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Top 4 Must-Follow Earnings for Monday

Robert Weinstein |Contributor
Tuesday, 31 Jul 2012 | 1:57 PM ET
Comstock | Getty Images

As hard as it may be to believe we are already moving past July and into August, the clock keeps ticking, but earnings season is still hot. With almost 500 companies confirmed to report on Monday, I picked the stocks most likely to influence the market on Monday, Aug. 6.

Chesapeake Energy

The company was founded in 1989 and is based in Oklahoma City, Okla. Chesapeaketrades an average of 21.2 million shares per day with a market capitalization of $12.2 billion.

Chesapeake is expected to report abysmal second-quarter earnings after the market closes on Aug. 6. The consensus estimate is currently 7 cents a share, 69 cents (90.8 percent) lower from 76 cents during the same period last year.

52-Week High: $34.35
52-Week Low: $13.55
Book Value: $24.95

Analyst opinion is mixed with this company. Most of the analysts surveyed don’t believe a buy or a sell is currently warranted. Right now, Chesapeake has 11 “buy” recommendations out of 27 analysts covering the company, 15 “holds,” and one lone analyst recommends selling.

The trailing 12-month price-to-earnings ratio is a respectable 8.2; however, the mean fiscal-year estimate price-to-earnings ratio is 48.2, based on earnings of 38 cents per share this year. Shareholders receive 35 cents annually in dividends. The yield based on a recent price is 1.9 percent.

Examining the history of a company is a great way to help understand what should be expected as we move forward. In the last three years, the average dividend paid per year was 28 cents. Over the last five years, the dividend has grown by an average of 1.7 percent per year.

Shares have traded slightly lower in the last month of trading. Shares are about breaking even at 0.8 percent less than a month ago. In Chesapeake’s previous earnings release on May 1, the closing price was $19.60. In comparison to a recent price of $18.70, shares are down 4.6 percent.

Investors previously have been rewarded with an increase of year-over-year revenue. Revenue reported was $11.64 billion last fiscal year compared to $9.37 billion in the previous year. The bottom line has falling earnings year-over-year of $1.57 billion last fiscal year compared to $1.66 billion in the previous year.

Short interest over 10 percent should give pause to investors looking at this company. The current float short is 12.76 percent.

United States Natural Gas Fund ETF tracks natural gas prices and is able to provide an easy equity-based ticker to track the price of natural gas. UNG bounced off the lows placed in April.

Forecasts for high temperatures and expanded electric use boosted UNG and natural gas prices higher. While too late for Chesapeake’s reporting quarter, the higher energy prices, should give guidance a spring in its step.

Low UNG prices have impacted more than Chesapeake’s stock price. Sandridge Energy , Cheniere Energy, and Devon Energyhave all watched their share price drop from the fallout with UNG.

SandRidge’s earnings release is expected after the market closes on Aug. 02, 2012. The analyst’s mean appraisal is presently 1 cent a share, a gain of 1 cent from zero during the corresponding quarter last year.

Cheniere Energy’s earnings release is after Chesapeake’s release, so no help from a miss or beat point of view, but at least we can look to see what is expected. The average analyst estimate is for a loss of about 19 cents per share.

Devon Energy’s earnings release is planned before the market opens on Aug. 1. The consensus estimate is currently 81 cents a share, backsliding 90 cents (52.6 percent) from $1.71 during the matching period in the previous year.

By watching the earnings and guidance for SandRidge and Devon, we are able to achieve greater clarity for the space. In turn, we should have a greater appreciation for what to expect out of Chesapeake’s report.

The drop in United States Natural Gas has impacted more than natural gas companies. United States Natural Gas is so cheap that natural gas displaces coal for electric power production. I believe it’s a real shame that natural gas is used for normal electric power generation instead of powering cars and trucks. We could be paying about $2 a gallon at the pump right now if America went in the direction of natural gas instead of electric vehicles.

Alpha Natural Resources is a coal company that like many coal miners, is experiencing lower coal demand and prices. Shares of Alpha Natural Resources have lost over 60 percent of their value since low UNG prices displaced coal in a major way. What makes Alpha Natural Resources and other coal miners important to Chesapeake investors is coal places a soft lid on UNG prices.

As United States Natural Gas moves higher in price, coal becomes more attractive and will lower demand for UNG/natural gas. If you're going to invest in natural gas and or coal miners, you will want to keep an eye on the other.

The AES Corp.

Who They Are: The company was founded in 1981 and is headquartered in Arlington, Va.

The AES Corp. trades an average of 6.8 million shares per day with a market cap of $9.2 billion.

