Earnings season kicks off this week with a variety of large names reporting. But the bulk of this quarter's reports will come in the following weeks. There will definitely be names that will leave you scratching your head, and probably be plenty of times where you ask yourself why you didn't go long or short into a certain company's report. As part of my quarterly earnings coverage, I've already named 5 stocks to be careful with into their quarterly reports. A couple of those names will be very interesting to watch, including Facebook's (FB) first quarterly report and JP Morgan's (JPM) trading loss update. But for this preview article, I'm focusing on a slightly different theme. Here are five earnings reports to definitely watch this quarter.
The biggest one out there has to be on the list. Apple is a name to watch not only because of its size, but for the impact it has on dozens of other names throughout the technology sector. For instance, the impact on Qualcomm's (QCOM) chip sales, or Corning's (GLW) gorilla glass sales. Apple's sales figures will also help investors and analysts consider names like Dell (DELL) and Amazon (AMZN) as well. Apple's reach is global, and its size and scope make it a name that must be followed each quarter.
Apple is scheduled to report on Tuesday, July 24. As with the prior quarter, we will hear from Verizon (VZ) during the week prior to Apple's release, and AT&T (T) will report the morning of Apple's release. Sprint (S) will report its results a few days after Apple. This will make it fun to watch where the analysts are, as most professional analysts usually release their estimates days, or even weeks, ahead of the Apple report. We heard a lot of bearish opinions on Apple last quarter when Verizon and AT&T iPhone activation numbers were way down from the prior quarter, and that scared many. But Apple did not disappoint, and I don't think that it is going to this quarter either. I will not release my official Apple preview until the day before earnings, which I do each quarter, but for now I will leave you with my initial projections halfway through the quarter. I can say for now that I probably will raise my iPad and Mac unit sales numbers, and will probably trim my iPhone estimate, but again, I have not fully run the numbers yet for my official preview.
SodaStream will announce its second-quarter results about a month from now, on August 8. For those who are not familiar with this name, it is the company that allows you to make your own soda and other drinks at home. Based in Israel, SodaStream generates about half of its revenue from Europe, but that percentage is decreasing as the company pushes into the United States. Recently, it has announced moves into Wal-Mart (WMT), and plans to enter drug and grocery stores within the next two years.
SodaStream is an extreme battle ground stock, meaning there is always a large number of bulls and bears fighting over the name. After nearly hitting $80 last year, SodaStream plunged, falling to the high $20s late last year and in parts of 2012. The company raised its full-year guidance at its last earnings report, and its change from a euro to U.S. dollar reporting currency makes it a lot easier for analysts and investors to clearly analyze the name (currency translations made financials and valuations hard to compare for some over periods of time).
Analysts are expecting a 17% rise in revenue this quarter and an earnings per share rise from $0.42 to $0.46. This company has done very well in terms of beating earnings expectations in recent quarters. The brand is growing and it is getting product into more and more retail outlets. The question many have now is will Europe's headwinds and possible euro currency impacts have a net impact on the bottom line. Expect this name to be volatile around and definitely after earnings.
China is slowing down, but the question is to what extent. The leading search engine in China is definitely showing signs of slowing growth. After two years of 85 to 90 percent revenue growth, Baidu's revenue is forecast to rise at just at just 52.5% this year and 41% next year. When Baidu reported its Q1 results, revenue missed estimates ever so slightly, and the midpoint of the Q2 guidance was below street expectations.
Shares of Baidu have fallen about $20 since reporting its earnings, and are currently just a few dollars off recent lows, levels not seen since late 2011. Baidu used to be known for beating estimates handily, but in the past three quarters, it has beaten by just a penny each time. We know that China is slowing, but if it is slowing much faster than expected, that will certainly scare off a few investors.
Now, there is not all bad news. Baidu has inked a search deal with Apple for searches on the iPhone, and Baidu is also looking to build its own smartphone. Those will help provide a fair amount of growth going forward, but Baidu needs to make sure it beats estimates. A good second-quarter report (release date still to be determined) and solid guidance should help this name rally back toward $135, but if Baidu disappoints again, I would not be surprised to see it fall toward $100.
Cisco Systems (CSCO)
I know that conditions are tough in Europe, but Cisco isn't exactly growing that fast to begin with. When Cisco guided well below expectations after last quarter, the stock took a hit. This is a stock that has done virtually nothing over the past couple of years, and that is including the fact that the company is buying back billions of its own stock. Cisco will report on August 15.
To me, this is a really important quarter for Cisco. If it misses estimates, or guidance is weak, this stock is going to get hit again. That is going to again start the speculation about when CEO John Chambers should step aside, and this time, I believe it will be justified. Cisco is going nowhere right now, and shareholders are getting more frustrated by the quarter. At some point, a change of management is going to be needed, and I'm feeling now that we are getting closer to that point.
If you are looking for a company that best represents the global economy, I think this may be one of your top choices. The construction machinery giant will report its second-quarter results on July 25. Caterpillar has a top-5 weighting in the Dow Jones Industrial Average thanks to its $80 plus price, so any moves in the name post-earnings will definitely have an impact on that day's movement.
Caterpillar is expected to show more than 20% year-over-year growth in revenue when it reports, with earnings per share rising more than 50%. Analysts are expecting more than 16% revenue growth this year and another close to 10% next year. However, estimates have come down in the past month, and we'll hear from Caterpillar in two weeks on how strong the global economy is. I had to choose one traditional blue-chip name for my list, and Caterpillar certainly fits the bill. If you want to know how the manufacturing sector is doing, watch when this name reports later this month.