This Week's Key Earnings
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This week is definitely the week when beautiful earnings instinctively flock like the salmon of Capistrano. It is such a big week that it’s hard to keep track on all the companies reporting. I’m going to pick out some that are of interest to me and explain why in the context of what they say about the economy and other stocks prospects. I've linked extensively to previous articles so investors can prime themselves in more detail for the results.
A relatively quiet opening to the week but there are still some interesting things happening. Hasbro will give results but my focus in retail will be with VF Corp of which I have discussed at length here. Investors need to look out for how its substantive European operations are working and in particular the performance of Timberland and jeanswear within China. The semiconductor industry is going to get an update on conditions when Texas Instruments gives results and after Cree buoyed the LED sector with its results it will be the turn of LED capital machinery play Veeco Instruments to report.
Industrial bellwether 3M gives results on Tuesday and its geographic commentary will speak volumes for global manufacturing prospects. A trio of aerospace stocks will report with BE Aerospace, Hexcel, and Ametek giving numbers. I confess that I am a bit concerned with Ametek because Textron is traditionally a large customer and its recent results gave indication of a slowdown in the business jet market. Hexcel’s mix of composites should be able to generate growth but it’s hard to get excited about a stock with its evaluation. BE Aerospace is a company I like a lot but I think investors should be cautious with aerospace right now. It could be a ‘growth trap’ because if China/India growth starts moderating then so will passenger miles flown and this is the key metric that guides future orders.
Inevitably the media headlines will be around Facebook ) when it gives numbers and the key thing here is the color and details around mobile which I doubt we are going to get from its management. The company has disappointed investors with how it has handled investors so far and I see no reason to believe it will suddenly change. It will be fascinating to see if analysts start asking questions about whether the nature of the content on Facebook will change as usage shifts to mobile. This is a point that I can’t see anyone else making but I think it is critical. Eyeballs go back to Facebook for the user generated content and not for anything that Zuckerberg created himself.
It’s also a decent day for technology as Juniper Networks ) and VMware give results. Juniper has been higher on a rumored bid from EMC but the stock is interesting in its own right. IT security stocks like Fortinet have lowered expectations recently so the security side will be watched closely and anything Juniper says about networking will be closely followed by Cisco watchers.
Whirlpool will also give numbers and the key thing will be damage limitation in Europe plus confirmation of a housing recovery in the US and finally Coach will update on the state of the Asian luxury market.
It’s a big day for defense stocks as Lockheed Martin, General Dynamics and Northrop Grumman will give earnings and investors are likely to get a lot more color on how Pentagon cutbacks will affect them.
It’s also a big day for some of the more niche plays in technology. Citrix Systems will update on the state of spending in the cloud computing sector while Ixia will give notice on the telco spending environment. However all eyes in telco will be on AT&T and whether it will downgrade its capital spending expectations. F5 Networks ) will report on the application delivery market. Technology has been weak (Intel, IBM etc.) but with Riverbed recently beating expectations (it has many growth drivers in common with F5) then F5’s numbers could be good. Then again who knows? I think the stock is a good value, but the market wont like any guidance reduction. One thing to look out for is it’s nascent but growing data center security offering.
Tupperware is always interesting because it’s a good play on emerging markets and I’m looking forward to Equifax’s results because things look to be picking up for credit issuance in the US.
A huge day for technology as Amazon, Apple, Acme Packet, Informatica ) and KLA-Tencor all give results. Don’t be surprised if Informatica is hugely volatile over results. It warned at the start of October after giving poor results in the summer and investor confidence must be low. It is one thing to keep blaming Europe but I think this company is also up against some very big competitors. Acme Packet is interesting but only for those who are willing to pay high valuations for companies with a lot of uncertainty.
Within consumer staples Procter & Gamble, Colgate-Palmolive and Mead Johnson ) will give results. If PG represents the value-but-underperforming proposition then Colgate-Palmolive is the performing-but-not-cheap end. Somewhere in the middle is performing-OK-but-valuation-too-rich proposition from Mead Johnson. Investors need to look out for its market share in China. It lost ground in the last quarter and will be hoping to make some back in this quarter. Look out for margins to see if it changed its policy and discounted in order to grab share. I covered the last results here. Incidentally, Colgate-Palmolive was covered here.
I’m looking forward to Roper Industries results because I think it is one of the best run companies in America . However, and I am aware how wacky this sounds, my interest will be in Animal Hospital company VCA Antech of which I discussed previously here.
The busy week winds down with Digital Realty Trust providing an update on data center capacity utilization and with a couple of interesting health care companies. Alere is an acquisition happy diagnostics company and Perrigo is one of those companies whose prospects look very good but you also wish would be cheaper.
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SaintGermain has positions in F5 Networks, Equifax and Roper Industries . The Motley Fool owns shares of Facebook and F5 Networks and has the following options: long JAN 2014 $20.00 calls on Facebook. Motley Fool newsletter services recommend Facebook, F5 Networks, and Informatica. 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.