GO
Loading...

6 Top Earnings to Watch Next Week

Robert Weinstein|Contributor
Friday, 17 Aug 2012 | 11:24 AM ET
Picturegarden | The Image Bank | Getty Images

After Cisco Systems blew the lid off theearnings estimate, can Hewlett-Packard andDelldo the same? I believe one of them can and one will struggle making their numbers. I selected the six companies I will watch earnings for and will trade if opportunity presents itself.

Aruba Networks

Background:Aruba Networks delivers the enterprise network to users, wherever they work or roam using a combination of solutions. Aruba is based in Sunnyvale, Calif., and trades an average of 3.9 million shares per day with a market cap(explain this) of $1.9 billion.

52-Week Range: $12.36 to $25.55

Book Value: $4.10

Price to Book: 3.89

Investors are looking forward to improving fourth-quarter earnings after the market closes on Aug. 23. The consensus opinion is presently 17 cents a share, the same as the corresponding period last year.

Twelve analysts rate ARUN a “buy” or “strong buy” out of 17, and none give a “sell” rating.

The price-to-earnings (P/E) ratio has come down, as the current trailing 12 months P/E ratio is 30.7, while the forward P/E ratio is now 22.8, based on earnings of 27 cents per share this year.

In the last month, the stock has really moved higher with a 30.5 percent increase. Even so, the 60-day moving average is well below the 200-day moving average. A recent closing price of $17.35 is trading above the 60- and 90-day moving averages, but the stock continues to trade in a bearish trend.

Even coming off a big oversold status, I would not get too aggressive buying before the earnings report. A strong beat can cause a squeeze, but won’t be worth it for anyone other than those willing to accept the risk of further downside in the price.

The short interest is very high and is a strong warning that short sellers(explain this) expect the share price to fall considerably. The short interest is 21.5 percent.

American Eagle Outfitters

American Eagle Outfitters is a specialty retailer of all-American casual apparel, accessories, and footwear for men and women between the ages of 16 and 34. American Eagle Outfitters trades an average of 4.6 million shares per day with a market cap of $4.1 billion.

52-Week Range: $10 to $21.53

Strong second-quarter earnings growth is expected by Wall Street before the market opens on Aug. 22. The consensus mean is 21 cents a share, a gain of 11 cents (52.4 percent) from 10 cents during the corresponding quarter last year.

More than half the analysts covering American Eagle rate it as a “buy” or “strong buy.” The average analyst target price for AEO is somewhat aggressive at $24.08.

The mean fiscal year estimate price-to-earnings ratio is 15.7, based on earnings of $1.32 per share this year.

The company currently pays 44 cents per share in dividends for a yield of 2.11 percent. Over the last five years, the dividend has grown by an average of 9.9 percent per year.

Shares are slowly but steadily climbing in the last 30 days. Shares are now 1.7 percent higher than last month and trading near the 52-week highs.

Currently, the short interest based on the float is small and not a big concern. Short interest is 3.9 percent.

Best Buy

Background:Best Buy operates in a single business segment, selling personal computers and other home office products, consumer electronics, entertainment software, major appliances, and related accessories principally through its retail stores. Best Buy trades an average of 11.4 million shares per day with a market cap of $6.6 billion.

52-Week Range: $16.97 to $28.52

BBY is forecast to record lower first-quarter earnings before the market opens on Aug. 21. The consensus estimate is currently 31 cents a share, a drop of 16 cents (34 percent) from 47 cents during the equivalent quarter last year.

A poor earnings report is largely baked into the cake, and the most significant catalyst is if the company goes private or not. The recent stock price moves suggests the odds are tipping in favor of a buyout. (Read More: Best Buy Founder Tells Company: ‘I Won’t Go Away.’)

Some of what is in the media may be lip service to get the large short interest to cover, but I for one would not want to be short in front of what could be a very large steamroller.

