Earnings Seasons: Here Are The Stocks to Watch

Earnings Seasons: Here Are The Stocks to Watch

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Next week marks the sixth week of Q3 earnings season, a time when investors adjust positions based on company performance and projections. But analysts expect investors have turned their eyes away from earnings to focus on European developments with hope of uncovering the fate of the global economy.

"U.S. options traders see almost no chance that earnings, dividends or buybacks will influence stock prices through the end of 2011, instead placing record bets that equities move in lockstep in reaction to Europe's debt crisis."(via Bloomberg) The recent debt and leadership fiascos in Italy and Greece have done nothing to improve sentiment in the markets.

Record high correlation among stocks indexes is certainly a driving factor. This Wednesday saw the CBOE's KCJ index (which measures the degree of correlation for S&P 500 stocks) close at record levels, above 91. In short, fearful investors are gripped with uncertainty and are unable or unwilling to differentiate between stocks.

Given Europe's potential to drastically alter the global economy, it's easy to understand that investors may brush off earnings as a negligible statistic. After all, a strong earnings report for the third quarter will hardly matter if the economy plunges into a global recession.

Earning Season Investment Ideas

Meanwhile, earnings are hardly dismissible. After all, if the economic collapse doesn’t come to be, they can prove just as valuable as ever. So which companies reporting earnings should be on your radar?

And more importantly, which of next week's earnings reports have the biggest potential to surprise to the upside?

No one knows for sure, but we can look at historical performance for some guidance.

All the stocks mentioned below have a history of beating analyst estimates (i.e. reporting earnings "surprises"). Will they do so again next week?

Keep these companies on your radar as they report earnings next week.

 

 

1. Foot Locker, Inc. (FL, Earnings, Analysts, Financials): Operates as a retailer of athletic footwear and apparel. Earnings scheduled to be released on 11/17. In Oct 2010: Reported EPS at 0.33 vs. estimate at 0.17 (surprise of 94.1%). In Jan 2011: Reported EPS at 0.39 vs. estimate at 0.36 (surprise of 8.3%). In Apr 2011: Reported EPS at 0.6 vs. estimate at 0.44 (surprise of 36.4%). In Jul 2011: Reported 0.24 vs. estimate at 0.12 (surprise of 100%. [Average earnings surprise at 59.7%].

 

2. Perry Ellis International Inc. (PERY, Earnings, Analysts, Financials): Engages in designing, sourcing, marketing, and licensing apparel products for men and women in the United States and internationally. Earnings scheduled to be released on 11/14. In Oct 2010: Reported EPS at 0.51 vs. estimate at 0.35 (surprise of 45.7%). In Jan 2011: Reported EPS at 0.69 vs. estimate at 0.67 (surprise of 3%). In Apr 2011: Reported EPS at 1.08 vs. estimate at 0.99 (surprise of 9.1%). In Jul 2011: Reported 0.11 vs. estimate at 0.04 (surprise of 175%. [Average earnings surprise at 58.2%].

 

3. Saks Incorporated (SKS, Earnings, Analysts, Financials): Operates fashion retail stores in the United States. Earnings scheduled to be released on 11/15. In Oct 2010: Reported EPS at 0.06 vs. estimate at 0.03 (surprise of 100%). In Jan 2011: Reported EPS at 0.13 vs. estimate at 0.08 (surprise of 62.5%). In Apr 2011: Reported EPS at 0.17 vs. estimate at 0.16 (surprise of 6.3%). In Jul 2011: Reported -0.05 vs. estimate at -0.09 (surprise of 44.4%. [Average earnings surprise at 53.3%].

 

4. AutoNavi Holdings Limited (AMAP, Earnings, Analysts, Financials): Provides digital map content and navigation and location-based solutions in the People's Republic of China (PRC). Earnings scheduled to be released on 11/17. In Sep 2010: Reported EPS at 0.18 vs. estimate at 0.09 (surprise of 100%). In Dec 2010: Reported EPS at 0.12 vs. estimate at 0.08 (surprise of 50%). In Mar 2011: Reported EPS at 0.17 vs. estimate at 0.13 (surprise of 30.8%). In Jun 2011: Reported 0.21 vs. estimate at 0.18 (surprise of 16.7%. [Average earnings surprise at 49.38%].

