The markets have only been back for five days so far, and it barely seems like that much to me. But as we start the new week, those who were not looking are quite surprised at what I am about to say. Earnings season starts today, Monday, January 9th. Yes, earnings season is here already, and the official start is today. So here are the key stocks reporting this week.
Alcoa (AA): Alcoa's report is always the official start to earnings season, and the company reports today after the bell. It has been a tough few months for the aluminum company, and the company just announced it would close or curtail about 12% of its global smelting capacity. Alcoa is trying to become cost effective in its industry, as prices have declined 27% from their 2011 peak.
As for the earnings report, revenues are expected to rise 2.2% to $5.78 billion. Earnings per share are expected to plummet to just 1 penny, from 21 cents in the year ago period. Alcoa's earnings performance has declined steadily over the past four quarters. The company went from a 10.5% beat, to a 3.7% beat, to in-line, and last quarter a 32% miss. Expectations are low and have come down severely in the past few months, so I would not be surprised if the company posted a loss for the quarter. Alcoa's shares are 50% off of their 52-week high, and are just 70 cents above their 52-week low. It's possible that the company could beat these lowered expectations. If they don't, shares will test the 52-week low of $8.45 again.
Supervalu (SVU): The grocery store company will report earnings Wednesday before the bell. Revenues are expected to decline 2.9% over last year's period, while earnings per share are expected to remain even at $0.24. I'm really interested in the report to see what they say about food prices. It has seemed lately that certain products are seeing large price increases, and this company could provide insight on the inflation trade. I wouldn't look for a huge reaction to this report from the name, as its 4% plus yield makes it more of a low-beta, value stock. The name trades extremely cheap on a price to sales and price to expected growth basis comparable to the rest of its industry.
Lennar (LEN): The homebuilder will report earnings Wednesday before the bell. Housing data have been rather strong lately, and shares of the company are just a point off of their 52-week high. Revenues are expected to rise 6.3% to $914 million, while EPS are expected to be flat at $0.17. Analysts remain positive on the stock, but are not as positive as they were a month ago. The company has beat on the bottom line in each of the past four quarters, and if they beat again, shares could rise to a new 52-week high. Jobs and housing need to recover, and Lennar's report could provide insight into the latter.
JP Morgan (JPM): JP Morgan kicks off earnings for the financial sector on Friday before the bell. The company is expected to see revenues decline 12.2% to $23.47 billion. Earnings per share are expected to decline from $1.12 to $0.93 currently, although I'd expect estimates could come down a few more pennies by Friday. JP Morgan should do well in its report, but it may be the only big bank to do so. We just saw another huge analyst revision downward for both Goldman Sachs (GS) and Morgan Stanley (MS) earnings. Goldman Sachs is expected to see about a 30% decline in earnings. Morgan Stanley is expected to post a decent size loss, and it's quite possible that Bank of America (BAC) could as well. Financials have done well recently, with Bank of America even getting up to $6.35 on Thursday.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
