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CHICAGO--(BUSINESS WIRE)--Zacks.com releases the list of companies likely to issue earnings surprises. This week’s list includes Blockbuster (NYSE: BBI) and Wal-Mart (NYSE: WMT). To see more earnings analysis, visit http://at.zacks.com/?id=3207.
Earnings Preview is written by Charles Rotblut, CFA, Senior Market Analyst for Zacks.com.
First-quarter earnings season shifts to the retail sector, with 26 retailers scheduled to report.
Consumers and their tax rebate checks may shift the focus away from last quarter's results to current spending trends. Are consumers are using the money to by necessities (food, medicine, etc.) or they choosing to splurge on discretionary items like high-def televisions? Wal-Mart (NYSE: WMT) is best positioned to provide an early answer to this question, and therefore its conference call could be very interesting.
WMT will be one of two Dow components reporting. The other will be Hewlett-Packard (NYSE: HPQ). HPQ will be able to provide additional insight into business spending on technology. Although estimates are unchanged ahead of the IT conglomerate's earnings report, investors should note that HPQ has topped expectations for 15 consecutive quarters.
In total, we have confirmed scheduled reports from 277 companies, 21 of which belong to the S&P 500. Other notable reports, besides WMT and HPQ, include Applied Materials (Nasdaq: AMAT) and Deere & Co. (NYSE: DE).
A lot of economic data will be released. With the Fed on hold until at least August, we will want to see signs that the economic slump is not severely worsening and that inflation is under control. Key indicators will include:
- Tuesday: April retail sales, March business inventories
- Wednesday: April CPI
- Thursday: April industrial production and capacity utilization, May New York Fed survey, May Phili Fed survey, May National Association of Home Builders index
- Friday: April housing starts, University of Michigan preliminary May consumer confidence index
May options will expire on Friday, May 16. Options expiration can bring slightly more volatility and volume.
First-Quarter Earnings
We are nearing the end of the first-quarter earnings season and, as I've been saying all along, the quality of the results lays in the eyes of the beholder.
Positive surprises are outnumbering negative surprises among S&P 500 companies by a ratio of 2.2:1. (270 companies have beat, 124 have missed and 50 met expectations.) Though positive, the ratio is lower than what we saw a year ago.
Median per share growth is 9.1% and median net income growth is 5.9%. Average per share growth and average net income growth, however, are -13.7%. More than 40% of the companies that have reported so far realized a year-over-year decline in net income.
Companies That Could Issue Positive Earnings Surprises during the Week of May 12 - May 16
The focus on Blockbuster (NYSE: BBI) has been on its acquisition aspirations, but the video rental company's earnings report could also make headlines. One of the five covering brokerage analysts recently raised his first-quarter earnings projection, causing the consensus earnings estimate to rise by two cents to 14 cents per share. The most accurate estimate is more bullish at 15 cents per share. BBI exceeded third and fourth-quarter expectations by six cents and seven cents per share, respectively. Blockbuster is scheduled to report on Thursday, May 15, before the start of trading.
Wal-Mart (NYSE: WMT) realized same-store sales growth of 3.2% in April, exclusive of fuel. Brokerage analysts have yet to adjust their first-quarter earnings estimates in response to the data, but they had previously upped their projections. The current first-quarter consensus earnings estimate of 76 cents is four cents higher than the average forecast of a month ago. The discount retailer has topped expectations for two consecutive quarters, after disappointing investors during the second quarter of last year. Wal-Mart is scheduled to report on Tuesday, May 13, before the start of trading.
Charles Rotblut, CFA, is the senior market analyst for Zacks.com.
Want to turn earnings surprises into quick profits? Learn how by visiting http://at.zacks.com/?id=3206.
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