As we prepare to kick-off earnings season once again, I wanted to examine the 30 stocks of the Dow Jones Industrial Average, and see how they are expected to fare given current estimates. I've drawn up a chart that not only looks at the projected EPS and Revenue numbers, but the projected EPS growth as well.
Symbol | EPS Date | Price | Est. EPS | Est. Rev. | Est. Q2 Growth | Yield/Div. |
7/26/12 | 88.99 | $1.65 | $7.82B | 3.1% | 2.6% ($2.36) | |
7/09/12 | 8.73 | $0.06 | $5.81B | -81.2% | 1.3% ($0.12) | |
7/18/12 | 58.63 | $1.09 | $8.09B | 1.9% | 1.4% ($0.80) | |
7/24/12 | 35.44 | $0.63 | $31.92B | 5.0% | 4.9% ($1.76) | |
7/18/12 | 7.66 | $0.15 | $22.64B | 116.7% | N/A | |
7/25/12 | 73.69 | $1.09 | $19.39B | -12.8% | 2.4% ($1.76) | |
7/25/12 | 84.61 | $2.31 | $17.23B | 52.0% | 2.4% ($2.08) | |
7/27/12 | 105.07 | $3.23 | $69.23B | -16.1% | 3.4% ($3.60) | |
8/15/12 | 16.77 | $0.46 | $11.63B | 15.0% | 1.9% ($0.32) | |
8/12/12 | 78.15 | $1.19 | $13.02B | 1.7% | 2.6% ($2.04) | |
8/07/12 | 48.04 | $0.92 | $11.27B | 17.9% | 1.2% ($0.60) | |
7/24/12 | 48.90 | $1.47 | $11.30B | 7.3% | 3.5% ($1.72) | |
7/26/12 | 84.80 | $1.99 | $120.66B | -8.7% | 2.7% ($2.28) | |
7/20/12 | 20.00 | $0.37 | $36.86B | 8.8% | 3.3% ($0.68) | |
8/22/12 | 19.57 | $0.97 | $30.38B | -11.8% | 2.6% ($0.53) | |
8/14/12 | 52.15 | $0.97 | $20.77B | 12.8% | 2.2% ($1.16) | |
7/18/12 | 191.41 | $3.43 | $26.39B | 11.0% | 1.7% ($3.40) | |
7/17/12 | 26.16 | $0.53 | $13.60B | -1.9% | 3.2% ($0.84) | |
7/17/12 | 67.64 | $1.29 | $16.70B | 0.8% | 3.6% ($2.44) | |
7/13/12 | 33.90 | $0.79 | $21.91B | -37.8% | 3.5% ($1.20) | |
8/02/12 | 38.98 | $0.66 | $14.06B | 6.5% | 3.0% ($1.16) | |
7/23/12 | 89.66 | $1.38 | $6.95B | 2.2% | 3.1% ($2.80) | |
7/27/12 | 41.51 | $1.02 | $12.20B | 7.4% | 4.0% ($1.68) | |
7/19/12 | 30.18 | $0.62 | $18.17B | -10.1% | 2.6% ($0.80) | |
7/31/12 | 22.54 | $0.55 | $14.96B | -8.3% | 3.9% ($0.88) | |
7/30/12 | 61.28 | $0.77 | $20.25B | -8.3% | 3.7% ($2.25) | |
7/19/12 | 63.26 | $1.44 | $5.98B | 258.2% | 2.9% ($1.84) | |
7/26/12 | 74.09 | $1.42 | $14.48B | 0.7% | 2.8% ($2.14) | |
7/19/12 | 44.39 | $0.64 | $28.54B | 12.3% | 4.5% ($2.00) | |
8/16/12 | 71.36 | $1.17 | $115.62B | 7.3% | 2.2% ($1.59) |
Projected Second Quarter Growth
In the first part of my analysis I wanted to note that Travelers (258.2%) and Bank of America (116.7%) are expected to grow the most out of their fellow counterparts, and much faster than the average of estimated quarterly growth of 11.72% for the entire Dow 30. Of the 30 stocks in the Dow, there are ten expected to retract in terms of second quarter growth, they were Alcoa (-81.2%), Boeing (-12.8%), Chevron (-16.1%), Exxon Mobil (-8.7%), Hewlett-Packard (-11.8%), Intel (-1.9%), JPMorgan Chase (-37.8%), Microsoft (-10.1%), Pfizer (-8.3%), and Procter & Gamble (-8.3%). Of the companies expected to retract in growth, five are currently demonstrating an average of yield of 3.54%. Those five companies are Chevron which yields 3.4% ($3.60), Intel which yields 3.2% ($0.84), JP Morgan Chase which yields 3.5% ($1.20), Pfizer which yields 3.9% ($0.88), and Procter & Gamble which yields 3.7% ($2.25).
For potential investors looking to establish a position in any of the five companies I've just mentioned, I'd remain a bit cautious, because any negative news especially with regard to earnings may result in short-term selling and thus a buying opportunity. Of the two stocks expected to grow significantly, Travelers and Bank of America may look attractive from a P/E standpoint, however I'd consider establishing a position at even lower levels, as the European financial crisis could have a big impact on both companies.
A Reflection Of Past EPS Performance
One of the most important variables, in my opinion, is a company's EPS trend. If the trend is positive for four consecutive quarters I rate the company very high, if it's negative for at least two of the quarters then the company really needs to impress me before I consider a position. In the case of the Dow 30, several stocks pop out that have surpassed estimates in each of the last four quarters and should continue to do so in the upcoming quarter. Those companies are: American Express, which has surpassed estimates in each of the last four quarters by an average of 6.1%. Cisco, which has surpassed estimates in each of the last four quarters by an average of 6.75%. Coca-Cola, which has surpassed estimates in each of the last four quarters by an average of 1.7%. Disney, which has surpassed estimates in each of the last four quarters by an average of 8.175%. DuPont, which has surpassed estimates in each of the last four quarters by an average of 8.85%. International Business Machines, which has surpassed estimates in each of the last four quarters by an average of 2.67%. Johnson & Johnson, which has surpassed estimates in each of the last four quarters by an average of 2.72%.
On a secondary note, there are several other companies I'd consider positions in based on positive EPS trends. Each of these companies has surpassed earnings estimates in three out of the last four quarters, and remained flat in the remaining quarter. As long as the company hasn't missed estimates they'll make the cut in the secondary group. Those companies are: General Electric which surpassed estimates in three of the last four quarters by an average of 3.96%, and remained in-line during the third quarter of 2011. Home Depot which surpassed estimates in three of the last four quarters by an average of 8.66%, and remained in-line during the first quarter of 2012. Kraft which surpassed estimates in three of the last four quarters by an average of 4.73%, and remained in-line during the fourth quarter of 2011. McDonald's which surpassed estimates in three of the last four quarters by an average of 3.06%, and remained in-line during the first quarter of 2012. Merck which surpassed estimates in three of the last four quarters by an average of 2.13%, and remained in-line during the second quarter of 2011.
Three of the remaining Dow 30 components, Caterpillar, Travelers, and Wal-Mart, should be assessed with caution as recent EPS trends have not been in their favor. Potential investors looking to establish a position in the remaining 27 companies should so from a conservative perspective initiating a small position at current levels, and adding to that position as earnings and dividend dates approach.
