Week in Preview: Here Come Retail Earnings
Nov 7th 2010 11:00AM
Updated Nov 8th 2010 7:27AM
This week, J.C. Penney (JCP), Kohl's (KSS) and Macy's (M) are the first of the major retailers to report results for the most recent quarter. Macy's launched an American Express credit card and increased its mobile presence during the fiscal fourth quarter.
The analysts surveyed by Thomson Reuters forecast Macy's earnings for that period to come to 3 cents per share, which compares to a net loss of 3 cents per share in the same period of last year. The Cincinnati-based department store operator is expected to post revenue of $5.6 billion for the three months that ended in October, which is 5.2% more than a year earlier.
For the full year, the forecast calls for earnings of $1.50 per share (+6.7%) and $8.2 billion in revenue (+4.3%). Macy's earnings results have been better than expected in recent quarters by a penny or a few per share.
Macy's long-term EPS growth forecast is 8.7%, and its forward price-earnings (P/E) ratio is 12.5, which is less than the industry average. The dividend yield is 0.8%. Macy's raised its second-half forecasts due to strong same-store sales. The First Call recommendation is to buy the stock, and the mean price target is $26.93 per share. Shares reached a 52-week high of $26.03 on Friday and are 29.3% higher than three months ago.
Analysts are expecting a strong performance from Penney as well, but flat results from Kohl's. More retailers will report the following week, including Abercrombie & Fitch Co. (ANF), Home Depot (HD), Sears (SHLD), Target (TGT) and Walmart (WMT).
Analysts anticipate that Priceline.com (PCLN), the online source for name-your-own-price travel, will report on Monday that its third-quarter earnings grew 30.6% year over year to $4.97 per share. During the three months that ended in September, Priceline introduced a new price guarantee, and revenue for that period is predicted to have risen 33.3% to $973.6 million. Analysts also expect better than 25% year-over-year growth of earnings and revenue in the fourth quarter. Earnings results have topped consensus estimates in recent quarters, by as much as 53 cents per share.
Priceline's long-term EPS growth forecast is 20.4%, which is higher than those of competitors Expedia (EXPE) and Orbitz (OWW). Its forward P/E ratio is 28.3, but that's less than the industry average. Net cash flow from operations has grown in the past few quarters, and the ROE is 42.2%. The consensus recommendation is to buy PCLN. Zacks considered the stock a powerful buy for its momentum. Shares reached a multiyear high of $388.88 at the end of the week, a pop of 78% from the beginning of the year.
Santa Clara, Calif.-based Agilent Technologies (A) is anticipated to be one of this week's biggest earnings gainers. For a fiscal fourth quarter in which the scientific testing equipment maker won a military contract and continued to offer new products, Agilent is expected to post EPS of 60 cents. That's up from a year-ago profit of 32 cents per share. And revenue for the three months that ended in October is expected to have increased 30.6% to $1.5 billion.
For the full year, analysts foresee earnings of $1.95 per share (+58.9%) on revenue of $5.4 billion (+20.6%). The per-share earnings results have topped analysts' expectations in the past five quarters, by as much as eight cents.
Agilent's long-term EPS growth forecast of 53.4% is much healthier than those of competitors Teradyne (TER) and Thermo Fisher (TMO). Its forward P/E ratio is 15.8, which is less than the industry average and its trailing P/E. The PEG ratio is 0.3, and the company keeps more than enough cash to cover long-term debt.
The consensus recommendation has been to buy the stock for more than 90 days, and the mean price target is currently $40.17. The stock recently was upgraded to buy, and the Motley Fool likes the growth potential. The share price has risen 27.8% in the past three months, approaching the 52-week high of $37.43, and with the 50-day moving average recently crossing above the 200-day moving average.
During the three months that ended in September, Milwaukee-based Rockwell Automation (ROK) announced an automation fair. The industrial automation giant is expected to report that EPS for that period more than doubled to 91 cents. And its fiscal fourth-quarter revenue is estimated to have increased 22.7% to $1.3 billion. The consensus forecast is for full-year EPS to come to $3.05 (+44.9%) on revenue of $4.8 billion (+11.2%). Earnings results have beat consensus estimates in the past five quarters, by as much as 25 cents per share.
The long-term EPS growth forecast is 21.0%, which is greater than the industry average. The forward P/E ratio of 18.5 is less than the industry average. The PEG ratio is 0.88, and the dividend yield is 1.8%. The analysts' consensus recommendation has not shifted from neutral despite five straight quarters of earnings growth, but shares are 41.5% higher year-to-date and reached a 52-week high of $66.86 on Friday.
And More ...
Analysts also expect to see strong earnings results this week from Advance Auto Parts (AAP), Cisco Systems (CSCO), Ebix (EBIX), Fossil (FOSL), LDK Solar (LDK) and Tim Hortons (THI). On the other hand, Progressive (PGR), Sara Lee (SLE) and Walt Disney (DIS) are expected to post EPS results about the same as a year ago, while smaller profits are anticipated from Dean Foods (DF), Marsh & McLennan (MMC), Polo Ralph Lauren (RL), NVIDIA (NVDA) and Wendy's/Arby's (WEN).
Things will be fairly quiet as far as economic data releases. Look for September's wholesale trade numbers on Tuesday, as well as the U.S. trade balance for September and the Import Price Index for October on Wednesday. The TIPP Economic Optimism Index and the preliminary University of Michigan Consumer Sentiment Index are scheduled for this week as well.