Earnings season is starting to wind down; over 440 companies in the S&P 500 have reported earnings already. Of those, 73% have beaten earnings estimates, and just 51% have exceeded sales expectations. When all is said and done, analysts expect a 1% year-on-year drop in profits and a 3.3% drop in sales across the index. While this isn’t as steep a drop as initially projected, the strong dollar is still clearly weighing on the S&P 500’s international sales.
So, this earnings season, we’ve had our fair share of winners—like Amazon (AMZN), Google (GOOGL), SanDisk (SNDK) and United Parcel Service (UPS)—and losers—like ExxonMobil (XOM), Microsoft (MSFT), IBM Corp. (IBM) and Procter & Gamble (PG). To ensure that we all end earnings season on a strong footing, let’s review some of this week’s biggest earnings announcements…
Advance Auto Parts Inc. (AAP) is scheduled to release its second-quarter report before the opening bell on Thursday. Currently, the consensus estimate is for $2.25 EPS on $2.38 billion in revenue. Compared with the year ago quarter, this translates to 8.2% earnings growth and 1.4% sales growth. The consensus EPS estimate has fallen by 3.4% over the past three months, which indicates that AAP may once again miss estimates (as it did last quarter). So, while AAP is an A-rated stock, it is a cautious buy.
Applied Materials Inc. (AMAT) is slated to report fiscal third-quarter results after the closing bell on Thursday. Analysts expect the chipmaker to post earnings of $0.33 per share on $2.54 billion in revenue. This works out to 17.9% annual earnings growth and 12.2% sales growth. Nonetheless, the earnings estimate is well below the 30.8% industry average. AMAT is a D-rated Sell.
Cisco Systems Inc. (CSCO) will release fiscal fourth-quarter sales and earnings after the market closes tomorrow, August 12. The consensus estimate is for $0.56 earnings per share on $12.65 billion in sales. This represents just 1.8% annual earnings growth and 2.4% sales growth. CSCO is a C-rated Hold.
Kohl’s Corp. (KSS) will also report second-quarter results before the market opens on Thursday. Currently, analysts are calling for $1.17 EPS on $4.31 billion in revenue. Compared with Q2 2014, this translates to just 3.5% bottom-line growth and 1.7% top-line growth. This is well below the industry average of 36.4% forecasted earnings growth. KSS is a C-rated Hold.
Macy’s Inc. (M) will announce second-quarter results first thing tomorrow morning. The consensus estimate is for $0.77 earnings per share on $6.23 billion in sales. This means that Macy’s profits are expected to fall 3.8% over last year, while sales are forecasted to dip 0.6%. Given that the consensus EPS estimate has fallen from $0.84 to $0.77 in the past three months, I’m not optimistic that Macy’s will beat expectations. M is also a C-rated Hold.
NetEase Inc. (NTES) is scheduled to release its second-quarter report after the closing bell on Wednesday. Analysts are looking for $10.88 EPS on $4.38 billion in revenue. Compared with the year ago quarter, this works out to 18.5% earnings growth and 58.3% sales growth. And, unlike most of the other stocks on this list, the consensus EPS estimate has actually risen over the past three months—by nearly 13%. Hopefully NetEase will beat these sales and earnings estimates. NTES is an A-rated Strong Buy.
Nordstrom Inc. (JWN) is also scheduled to report after the market closes on Thursday. The consensus estimate is for per share earnings of $0.90 on $3.67 billion in sales. While this translates to 8.3% sales growth, this means that EPS is expected to fall 5.3% compared with a year ago. JWN is a C-rated Hold.
I recommend that you keep these seven earnings announcements on your radar—if you currently hold any of these stocks, you may use their Portfolio Grader ratings to help you formulate an earnings game plan. In the meantime, I’ll keep an eye on the markets and will be in touch if there are any major developments.