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Adam Alvarez
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As a conservative, both politically and economically, I strive to look at the long term risks of all trades. I'm also in favor of and recognize the importance of implementing stop loss orders. When it comes to trading, the fear shouldn't be of failure, but the unwillingness to accept failure.
  • Review Of Four Companies Set To Report This Week 0 comments
    Oct 22, 2012 2:05 PM | about stocks: MMM, DECK, AKS, FFIV

    Below are four companies set to report this week and what to expect from the reports.

    1. 3M (NYSE:MMM): It's no secret that the supposed safe haven stocks have had a negative earnings season to this point. Google (NASDAQ:GOOG) and McDonald's (NYSE:MCD) have already shown us the dangers of assumption. With that said, 3M might provide the next headline disaster. With shares trading near all-time highs like Google and McDonald's before them, the company is projected to report earnings on Tuesday of $1.65 with bottom line estimates calling for $1.61. Ironic since the company was projected to report earnings of $1.61 in the third quarter last year. Overall, a number they subsequently missed by nine cents. Even if the company matches or exceeds estimates, future projections may still haunt shares. After posting impressive earnings growth of as much as 23% in 2010, 3M is looking at 8% growth this year and 9% next year. All things considered, the company would need to post very impressive numbers with stronger guidance for shares to surge higher. Based on third quarter results so far, expect such good news to be nonexistent.
    2. AK Steel (NYSE:AKS): Last year, AK Steel reported a third quarter loss of three cents. This year, they are expected to do even worse with a projected reading of -$0.35. With shares gaining 13% already this month, the stock will undoubtedly need a much stronger report to surge higher. History shows us, though, not to expect such a positive surprise. In the fourth quarter of last year, the company missed a consensus estimate of -$0.39 by posting losses of -$0.51. The report showing us there is no such thing as a floor when it comes to this company's much maligned growth story. With shares up 20% off their July lows, expect significant downside following earnings.
    3. F5 Networks (NASDAQ:FFIV): When the company reported fourth quarter earnings of $0.79 in October of 2010, the beat temporarily outweighed the overbought nature of shares. Three months later, the surge was over as it became clear earnings growth could not keep up with an accelerating P/E ratio. However, the combination of profit taking and earnings growth has made the stock once again approachable. In fact, shares sit at almost exactly the same level they were before reporting two years ago. The only difference is earnings are expected to have improved by $0.39. Even if earnings fall flat, the stock should be very appealing to long term investors.
    4. Deckers (NYSE:DECK): At first glance, Deckers appears a stock worth taking a chance on as the company gets set to report third quarter earnings Thursday. Expected to report EPS of $1.06, with a P/E ratio just over 8 and shares off over $80 from their 52 week high, the upside potential is certainly there. However, it is the continued declaration of growth that will more than likely keep shares from advancing. If the company meets expectations, third quarter earnings will have fallen over 30% from the year ago period. Overall, proving that decent earnings alone will not be enough to propel shares.

    Investing in any company before earnings contains significant risk and should only be considered by those willing and able to suffer sizable losses. If willing to take on this risk, consult multiple sources before making such a decision.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Stocks: MMM, DECK, AKS, FFIV
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