7 Stocks That Might Report Blowout Earnings On Monday

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Includes: AMGN, CAT, ETN, LO, NFLX, NMM, TXN
by: Efsinvestment

Last week was a profitable one for investors. Although the markets started the week with negative returns, they finished in the green territory. Utilities gained the most (2.5%), followed by financials (1.8%), and conglomerates (1.4%). Around 64% of the earnings reports have beaten the consensus earnings estimates so far. Thanks to stronger-than-expected earnings, most of the stocks that reported earnings made considerable gains.

It is mostly the case that undervalued companies report blow-out earnings, pushing their stock prices to higher levels. Therefore, investing in undervalued stocks with strong earnings potentials could be highly profitable.

Here is a brief analysis of cheap companies reporting earnings on Monday. I have analyzed these stocks from a fundamental perspective, adding my FED+ valuations and O-Metrix scores where applicable:

Company

Q3 EPS

Estimate

Q3 Revenue

Estimate

Fair Value

Range

O-Metrix

Score

Amgen (AMGN)

$1.29

$3.87 billion

$74 - $102

5.09

Caterpillar (CAT)

$1.55

$15.03 billion

$109 - $129

5.08

Eaton (ETN)

$1.08

$4.19 billion

$57 - $81

5.95

Lorillard (LO)

$2.03

$1.14 billion

$118 - $124

5.64

Netflix (NFLX)

$0.95

$872 million

$155 - $161

6.45

Navios Maritime (NMM)

$0.34

$47.37 million

$18 - $28

7.45

Texas Instr. (TXN)

$0.58

$3.33 billion

$37 - $47

5.36

(Company data from Finviz/Morningstar. Earnings data from Earnings.com and Yahoo Finance. You can download my FED+ Fair Value Estimator here.)

Amgen will report its earnings on Monday, after the market close. Consensus EPS estimate for the 3rd quarter is $1.29. In 2010, the same period EPS was $1.36. Mean revenue estimate is $3.87 billion for the current quarter. Here is the recent earnings history:

Earnings History

Sep 10

Dec 10

Mar 11

Jun 11

EPS Est

1.27

1.11

1.29

1.28

EPS Actual

1.36

1.17

1.34

1.37

Difference

0.09

0.06

0.05

0.09

Surprise %

7.10%

5.40%

3.90%

7.00%

Amgen is trading with a trailing P/E ratio of 12.18, and a lower forward P/E ratio of 10.44. Based on an annualized EPS growth estimate of 9.60%, the stock has a fair value range of $74 - $102. Its O-Metrix score of 5.09 is above the market average.

Caterpillar will report its earnings on Monday, before the market open. Consensus EPS estimate for the 3rd quarter is $1.55. In 2010, the same period EPS was $1.22. Mean revenue estimate is $15.03 billion for the current quarter. Here is the recent earnings history:

Earnings History

Sep 10

Dec 10

Mar 11

Jun 11

EPS Est

1.09

1.27

1.31

1.75

EPS Actual

1.22

1.47

1.84

1.52

Difference

0.13

0.20

0.53

-0.23

Surprise %

11.90%

15.70%

40.50%

-13.10%

Caterpillar is trading with a trailing P/E ratio of 14.44, and a lower forward P/E ratio of 9.98. Based on an annualized EPS growth estimate of 10.30%, the stock has a fair value range of $109 - $129. Its O-Metrix score of 5.08 is above the market average. Caterpillar has significant presence in emerging markets, which might boost its earnings above the analyst expectations.

Eaton will report its earnings on Monday, before the market open. Consensus EPS estimate for the 3rd quarter is $1.08. In 2010, the same period EPS was $0.80. Mean revenue estimate is $4.19 billion for the current quarter. Here is the recent earnings history:

Earnings History

Sep 10

Dec 10

Mar 11

Jun 11

EPS Est

0.69

0.84

0.80

0.95

EPS Actual

0.80

0.85

0.84

0.97

Difference

0.11

0.01

0.04

0.02

Surprise %

15.90%

1.20%

5.00%

2.10%

Eaton is trading with a trailing P/E ratio of 12.30, and a lower forward P/E ratio of 9.31. Based on an annualized EPS growth estimate of 9.70%, the stock has a fair value range of $57 - $81. Its O-Metrix score of 5.95 is above the market average. Eaton is trading almost 25% below its 52-week high. A good earnings report can push the stock back to its 52-week highs.

