Earnings Preview: Four Companies That Could Surprise

Earnings season will hit full stride this week with 443 companies confirmed to report. Nearly one-fourth of the S&P 500 will release results.

Dow components include 3M Company (MMM), AT&T (T), Bank of America (BAC), Boeing (BA), Caterpillar (CAT), Coca-Cola (KO), DuPont (DD), International Business Machines (IBM), McDonald's (MCD), Merck (MRK), Microsoft (MSFT) and United Technologies (UTX).

The economic data will largely take a back seat to the earnings news, though the March home sales figures will grab some attention.

• Monday: March Leading Indicators
• Wednesday: weekly crude inventories
• Thursday: March existing home sales, weekly initial jobless claims
• Friday: March new home sales, March durable goods orders

Vice Fed Chairman Donald Kohn will present his economic outlook at the University of Delaware on Monday night. The next Fed meeting will occur on Apr 28 and 29.

As I write this, the U.S. stock markets are on track to post their 6th consecutive weekly gain. Earnings look like they could continue to be better than feared, which means more fuel for the rally. Volume has been below average lately, however, so don't take unnecessary risks.

Companies That Could Issue Positive Earnings Surprises

This past Tuesday, Allegiant Travel (ALGT) preannounced first-quarter profits of $1.34 to $1.38 per share. The results were well above the previous consensus earnings estimate of $1.17 per share. No reason was given for the preannouncement, though the company had previously revealed that both its revenue passenger miles and load factor grew last quarter. The airline has topped expectations during 3 out of the last 4 quarters. Allegiant Travel is scheduled to report on Monday, Apr 20, before the start of trading. (The announcement date was moved up one day to avoid a "potential schedule conflict".)

Brinker International (EAT) recently preannounced fiscal third-quarter earnings of 44 to 45 cents per share, well above previous expectations for 28 cents per share. The company credited cost-cutting measures for improving profitability. The covering brokerage analysts responded by pushing the consensus estimate up to 45 cents per share. EAT has topped expectations twice and met forecasts twice in the past 4 quarters. Brinker International is scheduled to report on Tuesday, Apr 21, before the start of trading.

Within the past 7 days, 2 of the 14 covering brokerage analysts raised their fiscal third-quarter profit projections on Western Digital (WDC). The positive revisions, combined with a third changed forecast last month, pushed the consensus estimate a penny higher to 10 cents per share. The most accurate forecast is more bullish at 12 cents per share. The storage device maker has topped expectations for 5 consecutive quarters. Western Digital is scheduled to report on Thursday, Apr 23, after the close of trading.

Xilinx (XLNX) is one of the chipmakers on which brokerage analysts have recently raised forecasts. Revisions by 3 analysts over the past 30 days have resulted in a most accurate estimate of 19 cents per share, a penny better than the consensus estimate. Though XLNX did miss expectations last quarter, it met or exceeded estimates during 4 out of the previous 5 quarters. Xilinx is scheduled to report on Wednesday, Apr 22, after the close of trading.

Companies That Could Issue Negative Earnings Surprises

Schlumberger (SLB) has missed expectations during 3 out of the last 4 quarters. Ahead of the company's first-quarter earnings release, nearly half of the covering brokerage analysts have lowered their forecasts. This has resulted in the consensus estimate falling 6 cents to 77 cents per share. The most accurate estimate is even more bearish at 73 cents per share. Schlumberger is scheduled to report on Friday, Apr 24, before the start of trading.

-- Charles Rotblut