The Big Earnings to Follow This Week

Lee is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

A huge week for earnings as the season gets into full flow. I’m going to highlight some of the more interesting reports and what investors should be looking for. It’s a great time to start researching companies and I hope these primers are useful for investors to accelerate the process of doing so.


Citigroup, Gannett and Charles Schwab

Monday sees Citigroup, Gannett and Charles Schwab give results. Citigroup’s importance is obvious but I think Gannett is more interesting as a bellwether for the US economy. Media ad publishing are highly cyclical industries and any sign of an upturn will be gratefully received.


Coca-Cola, Domino’s Pizza and Fortinet

Tuesday will be an extremely busy day. Coca-Cola will give results and I think they could be interesting. There are some small signs that the North American beverage sector has stabilized (Alcoa suggested beverage can packaging was getting better) so don’t be surprised if it gives good results. Similarly keep an eye on Domino’s Pizza results. It usually looks for retail same store sales growth in North America to be in the 1-3% range and anything to the upper end may signify strength.

IT security company Fortinet (NASDAQ: FTNT) gives results and this will be the first set of earnings without the former CFO. Frankly I don’t think it’s a big deal in the long term but I guess some investors will look out for a new style of earnings presentation and perhaps the analyst response.  In the end, no one buys an IT security solution because they like the accounting policy of the CFO.The company has been performing very well recently but it is highly volatile over results so be aware.

Investors should be looking out for growth in deferred revenues and listen to the commentary to see if it is winning more market share in the mid-market. Another thing to look out for is margin expansion because typically it tends to be a bit low compared to the rest of the industry.


Technology Titan Tuesday

It’s also a big day for technology as the likes of Cree, IBM and Intel (NASDAQ: INTC) will all give results. The interest in Cree will come from how its lighting sales are coming back now that the agent issue has been resolved and whether it can increase gross margins in line with its plans. 

As ever with IBM, there is a huge amount of industry data to be gleaned but I am looking out for what it says about big data and storage in particular. Intel has already lowered full year estimates with a pretty poor statement but everyone will be focused around its commentary on any prospective upturn in demand coming from Windows 8.  In addition investors will be highly focused on its inventory position as there appears  I think the likelihood is that things will get worse before they get better with semiconductors. We shall see.


Tuesday’s Health Care Highlights

Healthcare will also be a big focus as Johnson & Johnson (NYSE: JNJ) and Intuitive Surgical (NASDAQ: ISRG) both give results. The focus with JNJ will be on internal execution. Look out for commentary on the Synthes integration and whether it can get consumer products sales growth going again. In particular women’s health and nutritional sales are going well for competitors and I expect JNJ to get back on track here. Pharmaceuticals are doing fine but investors should look for better performance in medical devices. 

As for Intuitive Surgical, it is anyone’s guess what it will report. The decline after the last set of results is a salutary lesson into what happens when highly rated growth stocks disappoint. The Da Vinci surgical robot is a wonderful tool but the challenge is to extend its common usage beyond a limited level of surgical procedures. I’m interested in how Intuitive night try to increase penetration with general surgeons who perform all sorts of different operations because that is where the growth could really accelerate.


Wednesday’s Eclectic Mix

A real mixed bag of companies will report on Wednesday. American Express is going to update on the state of the lending in the US and I expect some good results here following good news from Discover Financial recently. Abbott Labs (NYSE: ABT) is interesting because increases in doctor visits might feed through into its diagnostics results. In addition branded generics and nutrition are pretty good sectors to be in right now. So I expect good results from the future Abbott Labs side while the future Abbvie side (pharma and biologics) needs to start outlining a clear pathway to not relying so much on its blockbuster rheumatoid arthritis treatment Humira.

Three other very interesting companies report and all begin with ‘C’ namely Core Labs , Check Point Software and Crown Holdings.  Core Labs is a great company that helps oil majors extract the last, most expensive, bit of reserves from their fields. As such it is a great play on strong oil prices. Unfortunately falling oil prices and North American rig counts have taken their toll on the stock but for those convinced of a long term oil boom then now could be a good entry point.  

Check Point investors should be focusing on the overall growth in revenues and deferred revenues generated from software sales. Unfortunately some market commentators have got fixated on its slowing product sales even though the company’s strategy is to shift towards software. Crown Holdings is very interesting. If you think that food and consumer staples are safe industries then why not also like the companies that package their products?


Eaton Corp, Iron Mountain, Mastercard and Ralph Lauren

In the light of less than stellar results and outlook from Alcoa the earnings from Eaton Corp on Thursday should be approached with a bit of caution. Iron Mountain has been strong recently on the back of its conversion to a real estate investment trust (REIT) and Mastercard will follow on from Amex in reporting on transactions and credit condition in the US. Again, I would expect some good news here. Last but not least is Ralph Lauren which will be an intriguing report. Michael Kors has been very strong lately and seems to be encroaching on Coach’s market share so it will be interesting to see what Ralph Lauren says.

Dig Deeper

It's been a frustrating path for Microsoft investors, who've watched their company fail to capitalize on the incredible growth in mobile over the past decade. However, with the release of its own tablet, along with the widely anticipated Windows 8 operating system, the company is looking to make a splash in this booming market. In this brand new premium report on Microsoft Fool analysts explain that while the opportunity is huge, the challenges are many. Also provided are regular updates as key events occur, so make sure to claim a copy of this report now by clicking here.

SaintGermain has positions in Check Point Software and Johnson & Johnson. The Motley Fool owns shares of Intel, Intuitive Surgical, and Johnson & Johnson. Motley Fool newsletter services recommend Intel, Intuitive Surgical, and Johnson & Johnson. 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.If you have questions about this post or the Fool’s blog network, click here for information.

blog comments powered by Disqus