Autozone, Inc. (AZO) and Fuel Systems Solutions, Inc. (FSYS) could top expectations. Costco Wholesale Corporation (COST) and Tech Data Corporation (TECD) could provide disappointing guidance.
As fourth-quarter earnings season winds down, traders will be even more focused on the news coming out of Washington.
Congress will debate the president’s budget proposal, which includes allocations for absorbing bank losses. There will also be ongoing discussion about the stress tests for banks. Not to mention speculation about whether the government will take a large ownership position in other financial companies, as it is doing with Citigroup (C). Finally, aid for auto parts suppliers and healthcare reform are on the agenda.
Economic data will also grab the attention of traders. The week’s schedule includes the ISM manufacturing survey (Monday), the Beige Book (Wednesday at 2pm) and February employment data (Friday).
* Monday: February ISM manufacturing survey, January personal income and spending, January construction spending * Tuesday: January pending home sales, February auto sales, * Wednesday: February ISM non-manufacturing survey, ADP employment, Federal Reserve Beige Book, weekly crude inventories * Thursday: Fourth-quarter productivity (revised), January factory orders, weekly crude inventories * Friday: February unemployment and nonfarm payrolls, January consumer credit
Fed Chairman Ben Bernanke will testify before the Senate budget committee on Tuesday morning. He will speak about the impact of the economy on the federal budget. The fed chairman will speak again on Saturday, Mar 7, at a dedication ceremony in South Carolina.
Vice Chairman Donald Kohn will appear before the Senate’s Committee on Banking, Housing, and Urban Affairs on Thursday. He will speak about American International Group (AIG) on Thursday.
As for earnings, we have confirmed reports from 204 companies. Included in this group are 8 S&P 500 members: American Capital Ltd. (ACAS), Autozone, Inc. (AZO), Ciena Corporation (CIEN), Costco Wholesale Corporation (COST), Edison International (EIX), H&R Block, Inc. (HRB), MBIA Inc. (MBI) and Pepco Holdings, Inc. (POM).
Stocks remain oversold, suggesting that a bounce should occur soon. However, both indexes and stocks can stay oversold (or overbought) for an extended period of time.
Companies That Could Issue Positive Earnings Surprises During the past few weeks, 3 of the 18 covering brokerage analysts raised their fiscal second-quarter profit projections on Autozone, Inc. (AZO). The revisions pushed the consensus earnings estimate back up to $ 1.84 per share. The most accurate estimate is far more bullish, at $ 1.93 per share. AZO has beat expectations twice during the past 4 quarters, but also missed once. AutoZone is scheduled to report Tuesday, Mar 3, before the start of trading.
Fuel Systems Solutions, Inc. (FSYS) has topped expectations for 4 consecutive quarters. Ahead of the company’s fourth-quarter report, 1 brokerage analyst raised his profit forecast, which helped the consensus earnings estimate rise back to 41 cents per share. The most accurate estimate is slightly more bullish at 50 cents per share. This is a volatile stock with the potential to respond to good earnings. Fuel Systems Solutions is scheduled to report on Thursday, Mar 5, after the close of trading.
Companies That Could Issue Negative Earnings Surprises Earlier this month, Costco Wholesale Corporation (COST) warned that fiscal second-quarter earnings would be “substantially below” the consensus earnings estimate. The company blamed the economy, price-based promotions and lower gasoline profits for the warning. Nearly all of the covering analysts cut their projections in response, sending the average profit forecast 11 cents lower to 60 cents per share. Costco has historically met or topped expectations, so a miss may not occur. However, forecasts for the remainder of fiscal 2009 have been cut and it is probable that guidance for the second-half of the year will be disappointing. Costco is scheduled to report on Wednesday, Mar 4, before the start of trading.
Tech Data Corporation (TECD) has missed profit expectations for 2 consecutive quarters. Though earnings estimates are unchanged ahead of the company’s fiscal fourth-quarter report, forecasts for fiscal 2010 are dropping. This suggests a strong possibility of disappointing guidance. Tech Data is scheduled to report on Tuesday, Mar 3, before the start of trading.
Charles Rotblut is the Vice President of Web Content for Zacks Investment Research and the Senior Market Analyst for Zacks.com. He oversees the editorial staff, manages the market-beating Focus List, Timely Buys and Top 10 portfolios, and plays an instrumental role in the development of new products. For more information, visit http://www.zacks.com
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