5 Stocks Reporting Noteworthy Earnings This Week

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Includes: AMZN, CAT, F, GMCR, NFLX
by: Convex Strategies

As we delve deeper into earnings season, some of the biggest corporations in the world are making headlines. With all the turmoil in Europe, credit downgrades, protests, and other detractors, 3rd quarter earnings are more important than ever.

Monday

  1. Caterpillar (NYSE:CAT): Analysts are projecting $1.63 in EPS, on $14.8 billion in revenue. Last year, Caterpillar earned $1.22 per share. Caterpillar's numbers will be very interesting to watch, as its success is often a solid indicator of overall industrial activity. Considering the turmoil that the global economy experienced during the 2nd quarter, the earnings estimates appear somewhat lofty. CAT earned $1.84 in the 1st quarter of 2011, and $1.52 in the second. CAT missed expectations last quarter, as its margins contracted moderately. It's difficult to imagine Caterpillar being able to beat earnings, especially considering that the business cycle may be shifting against them. Given its difficulties with margins last quarter, I see a slight miss in earnings and a hit or slight beat on revenue.
  2. Netflix (NASDAQ:NFLX): Has there been a more important earnings announcement recently for Netflix? NFLX underwent a hellish 2nd quarter, and saw its stock plummet to the low $100s. After announcing that it would split its physical DVD delivery segment from its streaming business, CEO Reed Hastings decided to kill the plan and keep both segments together. This move did not, however, completely quell customer anger, given the price increases and dropping of Starz (LSTZA) movies. Fist Call analysts are projecting $.95 in EPS, after earnings of $1.11 and $1.26 in the first and second quarters, respectively. A miss here would be huge, after warning investors that customer defections would result in a potential earnings miss. The company's own estimates called for as low as $.72 per share. After lighter than expected revenue in the 2nd quarter, and havoc during the 3rd, a miss here could result in severe selling from already nervous investors and traders. Despite the sell-off, the market is still relatively optimistic about its growth prospects, as it trades at about 30 times earnings.

Tuesday

  1. Amazon (NASDAQ:AMZN): With analysts only expecting $.25 per share on $10.93 on billion, the estimates are curiously low for a company trading at more than 100 times earnings. Amazon beat earnings estimates last quarter, as it earned $.41 per share. eBay (NASDAQ:EBAY), an obviously important competitor preview, met earnings estimates and slightly beat on revenue when it announced last week. Given the already low estimates, a miss could be pretty harmful to Amazon's share price. Amazon should beat.

Wednesday

  1. Ford Motor (NYSE:F): Analysts are calling for $.45 per share, with revenue of $29.86 billion. Both figures would be a slight decrease from last year's numbers. Despite the negative performance that Ford's shares have posted this year, the company's earnings beat in both the 1st and 2nd quarters by solid margins. Though most cyclical companies have seen their industries' growth prospects continually revised down this year as the global economy has sputtered, the automotive industry car sales estimates have remained remarkably steady. With some recent strength this week in Ford's stock, along with a credit upgrade from Standard & Poor's, a beat here could further improve momentum and result in a surge in share prices. I like Ford's chances here; the news out of the automotive industry was good all quarter, and these estimates appear a bit low.
  2. Green Mountain Coffee Roasters (NASDAQ:GMCR): Quite the week for investors in GMCR. Shares plummeted to $68 after David Einhorn ripped into the company's accounting practices, free cash flow, and questioned its ability to retain patents for its single serve K-Cups, a huge revenue booster for the company. GMCR is expected to earn $.48 per share, which is in-line with earnings from the first two quarters of 2011. While there is no known catalyst for a miss, one would in fact slash the share price further, given the already depressed sentiment.

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