Earnings Preview: eBay, JPMorgan Chase, and Kinder Morgan Energy
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Earning season is well underway, with the number of S&P 500 companies reporting this week significantly higher than last. The volume of reports increases even further going into the third week of January. Here are three of my favorite 2013 investment ideas that are reporting on Wednesday, January 16.
eBay (NASDAQ: EBAY)
Reports Wednesday, Jan. 16 after close; Consensus $0.61 EPS / Revenue $3.97 B
Shares of eBay have risen less than 1 percent since I published An Unexpected Winner in Mobile Commerce on November 30. My conviction on eBay remains the same as the company is uniquely positioned to benefit from the rise in mobile payments and an increasingly cashless society with its PayPal business.
On Wednesday’s conference call, investors will be hoping to learn more about a recently announced collaboration between NCR (NYSE: NCR) and PayPal. NCR develops the point-of-sale hardware used at various national retailers and has seen its shares rise more than 3% since today's press release. The joint venture, announced earlier this morning on January 15, allows PayPal to dramatically expand its physical retail footprint. In addition, PayPal technology is being tested to allow a tableside ordering system at restaurants.
Management’s guidance for fiscal years 2013 and 2014 will likely affect eBay’s stock price to a greater degree than fourth quarter 2012 results. eBay posted strong comparable-store sales for December, which leads me to believe the company’s market share gains will continue in the New Year.
JPMorgan Chase (NYSE: JPM)
Reports Wednesday, Jan. 16 before open; Consensus $1.20 EPS / Revenue $24.61 B
Investors will be looking to see continued revenue strength within JPMorgan’s investment banking and mortgage businesses in upcoming fourth quarter results. The company’s mortgage banking division reported record production revenue during the third quarter, with originations up 7% compared to the second quarter and 29% year-over-year.
Consensus analyst estimates for 2013 and 2014 have also risen slightly in recent weeks. Moshe Orenbuch, a Credit Suisse analyst which has an Outperform rating and $50.00 price target on JPM, is modeling $5.40 and $5.90 in earnings per share for 2013 and 2014 respectively.
Several news outlets have recently reported that JPMorgan may face regulatory actions in both the U.S. and U.K. related to the bank’s “Whale” trades that took place last year, which resulted in the firm posting a trading loss of $6.2 billion for 2011. JPMorgan’s board of directors is believed to be considering the release of an internal report faulting CEO James Dimon for insufficient oversight related to Whale. Dimon recently stated to reporters at the company’s Annual Healthcare Conference in San Francisco that some top executives “acted like children” and put their personal reputation before the financial interest of the company and its shareholders.
Despite recent mishaps, JPMorgan remains one of the most well-run banks on Wall Street, and the company is an industry leader within most of its business lines. Analysts anticipate that JPMorgan could resume its share buyback plan during 2013, which has been placed on hold since the bank recorded further losses in its chief investment office division.
Also within the financial sector, Goldman Sachs ($3.21 EPS / Revenue $7.48 B) and my personal favorite US Bancorp ($0.75 EPS / Revenue $5.16 B) both report fourth quarter 2012 earnings before the opening bell on Wednesday.
Kinder Morgan Energy Partners LP (NYSE: KMP)
Reports Wednesday, Jan. 16 after close; Consensus $0.66 EPS / Revenue $2.45 B
Shares of Kinder Morgan Energy Partners have risen nearly 12% since I published Income Investing: High Yield Bets on Natural Gas Transportation on December 13. I believe the recent increase in share price can be attributed to a January effect of investors coming back to income equities, after concerns over increased taxes and the fiscal cliff caused large money outflows in late 2012.
Kinder Morgan also completed a secondary equity offering on December 17 at $78.60 per share, which has been visibly well-received. Investors have good clarity going into Wednesday’s fourth quarter 2012 earnings release, as management provided preliminary projections for 2013 during early December. Kinder Morgan Partners expects to declare $5.28 per unit in distributions for 2013, giving the stock a 6.0% forward yield.
General partner Kinder Morgan (NYSE: KMI) and limited partner Kinder Morgan Management also report earnings on Wednesday. Readers should be informed that Kinder Morgan, Inc. is a C corporation and not a master limited partnership, which makes it attractive for investors with specific tax considerations. Kinder Morgan, Inc. also holds the assets from the 2011 acquisition of El Paso Pipeline Partners, which should increase its dividend payout in coming years.
On the economic front, Wednesday, January 16 is chock full of important news releases. The U.S. Bureau of Labor Statistics will be releasing December 2012 Consumer Price Index data at 8:30 a.m. ET. For November, the CPI dropped (0.3) percent based on a significant decline in food and energy costs. Excluding the decline in food and energy, the November CPI rose 0.1 percent.
The Federal Reserve releases its Industrial Production monthly index for December on Wednesday at 9:30 a.m. Production rebounded in November by 1.1 percent, following a (0.7) percent decline for October. The Fed is attributing the initial decline and subsequent rebound in industrial production to the effects of Hurricane Sandy.
Finally, the National Association of Home Builders is releasing its monthly Housing Market Index for January at 10:00 a.m. A reading over 50 for tomorrow’s report indicates more builders describe conditions as positive rather than negative. The index has risen for eight consecutive months through December and currently stands at 47, the highest level attained since April 2006.
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johnmacris has no position in any stocks mentioned. The Motley Fool recommends eBay and Kinder Morgan. The Motley Fool owns shares of eBay, JPMorgan Chase & Co., and Kinder Morgan. 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!