Earnings Not to Miss This Week

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Perusing the scheduled earnings releases for July 18 and July 19, I found some companies from sectors I believe will fare well during the second half of 2013. The results should serve as guidance as to whether my belief is correct. Here's a rundown of what to expect, including the earnings estimate and what supports each firm's numbers.

Commercial aerospace a boon to profits

Reporting on July 19, Rockwell Collins (NYSE: COL) is a manufacturer of communication and aviation electronics for commercial and military customers. The company's second-quarter earnings were likely about $1.16 a share, as compared with $1.14 last year, in accordance with management's guidance of a modest share-net gain for the year. Specifically, it forecasts full-year share earnings at $4.45 to $4.65, versus $4.41 in 2012.

It derives roughly half of its sales and earnings from each of the Commercial and Government sectors; sales to these customer groups likely rose 6% and declined 9%, respectively, in the quarter. Cost containment is assisting the bottom line, as are share buybacks.

Rockwell Collins shares have been a beneficiary of the commercial aircraft market upturn. They'll probably have further momentum, particularly if the military business starts getting better. On that note, it has recently inked a contract with the U.S. Navy and is reporting a strong pipeline of deals. I like the company for its aviation market exposure, given solid June results.

Supermarkets are gaining attention

The agreement between Kroger and Harris Teeter to combine has brought headlines to the grocery store industry of late. This sector has performed well this year, with numerous stocks recently reaching 52-week highs. Safeway (NYSE: SWY), reporting on July 18, should post earnings of about $0.51, representing a penny increase from the prior year.

This outlook coincides with management's target of a slight full-year share-net increase, to between $2.25 and $2.45, as compared with $2.15 last year. The company is realizing modest same-store sales gains. The downside is its sizable debt that may be limiting expansion.

As for Safeway shares, they have gained ground of late, but are still appealing from a valuation standpoint.

Could well benefit from automobile sales surge

Autoliv (NYSE: ALV) is a producer of airbags and other components for autos. It serves many of the major manufacturers. June-quarter earnings may well have met or exceeded last year's $1.39 a share tally, based on modest sales growth and a slightly lower operating margin.

Sales are likely to advance this year due to demand for automotive radars, night vision systems, and cameras, as opposed to its traditional airbags and seat belts. Autoliv's R&D budget is primarily geared toward development of those growth offerings. The company has ample liquidity that should allow it to invest in businesses with favorable sales trends.

Still, these "active safety and associated products" represent only about 3% of total sales. Thus, the shares are mostly a near-term play on the automotive upturn.

An electrical equipment maker entrenched in growing markets

Amphenol (NYSE: APH) makes connectors, assembly systems, and cable for various industries. Its presence in the Wireless Communications, Commercial Aerospace, and Automotive markets may well allow for solid earnings gains in the near-term. In fact, share net probably rose to around $0.94, from $0.86 in the prior year.

In all, based on positive trends in the end markets served, as well as gains from recent acquisitions, Amphenol's profits are on a positive trajectory. The shares are worthwhile for near-term or buy and hold portfolios.


Check out these earnings reports on July 18 (Safeway and Amphenol) and July 19 (Rockwell Collins and Autoliv), as they may signal trends in key industries including automotive, aerospace, and supermarkets.


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Damon Churchwell has no position in any stocks mentioned. The Motley Fool recommends Autoliv. 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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