Earnings season has mostly wound down, but as always at least some major companies are reporting earnings. Some are actually market-movers as well and it is a short week with earnings out only Monday and Tuesday, with a few on Wednesday. On deck are Hewlett-Packard Company (NYSE: HPQ), Tyson Foods Inc. (NYSE: TSN), Campbell Soup Co. (NYSE: CPB), LDK Solar Co. Ltd. (NYSE: LDK), Tech Data Corp. (NASDAQ: TECD), Barnes & Noble, Inc. (NYSE: BKS), Borders Group, Inc. (NYSE: BGP), J. Crew Group, Inc. (NYSE: JCG), Dollar Tree Inc. (NASDAQ: DLTR), and Deere & Co. (NYSE: DE).
We have included estimates from Thomson Reuters, relative data on peers and recent developments, and relative performance on each where it was applicable.
The biggest on Monday is Hewlett-Packard Company (NYSE: HPQ) in the PC and It services sector. We would note that estimates may have just been unofficially guided down after Dell’s rotten quarter, but we already have recent guidance from H-P. Thomson Reuters has estimates of $1.13 EPS and $30.36 billion in revenues. Estimates for next quarter are $1.04 EPS and $29.7 billion in revenues. We are going to hold off on most data going into H-P earnings at least before Monday morning because of last-minute estimate changes based on Dell. We would note that some of Dell’s woes are due to H-P, and then the Acer netbook and whatever you want to tie into Apple’s gains. H-P is also really marginalized about what it says Monday because it already lifted guidance when it announced its buyout of 3Com (NASDAQ: COMS).
Tyson Foods Inc. (NYSE: TSN) is on deck Monday. This may not seem important, but it is to the meat and food supplier companies. Estimates are $0.26 EPS and $6.89 billion in revenues, and next quarter estimates are $0.15 EPS and $6.59 billion in revenues. As a producer of chicken, beef, pork, and prepared foods, it will be interesting to see if the H1N1 fears by the public have finally worked themselves out. The company just named a new CEO this week, which always makes for a wild card report or conference call.
Campbell Soup Co. (NYSE: CPB) has finally gotten off the floor after not participating in the rally. At $34.13, its 52-week trading is $24.63 to $37.58. Estimates are $0.81 EPS and $2.28 billion in revenues. The big question here is what the company sees ahead for off-brand and private-label competition from grocery stores looking for more of the profits to stay in their pockets. It turns out that Campbell Soup is not recession-proof and has some aspects of a luxury brand when it comes to pinching pennies. Interestingly enough, this one just raised its dividend by 10%.
LDK Solar Co. Ltd. (NYSE: LDK) is also on deck Monday, and by now may just be a me-too solar earnings report. It is a loser too as estimates are -$0.10 EPS and $277.2 in revenues. Next quarter is expected to show -$0.05 EPS and $258.7 million in revenues.
Tech Data Corp. (NASDAQ: TECD) is often overlooked as a key company, but the company offers a broad insight on what is happening in the world of technology products as it gets all the goods from the factories to the end retailers around the globe. Estimates are $0.70 EPS and $5.31 billion in revenues, and next quarter estimates are $0.82 EPS and $5.63 billion in revenues. At just under 15-times expected Jan-2010 fiscal earnings, this isn’t expensive, but the performance is high: At $42.08 this one has a 52-week trading range of $14.14 to $44.63. We’d watch Ingram Micro (NYSE: IM) for a chaser move either way.
We have the big book earnings war on Tuesday with both Barnes & Noble, Inc. (NYSE: BKS) and Borders Group, Inc. (NYSE: BGP) and we’d be sure to make note that these are thinly followed compared to most big retailers. Barnes & Noble is expected to post -$0.33 EPS and $1.16 billion, but the coming holiday quarter estimates are $1.52 EPS and $2.18 billion in revenues. Borders Group, Inc. (NYSE: BGP) is expected to post -$0.46 EPS and $630 million in revenues, and the coming important holiday quarter is expected to be $0.92 EPS and $987.9 million in revenues. While both stocks are up significantly from the lows, neither stock is anywhere close to being a top performer and neither is close to 52-week highs. There is a move to digital books on e-readers and online pure-plays for selling books or readers buying at Costco, Wal-Mart, and elsewhere. And dare we say… Most Americans do not read books anymore anyway. It looks like there are fresh reports that the Nook e-reader from Barnes & Noble is also getting delayed and might not make the Christmas deadline… a win for Amazon and the Kindle.
J. Crew Group, Inc. (NYSE: JCG) is far from a systemic stock, but it will be all over the media when it reports on Tuesday because of the Obama effect. Michelle Obama has been a boom for J. Crew… to the point that you can’t not notice the premium valuations over other clothing retailers. Estimates are $0.58 EPS and $407.99 million in revenues, and the estimates for the ever-important holiday season are $0.40 EPS and $435.48 million in revenues. As far as how this translates to forward numbers, J. Crew trades after a 1.6% drop today to $40.45 at over 25-times the $1.60 EPS estimate for Jan-2010 FY and trades at 21-times the $1.93 EPS estimate for Jan-2011 FY. With a $40.45, it is also at the top of the $8.02 to $44.29 trading range over the last 52-weeks. This stock was at $50.00 briefly in early 2008 and above $50.00 in 2007 before the great bear market came to town before Santa.
Dollar Tree Inc. (NASDAQ: DLTR) is also on deck Tuesday, and this can influence all the other dollar stores. By now you have figured out that dollar stores were the winner in the trade-down economy during the recession. Estimates are $0.66 EPS on $1.24 billion in revenues. The coming holiday quarter estimates are $1.35 EPS and $1.53 billion in revenues. At $48.70 today, its 52-week trading range is $27.61 to $51.72. That being said, there is little else to watch except for keeping an eye on Dollar General (NYSE: DG), 99 Cents Only Stores (NYSE: NDN), and Family Dollar Stores Inc. (NYSE: FDO).
Deere & Co. (NYSE: DE) has already recovered handily to the point that it is close to 52-week highs. It reports Wednesday morning, right before everyone disappears to go eat Turkey with their families in America. Estimates are $0.03 EPS and $4.44 billion in revenues. Next quarter estimates are $0.23 EPS and $4.06 billion. At $50.00, it is at the top of the $24.51 to $52.28 trading range over the last 52-weeks. Deere has already announced that it was recalling 452 laid off workers for an Iowa plant, so it would be a shock if suddenly the company announced that business was rolling back over hard. We will be hoping for raised guidance for its fiscal October-2010 because the $2.68 estimate above the $2.61 EPS estimate for fiscal October-2009, but more importantly because that is 18.6-times forward earnings. Anything short of raised guidance, by a handy amount, will be a disappointment to us.
We will follow-up on some of these each day next week with much more detailed earnings previews and some earnings reports in the key names.
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JON C. OGG
NOVEMBER 19, 2009