Best Buy currently distributes 64 cents per share in yearly dividends for a yield of 3.31 percent. Looking back at the three-year history of declared dividends, this company has paid on average 59 cents per share each year in dividend payments. Over the last five years, the dividend has grown by an average of 11.5 percent per year.

Lowe’s Cos.

Background:Lowe’s Cos. is a retailer of home improvement products in the world, with specific emphasis on retail do-it-yourself and commercial business customers. Lowe’s trades an average of 12.5 million shares per day with a market cap of $31.6 billion.

52-Week Range: $18.28 to $32.29

Second-quarter earnings is highly anticipated by hopeful investors expecting a positive earnings growth report before the market opens on Aug. 20. Analysts’ mean appraisal is presently 70 cents a share, a gain of 2 cents (2.9 percent) from 68 cents during the corresponding quarter last year.

Over half the analysts covering LOW rate it as a “buy” or “strong buy”; 11 of the 21 analysts covering the company give a “buy” recommendation, while 10 rate it a “hold.” None of the analysts recommend selling. The average analyst target price for LOW is $31.06.

The trailing 12-month price-to-earnings ratio is 15.3, the mean fiscal year estimate price-to-earnings ratio is 14.9, based on earnings of $1.79 per share this year.

This stock currently has an annualized dividend of 64 cents, yielding 2.41 percent. After Home Depot reported, I am going to bet Lowe’s beats. (Read More: Home Depot Earnings Beat Forecasts, Ups Guidance.)

Weinstein Estimate: Earnings of 73 cents a share or more.

The last reported short interest is very small. Short interest is only 1.5 percent.

Dell

Background:Dell is a premier provider of products and services required for customers worldwide to build their information-technology and Internet infrastructures. Dell trades an average of 14.9 million shares per day with a market cap of $21.4 billion.

52-Week Range: $11.39 to $18.36

Wall Street isn’t expecting much this quarter and neither am I. Earnings per share is expected to come in below last year in the same quarter. The earnings release is scheduled after the market closes on Aug. 21. The consensus estimate is currently 45 cents a share, a decline of 9 cents from 54 cents during the corresponding period last year.

The trailing 12-month price-to-earnings ratio is 6.0, the mean fiscal year estimate price-to-earnings ratio is 6.4, based on earnings of $1.91 per share this year.

Shares are modestly higher from a month ago and even with modest results Dell could bounce significantly higher from here. With only 3 percent short interest, there doesn’t appear to be a lot of money betting on further weakness.

Weinstein Estimate: Earnings per share of 47 cents.

Hewlett-Packard

Background:Hewlett-Packard is one of the leading global providers of computing and imaging solutions and services for business and home. HP trades an average of 21.1 million shares per day with a market cap of $38 billion.

52-Week Range: $17.41 to $34.00

HPQ is forecast to report smaller third-quarter earnings after the market closes on Aug. 22. The consensus estimate is currently 99 cents a share, falling 11 cents (10 percent) from $1.10 during the same period last year.

Shareholders have not been rewarded for their patience. Shares are down 38 percent in the last year, and the average analyst target price for HPQ is $25.29. Paper and ink use are down industrywide and HP generates a significant amount of revenue and margins from printing.

This stock currently has an annualized dividend of 53 cents, yielding 2.73 percent. Currently, the short interest based on the float is small and not a big concern. Short interest is 2.8 percent.

I use Zacks.com, WSJ.com, Tradestation, and Reuters for my data. P/E is generally adjusted P/E based on an average number of shares.

—By TheStreet.com Contributor Robert Weinstein

Additional News: HP Braces for a Huge Loss

Additional Views: Home Depot or Lowe’s? Pros Pick Favorites

______________________________

CNBC Data Pages:

______________________________
Disclosures:

At the time of publication, Robert Weinstein does not hold a position in any stock mentioned. TheStreet’s editorial policy prohibits staff editors, reporters, and analysts from holding positions in any individual stocks.

Disclaimer

  Price   Change %Change
AEO
---
4331
---
HPQ
---

Featured