Four Companies to Report Earnings that Should be Monitored Closely

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This week will be the first significant period of earnings for the season. Last week there were a couple big name earning releases from companies -- Wells Fargo and Alcoa -- but nothing to the degree of what we’ll see this week. Therefore, I am looking at four of the most important releases of the week, and determining which ones might beat expectations.

eBay (NASDAQ: EBAY)

Online retailer eBay will announce its quarterly results on Wednesday, and is expected to post an EPS of $0.69, compared to $0.48 in the year prior. The stock is currently trading just $1 off its 52-week highs with a P/E ratio of 18.15 and a price/sales of 5.16.

eBay is an industry leader when it comes to margins, and once again margins will be a closely monitored piece of data for the retailer. Furthermore, investors will be listening closely to information surrounding PayPal, as there have been several rumors that the company is planning to expand its presence into new retail stores.

My only concern for this current quarter is that online retailers did see a slowdown during this last holiday season and I am not certain that this slowdown is priced into the stock. Therefore, with a price/sales of 5.16, I think investors might be better served by avoiding this stock until after earnings are released.

Intel (NASDAQ: INTC)

Intel has lost more than 13.5% of its value during the last six months, compared to the Dow Jones’ 5.6% gain. The technology giant has fallen due to fears of a weakening PC market, but I think that all fears might be priced into the stock. The company will announce quarterly results on Thursday, expected to post an EPS of $0.45, compared to $0.65 last year.

We already know that PC sales will be lower, but the data is conflicting. For example, sales of Windows 8 have been disappointing, but hard-disk drive manufacturer Seagate Technology recently announced a major boost in sales. Therefore, some are starting to suggest that demand is rising, and the good news is that Intel is priced at the bottom. As a result, I think Intel could get a nice pop after earnings following a better-than-expected report and good guidance.

General Electric (NYSE: GE)

General Electric has become more of a bank that an industrial powerhouse. According to a recent report, GE Capital accounts for 84% of the company’s liabilities and controls more than 90% of its cash. The company has made some bold moves in the last year to improve its financial positioning, and should benefit from the improvements in the financial sector.

General Electric is another company that is priced cheap, yet has grown at a moderate rate. The company will announce earnings on Friday and is expected to post an EPS of $0.43, and most expect a beat by $0.02. I think that because of the changes occurring at GE, it’s very possible that the company exceeds these expectations and trades higher following its report.

Schlumberger Limited (NYSE: SLB)

Schlumberger is a large cap energy company with single digit growth that has traded relatively flat over the last year. The company is expected to post an EPS of $1.08 when it reports on Friday, which will be $0.02 less than last year. Schlumberger will be one of the first of the large energy companies to report earnings and will be closely watched as a company to lead the sector.

With the stock being fairly priced, and the company already cutting EPS by $0.05, I think it could be a bad start to the energy earnings period. The company said that it encountered weaker than anticipated land activity in the U.S. including a number of contractual delays. While these issues may not affect other energy companies, a bad earnings report will most likely create a temporary loss.

Conclusion

Four of the most closely watched companies in four different sectors will announce earnings this week. Either way, beat or miss, these companies will temporarily impact the trend of their respective industries, and should be monitored as a gauge of economic strength. 


BrianNichols has no position in any stocks mentioned. The Motley Fool recommends eBay and Intel. The Motley Fool owns shares of eBay, General Electric Company, and Intel. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

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