Many of the largest and most influential companies have already issued their Q1 results, but that doesn't mean earnings season is completely in the rearview mirror at this point.
There are still a number of earnings reports that will capture plenty of headlines and have the potential to be market moving events. So far, as has been widely reported, corporate earnings have been very strong relative to lowered consensus expectations, and have provided support to the broader markets. Over the past week or so, the number and the degree of beats has been a little less impressive as the quality of companies reporting has taken a step back. In today's article, we'll take a look at a few of the more anticipated reports that are due out on Wednesday, May 2.
"Organic" Growth Fueling Whole Foods
In a testament to its brand strength and customer loyalty, Whole Foods (NASDAQ: WFM) has continued to grow revenue and profits at a healthy clip despite the still challenging economic conditions. WFM benefits from a customer that generally has higher discretionary income, and is more willing to spend up for healthier, organic food. Its stock performance has been exceptional, up ~20% year-to-date. After setting all-time highs in mid-March, the stock has chopped in a sideways fashion, trading in a $81-$86 range. Another upside report, coupled with above consensus guidance, may be the catalyst to pop it through that range.
For is fiscal Q2, analysts are looking for EPS of $0.59 on revenue of $2.66 billion, which would equate to year/year growth of 16% and 13%, respectively. Over the past few quarters, WFM's profit growth has primarily been driven by a mix of solid comparable store sales growth and improving operating margins. For instance, its same store sales were up 8.7% last quarter, matching its Q4 performance, and its operating margin increased to 5.6% from 4.9%, driven by improvement in occupancy costs and leverage in wages and depreciation.
Will Traders Be Yelping For Joy?
After the market closes on May 2, local review website and recent IPO, Yelp (NASDAQ: YELP) will report its Q1 results - its first quarterly report since going public. The Street is expecting the company to report a loss per share of ($0.11) on revenue of $25.41 million, which equates to annual growth of 54%. While strong, that would be its slowest year/year growth in at least five quarters.
YELP got off to a hot start, gaining as much as 113% versus its IPO price by the end of March. But, the stock has come under intense pressure in recent weeks, giving back much of those gains. When YELP went public, there was quite a bit of enthusiasm surrounding its deal due to the fact that it's a widely recognized internet name, and its revenue growth has been impressive. However, after traders and investors began focusing in on its sub-par fundamentals - namely, its track record of losses and its rich valuation - the stock began to lose its luster. An upside report could light a fire under the stock once again, at least in the near-term, but until it can prove that its business model can churn out profits, a heavy level of skepticism is likely to remain.
"Securing" Gains Proves Elusive
Since late last summer, shareholders of Symantec (NASDAQ: SYMC) have been through a bumpy ride, most recently being blind-sided by downside 4Q12 guidance on April 24. The provider of internet security products, storage, and back-up products lowered its guidance to EPS of $1.68 from $1.72-$1.73, citing higher deferred revenue than was expected. The news chopped shares down to the $16 level from the $18 level. The silver lining here is, the pre-announcement has taken much of the risk out of the quarterly results, which will be released on May 2 after the close. With much of the mystery taken out of the quarter, investors and traders will mostly turn their attention to guidance. For its 1Q13, analysts are expecting EPS and revenue of $0.38 and $1.67 billion; and for FY13, estimates stand at $1.69 and $6.92 billion. SYMC has a bit of a checkered past in terms of performance vs. expectations, but, with expectations muted and with a cheap valuation (forward P/E around 10x, P/S around 1.8x), it shouldn't take blow-out guidance to move the stock higher.
Searching For Another Beat
One of the more unlikely recent recoveries has been Garmin (NASDAQ: GRMN), a company that was looking like its best days were well-behind it just a year ago. GRMN appeared to be a victim of the proliferation of smartphones, which of course, have the capability of providing mapping and directions. But, after its average selling prices and market share took a nose dive, its business has stabilized and its PND devices have managed to remain a relevant factor in the personal navigation market. Analysts have been slow to realize this pick-up at GRMN as the company has blown out estimates in each of the last two quarters. The question now is, has the Street finally caught up to GRMN's recovery? To keep its upward momentum going, GRMN will need to beat the $0.41 and $520.01 million estimates. There is also some resistance around the $48 level that could be a factor following its print.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.