Earnings Previews For McDonald's, Harley Davidson, Advanced Micro Devices And Steel Dynamics

Includes: AMD, HOG, MCD, STLD
by: Stock Traders Daily

The pace of earnings reports will reach a fevered pitch during the week of January 23, promising to keep investors and traders busy and on their toes. Given the heavy dose of reports, volatility in the broader market could pick up, creating plenty of trading opportunities.

Therefore, having the right risk-control tools and technical analysis at your side is crucial during this time. As always, our trading reports provide traders with all the key levels of interest, helping to secure gains while minimizing downside exposure.

In today's article, we take a look at some of the most highly-anticipated earnings reports that are due out on Tuesday, January 24.

Investors Have Been Lovin' It

As a "flight to quality" play, and a play on the still cost-conscious, value-seeking consumer, McDonald's (NYSE:MCD) has been one of the hottest stocks over the past year-and-a-half. Impressively, even its performance in the dismal European market has been solid, with monthly comparable sales up 6.5% there recently. In the U.S., MCD has enjoyed continued success for its breakfast items as its $1 coffee has lured customers in.

For its fourth quarter, the Street is forecasting EPS of $1.29 and revenue of $6.78 billion, translating to year/year growth of 11.2% and 9.2%, respectively. Not surprisingly, the Asia Pacific, Middle East, & Africa regions have been a significant catalyst for its growth, and figure to remain so for some time. However, with the stock trading at all-time highs and with investor sentiment extremely bullish on the stock, MCD cannot afford a miss - or perhaps even an inline quarter.

Will Investors Be Riding High on the HOG?

It was a bumpy ride for investors of Harley-Davidson (NYSE:HOG) in 2011 as the company's financial performance was hindered by a mix of sour consumer sentiment, the restructuring of its York facility, and to a certain extent, supply chain disruptions caused by the earthquake and tsunami in Japan. However, as the labor market has shown some signs of life, shares of HOG have been on the rise in 2012. Heading into its Q4 earnings report, analysts' EPS estimates have dropped, moving to $0.22 from $0.25 a few months ago. The ongoing restructuring of the York facility is negatively impacting capacity and mix - restricting the number of higher-margin bikes it can build - which will crimp its gross margin. On the positive side, demand appears to be picking up, with analysts expecting revenue growth of 10.3% year/year to $1.01 billion.

Soft PC Sales & IT Spending Hurting AMD

Advanced Micro Devices (NASDAQ:AMD) has made meaningful strides on the manufacturing side of its business, and has taken aggressive steps to cut back costs through its restructuring plan which will cut its workforce by 10%. The bad news is, the revenue side of the equation is not looking too hot as large technology OEMs have been warning about weak PC & server sales. The Street is expecting it to report a profit of $0.16 on revenue of $1.72 billion, but the possibility of a miss and/or downside guidance is certainly a risk to consider heading into its print.

Nerves of Steel

Investors of Steel Dynamics (NASDAQ:STLD) have had to endure a wild ride over the past several months, seeing the stock get hammered throughout much of 2011, but then enjoying a significant upswing since the beginning of last October. Despite issuing downside Q4 guidance in December ($0.08-$0.12 vs. $0.18), due to decreased shipments and lower flat rolled steel prices, the stock has continued to rally into its earnings report. With much of the "surprise factor" taken out of its Q4 earnings due to its guidance, the focus will turn to its outlook for FY12. In particular, whether it sees a meaningful rebound for steel prices this year will be of utmost interest.

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