52-Week High: $13.82
52-Week Low: $9.44
Book Value: $8.46

AES is anticipated to report better second-quarter earnings before the market opens on Aug. 6. The consensus estimate is currently 29 cents a share, an improvement of 1 cent (3.4 percent) from 28 cents during the same period last year.

Over half the analysts covering AES rate the stock as a “buy” or “strong buy.” Five of the six analysts covering the company give a “buy” recommendation. One analyst rates it a “hold,” and none of the analysts recommend selling.

The trailing 12-month price-to-earnings ratio is 11.4, the mean fiscal year estimate price-to-earnings ratio is 9.5, based on earnings of $1.26 per share this year.

Over the last month in trading, the stock lost ground. With a drop of 6.6 percent, it’s been a tough month. The last date AES released earnings was May 4, and the closing price was $12.08. Based on a recent price of $12.11, shares are currently mildly up 0.2 percent.

Management has provided an improvement of year-over-year revenue. Revenue reported was $17.27 billion last fiscal year compared to $15.83 billion in the previous year. The bottom line has rising earnings year-over-year of $58 million last fiscal year compared to $9 million in the previous year.

Almost zero interest by short sellers in shorting this stock. Short interest hardly moves the needle at 0.85 percent.

Tyson Foods

Who They Are: The company was founded in 1935 and is headquartered in Springdale, Ark.Tyson Foodstrades an average of 6.7 million shares per day with a market cap of $4.5 billion.

Investors are waiting for the release of the third-quarter earnings before the market opens on Aug. 6. The consensus opinion is presently 54 cents a share, a progression of 8 cents (14.8 percent) from 46 cents during the corresponding period last year.

Three out of 12 analysts now rate Tyson a “strong buy” down from eight analysts a month ago. The current float short is small and not a major concern. Short interest is 3.83 percent.

The trailing 12-month price-to-earnings ratio is 9.5, the mean fiscal year estimate price-to-earnings ratio is 7.7, based on earnings of $1.95 per share this year. This stock currently has an annualized dividend of 16 cents, yielding 1.06 percent. Looking back at the three year history of declared dividends, this company has averaged 16 cents a year in dividend payments.

In the last month, the stock has really taken a turn for the worse. Shares have crumbled 20 percent in the last month of trading.

In the previous Tyson’s earnings release on May 7, the closing price was $18.63. In comparison to a recent price of $14.91, shares are down 20 percent.

Investors have previously been rewarded with an increase of year-over-year revenue. Revenue reported was $32.27 billion last fiscal year compared to $28.43 billion in the previous year. The bottom line has falling earnings year-over-year of $750 million last fiscal year compared to $780.00 million in the previous year.

Manitowoc Co.

Who They Are: The company was founded in 1853 and is based in Manitowoc, Wisc. Manitowoc Co. trades an average of 4.1 million shares per day with a market cap of $1.6 billion.

52-Week High: $16.71
52-Week Low: $6.01
Book Value: $3.85
Price-to-Book Value: 3.2

Strong second-quarter earnings growth is after the market closes on Aug. 6. The consensus mean is 25 cents a share, a gain of 9 cents (36 percent) from 16 cents during the corresponding quarter last year.

Five out of 13 analysts now rate Manitowoc a strong buy down from six analysts a month ago. Shares have moved higher in the last month with a 3.3 percent improvement.

The trailing 12-month price-to-earnings ratio is 24.7, the mean fiscal year estimate price-to-earnings ratio is 15.6, based on earnings of 77 cents per share this year. The company currently pays 8 cents in dividends for a yield of 0.66 percent.

The current float short is small and not a major concern. Short interest is 3.83 percent. Looking back at the three-year history of declared dividends, this company has paid 8 cents a year in dividend payments. Over the last five years, the dividend has grown by an average of 2.7 percent per year.

The last date Manitowoc released earnings was May 3, and the closing price was $14.34. Based on a recent price of $11.79, shares are down 17.8 percent.

Investors have previously been rewarded with an increase of year-over-year revenue. Revenue reported was $3.65 billion last fiscal year compared to $3.14 billion in the prior year.

Short interest over 10 percent should give pause to investors looking at this company. The current float short is 10.4 percent.

—By TheStreet.com Contributor Robert Weinstein

Additional News: Lightning Round: Chesapeake Energy, OSI Systems, Danaher and More

Additional Views: ‘Fast Money’ Final Trade

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Disclosures:

TheStreet’s editorial policy prohibits staff editors, reporters, and analysts from holding positions in any individual stocks. At the time of publication, Robert Weinstein was short covered calls in ANR.

Disclaimer

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