Now that we are in the throes of peak earnings season, Estimize takes a look at the names that are anticipated to surprise either to the upside or downside this week.
Expected misses this week come from the consumer discretionary and industrials sectors. The main metrics used to determine a possible miss are revisions activity, growth expectations and historical beat rates.
Athletic apparel company Under Armour reports before tomorrow's opening bell, and has seen some of the most drastic cuts to EPS estimates of all companies releasing results this week. In the last three months, Estimize EPS expectations have come down 62 percent, proliferated even further last week when Morgan Stanley reiterated their sell rating and halved their price target to $32 from $64.
The call was made due to slowing growth and loss of market share to competitors such as Nike. While the company is still expecting YoY growth of 11 percent, all signs point to a potential miss, as this is a company that has never beaten the Estimize consensus in its nearly five years of estimate collection. While UA's footwear segment has been on fire, growing 95 percent last quarter, it only accounts for approximately 17 percent of overall revenue, and still faces stiff competition from peers.
General Electric may not be as widely anticipated as the others on this list, but the recent weakness at the industrial giant makes it one of our laggards for the season. Earnings expectations for this name have dropped by 16 percent in the last three months, with profits now expected to slump 28 percent YoY. This isn't a company that has a history of beating either, only surpassing the crowdsourced consensus 35 percent of the time.
And the issues aren't just on the bottom line. GE has suffered from sluggish revenue growth, missing on the top line in seven of the past eight quarters. It is seeing the most weakness from from its oil and gas, health care and financial services divisions.
The company is actively restructuring its portfolio away from GE capital in order to redefine itself solely as an industrial entity. A recent deal to acquire Alstom's Energy has been a good start and is likely to contribute $0.05 to earnings in 2016.
That said, a mounting order backlog, lower oil prices and significant internal exposure might continue to inhibit its growth potential in the near-term.
Consumer-facing names make up the potential positive surprises this week.
While Boston Beer Company is still expecting a slight decrease in profits from the year-ago period, analysts' upward revisions to the bottom line are the most significant we've seen for this name. In Q4, although YoY earnings and revenues declined, EPS surpassed the crowdsourced expectation by 6 cents. The largest brewer in the U.S. boasts huge brands such as Sam Adams, Angry Orchard and Twisted Tea.
Its consistent efforts to build its portfolio of drinks have been key to revenue growth, but a slowdown in depletion trends have been led by a rise in small craft brewers. The company is currently focused on international expansion, which it views as a key driver of future growth. This includes acquiring assets to expand geographically and grab a larger market share overseas. In particular, the Indian market is considered to be highly lucrative for SAM.
Despite mixed housing numbers last month, the housing market has made significant strides in the past few years. After suffering in the years following the financial crisis, housing indicators such as new home sales and housing starts are steadily approaching pre-recession levels.
Real estate has always played an important role in the U.S. economy and continues to be an important bellwether for the health of the consumer. While PulteGroup hasn't always been a winner in the space, often losing out to competitor Lennar, early signs are pointing to positive earnings in the first quarter.
PHM's stock has seen some swings this quarter, especially in response to boardroom drama between the company's founder and management. Even so, analysts have raised profit expectations by 8 percent, with the crowd now calling for YoY growth of 59 percent.
Many positives from last quarter are expected to carry over into Q1, mainly improvements in average selling prices, home deliveries and order trends, all supported by the underlying increase in demand for housing. While the company has only beaten the crowdsourced consensus 45 percent of the time, it has surpassed the Wall Street consensus 70 percent of the time. This is also a stock that has a great post-earnings drift in the 30 day period of 5 percent.
Be sure to get your estimates in for these names here!