 

5. Mentor Graphics Corp. (MENT, Earnings, Analysts, Financials): Mentor Graphics Corporation supplies electronic design automation systems used to automate the design, analysis, and testing of electronic hardware and embedded systems software in electronic systems and components worldwide. Earnings scheduled to be released on 11/17. In Oct 2010: Reported EPS at 0.22 vs. estimate at 0.16 (surprise of 37.5%). In Jan 2011: Reported EPS at 0.48 vs. estimate at 0.46 (surprise of 4.3%). In Apr 2011: Reported EPS at 0.2 vs. estimate at 0.18 (surprise of 11.1%). In Jul 2011: Reported 0.11 vs. estimate at 0.05 (surprise of 120%. [Average earnings surprise at 43.22%].

 

6. Abercrombie & Fitch Co. (ANF, Earnings, Analysts, Financials): Operates as a specialty retailer of casual apparel for men, women, and kids. Earnings scheduled to be released on 11/16. In Oct 2010: Reported EPS at 0.56 vs. estimate at 0.51 (surprise of 9.8%). In Jan 2011: Reported EPS at 1.38 vs. estimate at 1.32 (surprise of 4.5%). In Apr 2011: Reported EPS at 0.27 vs. estimate at 0.12 (surprise of 125%). In Jul 2011: Reported 0.35 vs. estimate at 0.3 (surprise of 16.7%. [Average earnings surprise at 39%].

 

7. Dell Inc. (DELL, Earnings, Analysts, Financials): Provides integrated technology solutions in the information technology (IT) industry worldwide. Earnings scheduled to be released on 11/15. In Oct 2010: Reported EPS at 0.45 vs. estimate at 0.33 (surprise of 36.4%). In Jan 2011: Reported EPS at 0.53 vs. estimate at 0.37 (surprise of 43.2%). In Apr 2011: Reported EPS at 0.55 vs. estimate at 0.44 (surprise of 25%). In Jul 2011: Reported 0.54 vs. estimate at 0.49 (surprise of 10.2%. [Average earnings surprise at 28.7%].

 

8. ZOLL Medical Corp. (ZOLL, Earnings, Analysts, Financials): Develops, manufactures, and markets resuscitation devices and related software solutions worldwide. Earnings scheduled to be released on 11/14. In Sep 2010: Reported EPS at 0.33 vs. estimate at 0.31 (surprise of 6.5%). In Dec 2010: Reported EPS at 0.18 vs. estimate at 0.16 (surprise of 12.5%). In Mar 2011: Reported EPS at 0.27 vs. estimate at 0.2 (surprise of 35%). In Jun 2011: Reported 0.42 vs. estimate at 0.35 (surprise of 20%. [Average earnings surprise at 18.5%].

 

9. NetEase.com, Inc. (NTES, Earnings, Analysts, Financials): Engages in the development of applications, services, and other technologies for the Internet in China. Earnings scheduled to be released on 11/16. In Sep 2010: Reported EPS at 0.67 vs. estimate at 0.63 (surprise of 6.3%). In Dec 2010: Reported EPS at 0.83 vs. estimate at 0.7 (surprise of 18.6%). In Mar 2011: Reported EPS at 0.86 vs. estimate at 0.71 (surprise of 21.1%). In Jun 2011: Reported 0.91 vs. estimate at 0.79 (surprise of 15.2%. [Average earnings surprise at 15.3%].

 

10. Sally Beauty Holdings Inc. (SBH, Earnings, Analysts, Financials): Engages in the distribution and retail of professional beauty supplies. Earnings scheduled to be released on 11/16. In Sep 2010: Reported EPS at 0.23 vs. estimate at 0.2 (surprise of 15%). In Dec 2010: Reported EPS at 0.22 vs. estimate at 0.19 (surprise of 15.8%). In Mar 2011: Reported EPS at 0.26 vs. estimate at 0.23 (surprise of 13%). In Jun 2011: Reported 0.3 vs. estimate at 0.28 (surprise of 7.1%. [Average earnings surprise at 12.72%].

 

(Written by Rebecca Lipman. List compiled by Eben Esterhuizen, CFA. Rebecca owns shares of DELL. EPS data sourced from Yahoo! Finance.)

 

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