The Calm Before the Earnings Season Storm

This morning, the major indices opened flat as investors collectively held their breath for third-quarter earnings season to start tonight. And I must admit that I can’t blame them. Analysts expect the S&P 500 as a whole to see profits contract 5.1% compared with last year.

So now more than ever, it’s crucial to keep track of earnings. But considering that upwards of 50 companies will report operating results each and every trading day over the next several weeks, I don’t expect you to spend hours of your day combing through the data. Instead, I’ll do that for you and hit the highlights in this daily blog. Today, I’m going to start with a preview of the biggest names to keep on your radar over the next several trading days:

Thursday: After today’s close, Alcoa Inc. (AA) kicks off the official start to earnings season by announcing its third-quarter operating results. But if you currently hold shares of the world’s leading aluminum producer, you may want to brace yourself: Analysts estimate that Alcoa Inc.’s sales dropped 9.0% and its earnings plummeted a shocking 54.8% compared with Q3 2014. Over the past three months, analysts have cut their earnings estimates from $0.19 to $0.14 per share. So it’s easy to see why AA fails in PortfolioGrader; it currently is an F-rated Sell.

Friday: With tomorrow being a Friday, there are only three names scheduled to report: Information Services Group Inc. (III), Oil-Dri Corporation of America (ODC) and Tryg A/S (TRYG.CO). The first two are C-rated holds in PortfolioGrader, while Tryg isn’t in Portfolio Grader because it’s not traded on U.S. exchanges.

Monday: This Monday will also be a relatively quiet day for earnings. You can click here to see the full lineup, but no companies stand out, in my opinion.

Tuesday: Things heat up on Tuesday, with CSX Corp. (CSX), Intel Corp. (INTC), Johnson & Johnson (JNJ), JPMorgan Chase & Co. (JPM), Kinder Morgan Inc. (KMI) and Las Vegas Sands Corp. (LVS) all reporting that day. But while these may be household names, I wouldn’t recommend buying any of these companies in anticipation of earnings. JNJ, KMI and LVS outright fail in Portfolio Grader, while CSX, INTC and JPM are holds. Clearly, the strong dollar is weighing on the international sales of these companies.

As a whole, this earnings season is going to brutal to multinational companies. There are a few exceptions to the rule, of course. Next Thursday, I’m looking forward to UnitedHealth Group Inc.‘s (UNH) earnings announement. Analysts are looking for the healthcare provider to post $1.64 EPS on $40.18 billion in revenue. This works out to 0.6% annual earnings growth and 22.7% annual sales growth. This stock is an A-rated Strong Buy.

Make no mistake—the next several weeks will shake up the market as earnings take center stage. So be sure to check in on this blog from time to time to help you locate the best profit opportunities in this shifting market.


Louis Navellier

Louis Navellier

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