shares trade at 13-times this year’s expected earnings and trade at 12-times next year’s expected earnings.

Dell Inc. (NASDAQ: DELL) reports on Tuesday afternoon and DJIA-component Hewlett-Packard Co. (NYSE: HPQ) is the one where investors are going to look for a boost or a drop now that the mixed-up company’s identity crisis will now include its PC unit in the future. 

Thomson Reuters has estimates for the PC-maker of $0.47 EPS and $15.65 billion in revenues; next quarter estimates are $0.46 EPS and $16.25 billion in revenue.  Shares trade around $15.35, its 52-week trading range is $12.99 to $17.60 and the consensus price target from Thomson Reuters is listed as $17.56.

Dell is a company which just can’t get any respect.  The competition from H-P was one thing, but the rise and dominance of Apple Inc. (NASDAQ: AAPL) has been a perpetual thorn in its side.  The problem is that being a PC-maker is like being in the toaster and refrigerator business.  That is why Dell is adding more datacenter, systems, and consulting to its mix each quarter.  The company has also been beating expectations and it trades at a mere 8-times expected earnings.  The recipe that is missing is a dividend, and our take is that the weakness in Apple after the death of Steve Jobs is a chance for Apple to regain some of its lost love.

JON C. OGG