Earnings Preview: March Madness On Wall Street

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Includes: GME, GS, MS, WCG
by: Zacks Investment Research

College basketball may not be the only madness as three potentially volatile days face traders.

Tuesday starts with Goldman Sachs (NYSE:GS) and then transitions into Fed watch. The statement from the March meeting should be released around 2:15 ET, give or take five minutes. Wednesday follows with earnings from Morgan Stanley (NYSE:MS). Then comes Thursday with Bear Stearns' (NYSE:BSC) numbers and a conference call that will be very interesting, to say the least.

Of course, these aren't the only things scheduled for the week.

We have confirmed quarterly earnings reports for 144 companies, including 16 S&P 500 members. In addition to the aforementioned brokerage firms, Adobe Systems (NASDAQ:ADBE), Discover Financial (NYSE:DFS), Fedex (NYSE:FDX), GameStop (NYSE:GME), KB Home (NYSE:KBH) and Nike (NYSE:NKE) are on the calendar.

On the economic front, the Federal Reserve will meet on Tuesday, Mar 18. A 75-basis point cut is very possible, though a 50-basis point cut is not out of the realm of possibilities. Given Friday's news about Bear Stearns needing liquidity and the tame inflation numbers, I think we will see a 75-basis point cut.

Here is a listing of the other economic data.

  • Monday: March New York Fed manufacturing survey, February industrial production and capacity utilization, March National Association of Home Builders survey, fourth-quarter current account balance (this last one could impact how the dollar trades)
  • Tuesday: February Producer Price Index (PPI), February housing starts
  • Wednesday: Mortgage Banker's Association index
  • Thursday: February Conference Board's Leading Indicators, March Phili Fed survey

First round games for the NCAA men's college basketball tournament start on Thursday.

The U.S. equity markets will be closed on Friday, Mar 21, in observance of Good Friday. Have a happy Easter.

Companies That Could Issue Positive Earnings Surprises during the Week of Mar 17 - 21

GameStop (GME) raised its fourth-quarter earnings guidance last month. The retailer anticipates profits of $1.11 to $1.12 per share. Strong demand for video games led to same-store sales growth of 17.4%. Five brokerage analysts adjusted their projections as a result, leading to a consensus earnings estimate of $1.12 per share. GME has surpassed expectations for four consecutive quarters. GameStop is scheduled to report on Tuesday, Mar 18, before the start of trading.

The consensus estimate for WellCare Health Plans (NYSE:WCG) is holding at $1.58 per share, despite recent warnings from two other insurers. The quarterly consensus earnings estimate for WCG is two cents higher than the average forecast of a week ago. Furthermore, the insurer has a history of beating expectations, having issued positive earnings surprises for more than 10 consecutive quarters. WellCare is scheduled to report on Thursday, Mar 20, before the start of trading.

Companies That Could Issue Negative Earnings Surprises during the Week of Mar 17 - 21

Morgan Stanley (MS) has missed earnings expectations for two consecutive quarters. Forecasts for the firm's fiscal first-quarter have fallen 31 cents over the past 30 days to $1.13 per share, reflecting downward revisions by more than half of the covering brokerage analysts. Morgan Stanley is scheduled to report on Wednesday, Mar 20, before the start of trading.

First-quarter estimates have also been falling on Bear Stearns (BSC) and Goldman Sachs (GS). Given Friday's announcement about BSC's liquidity problems, the firm's financial status will be more important than its earnings announcement. GS has not missed earnings expectations since 2005, though the trend in estimate revisions suggests this streak is at risk of being broken.

Charles Rotblut, CFA is the senior market analyst for Zacks.com. He can be reached at crotblut@zacks.com