Week of December 10: Earnings and Event Preview
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With only fifteen trading days left in the calendar year, there is still plenty of news that can have an impact on investors. Although the bulk of the recent earnings season is behind us, a few notable companies have yet to report. Here are the earnings calls, corporate events, and economic data I’ll be following for the week of December 10, 2012.
Dell (NASDAQ: DELL). The company will be hosting its annual Dell World event on Tuesday, Dec. 11, and Wednesday, Dec. 12, in its hometown of Austin, Texas. The conference is tailored to IT professionals and represents Dell’s renewed effort to grow its enterprise business.
The once-formidable consumer products giant has seen its shares decline more than 28% year-to-date, as Dell continues its transition to focus on medium and large size businesses in the face of continued weakness in its personal computer segment. The situation at Dell appears far less severe than that of its competitor Hewlett-Packard, and the current valuation more than offsets reduced expectations going forward. I feel it remains a possibility for Dell to issue a special dividend before year-end, given the high insider ownership of Chairman and CEO Michael S. Dell.
Hovnanian Enterprises (NYSE: HOV). The beleaguered homebuilder will release fourth quarter and fiscal 2012 earnings before the bell on Thursday, Dec. 13. First Call consensus estimates for Q4 stand at a loss of ($0.06) per share with revenue estimate of $461 million. Despite being saddled with debt, Hovnanian shares have risen an extraordinary 267% year to date on increased belief of a housing rebound. In particular, the company’s new order backlog rose 42% during the third quarter, representing 2,452 homes with a total sales value of $814 million. Chairman and CEO Ara Hovnanian stated on November 2 that the company’s results would meet expectations despite the impact of Hurricane Sandy. For readers considering investment in the homebuilding sector, I recommend purchasing shares in increments and building up your position over time.
Joy Global (NYSE: JOY). The Milwaukee, Wisconsin based manufacturer of mining equipment for the extraction of coal and iron ore will release fourth quarter earnings before the opening bell on Wednesday, Dec. 12. Shares of Joy Global have declined approximately 25% year-to-date as the company faces decreased demand for its mining equipment on a global basis.
First Call consensus estimates for Q4 stand at a profit of $1.91 per share with revenue estimate of $1.42 billion. Management stated at multiple investor conferences in November that it sees signs of stabilization in China, which remains one of the company’s most important growth markets. The company will provide formal guidance for fiscal year 2013 on Wednesday’s conference call, and I expect the overall market reaction to be positive. Furthermore, Joy Global’s leading market position makes it a compelling acquisition target for either a domestic or international buyer, similar to Caterpillar’s acquisition of Bucyrus in November 2010.
Phillips 66 (NYSE: PSX). Shares of this Houston, Texas based refiner began trading on the New York Stock Exchange on May 1, 2012 after its former parent ConocoPhillips decided to complete a divestiture of its downstream segment. The term downstream is used to refer to the oil refining and distribution (selling) business within the petroleum industry. Phillips 66 is holding its inaugural analyst meeting this Thursday, Dec. 13 beginning at 8:30 a.m. in New York, and I recommend that readers buy shares of PSX ahead of the conference.
Unlike its competitors Marathon Petroleum and HollyFrontier, Phillips 66 has significant exposure to natural gas liquids, which should serve the company well based on increased expectations for domestic energy production. Management is also extremely shareholder friendly, recently announcing an increase in its regular dividend and doubling its share repurchase plan. The marketplace seems to recognize the value in Phillips 66, as shares have risen nearly 60% since the IPO in May.
On the economic front, the Federal Reserve will issue its monthly Federal Open Market Committee (FOMC) statement on Tuesday at 2:15 p.m EST. On Thursday, the U.S. Department of Labor will release the Producer Price Index (PPI) for November at 8:30 a.m.
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johnmacris owns shares of Hovnanian Enterprises, Inc. and is long HOV May 4.5 calls. johnmacris is long January 60/62.5 vertical call spreads in Joy Global.The Motley Fool owns shares of Joy Global. 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!