Lorillard will report its earnings on Monday, before the market open. Consensus EPS estimate for the 3rd quarter is $2.03. In 2010, the same period EPS was $1.81. Mean revenue estimate is $1.14 billion for the current quarter. Here is the recent earnings history:

Earnings History

Sep 10

Dec 10

Mar 11

Jun 11

EPS Est

1.64

1.67

1.57

2.02

EPS Actual

1.81

1.74

1.71

2.05

Difference

0.17

0.07

0.14

0.03

Surprise %

10.40%

4.20%

8.90%

1.50%

Lorillard is trading with a trailing P/E ratio of 15.84, and a lower forward P/E ratio of 13.42. Based on an annualized EPS growth estimate of 12%, the stock has a fair value range of $118 - $124. Its O-Metrix score of 5.64 is above the market average. Lorillard is not the cheapest tobacco stock in the market, but it offers a good yield of 4.5%.

Netflix will report its earnings on Monday, before the market open. Consensus EPS estimate for the 3rd quarter is $0.95. In 2010, the same period EPS was $0.70. Mean revenue estimate is $812 million for the current quarter. Here is the recent earnings history:

Earnings History

Sep 10

Dec 10

Mar 11

Jun 11

EPS Est

0.71

0.71

1.08

1.11

EPS Actual

0.70

0.87

1.11

1.26

Difference

-0.01

0.16

0.03

0.15

Surprise %

-1.40%

22.50%

2.80%

13.50%

Netflix is trading with a trailing P/E ratio of 29.63, and a lower forward P/E ratio of 18.91. Based on an annualized EPS growth estimate of 31.30%, the stock has a fair value range of $155 - $161. Its O-Metrix score of 6.45 is above the market average. After making several strategic mistakes, Netflix fell-off the cliff, losing 60% in the last quarter. I think the sell-off is over. If Netlix beats the analyst estimates, as it did in the last quarter, the stock can provide unexpectedly high returns in a short period of time.

Navios Maritime will report its earnings on Monday. Consensus EPS estimate for the 3rd quarter is $0.34. In 2010, the same period EPS was $0.38. Mean revenue estimate is $47.37 million for the current quarter. Here is the recent earnings history:

Earnings History

Sep 10

Dec 10

Mar 11

Jun 11

EPS Est

0.36

0.34

0.34

0.32

EPS Actual

0.38

0.38

0.35

0.36

Difference

0.02

0.04

0.01

0.04

Surprise %

5.60%

11.80%

2.90%

12.50%

Navios Maritime is trading with a trailing P/E ratio of 11.79, and a lower forward P/E ratio of 11.71. Based on an annualized EPS growth estimate of 7%, the stock has a fair value range of $18 - $28. Its O-Metrix score of 7.45 is well above the market average. Navios is one of my favorite stocks. It offers a nifty double digit yield of 10.74%. Navios has beaten analyst estimates in the last 4 quarters. Occasionally, the stock experiences “investor panic”, resulting in massive drops in stock price. It is a must buy type of stock, if such opportunity arises (like it did in early August).

Texas Instruments will report its earnings on Monday. Consensus EPS estimate for the 3rd quarter is $0.58. In 2010, the same period EPS was $0.71. Mean revenue estimate is $3.33 billion for the current quarter. Here is the recent earnings history:

Earnings History

Sep 10

Dec 10

Mar 11

Jun 11

EPS Est

0.69

0.63

0.58

0.53

EPS Actual

0.71

0.78

0.55

0.56

Difference

0.02

0.15

-0.03

0.03

Surprise %

2.90%

23.80%

-5.20%

5.70%

Texas Instruments is trading with a trailing P/E ratio of 11.72, and a forward P/E ratio of 12.59. Based on an annualized EPS growth estimate of 10.80%, the stock has a fair value range of $37- $47. Its O-Metrix score of 5.36 is above the market average. Tech stocks are among the cheapest ones in the market, and Texas Instruments is no exception.

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