Home > News & Commentary > Earnings Preview 10/20/09: Big Day for the Dow (UTX, KO, CAT, DD, BLK, COH, UAUA, PFE, CNI, YHOO)

Earnings Preview 10/20/09: Big Day for the Dow (UTX, KO, CAT, DD, BLK, COH, UAUA, PFE, CNI, YHOO)

Some big names, including 5 of the 30 Dow components, will be reporting earnings tomorrow. What follows here is a rundown of what to expect:

Before Market Open:
United Technologies Corp (UTX): Analysts are expecting EPS of $1.12 on revenue of $13.31B, which would be a 10% decline from the year ago quarter.  EPS estimates have remained stable over the last 90 days, so I doubt the market is expecting any less than a beat of those numbers. GE’s numbers did not paint a great picture for conglomerates, but unlike the General, United Technologies is not burdened by a dismally performing capital arm so there is probably little comparison there.
YTD: +22%     One Month: +4%

Coca-Cola (KO): Analysts are expecting EPS of $0.82 on revenue of $8.12 bn, equating to a 3.2% decline compared to the year ago quarter.  EPS estimates have risen slightly, compared to 60 days ago, so it is hard to know what the street expects.  Closely watched will be the revenue numbers to see if the company can grow out of the recession, and provide investors with good numbers made without resorting to drastic cost cutting.  A wildcard here is the declining dollar; since Coca-Cola has a strong presence abroad their numbers could be helped by favorable currency conversion rates relative to previous quarters.
YTD: +21%     One Month: +1%

Caterpillar (CAT): The provider of heavy-machinery is expected to report EPS of $0.06 on revenue of $7.49 bn, a drastic 42% decline from the year ago quarter.  The standard deviation of EPS estimates is high, so clearly the street has no coherent strategy in mind for these earnings.  Caterpillar has obviously been hit hard by the decline in construction spending, both residential and commercial, and their earnings will give some indication whether the tangible economy is actually improving.  It is my belief that Caterpillar is one of the key stocks to watch tomorrow for market direction.
YTD: +29%     One Month: +8%

EI DuPont de Nemours & Co. (DD): Analysts are expecting EPS of $0.33 on revenue of $6.14 bn, which would be a 15% decline from a year ago.  Wall Street has published cautious earnings for the chemical giant, following the company’s own reserved guidance.  Revenue will be the keenly watch figure, as investors will look to see if the decreased fear about the construction sector is well founded.  DuPont will also provide some clarity over DOW’s earnings later in the week, and as both stocks have performed admirably this year, these numbers will be watched intensely. On the docket will be the dividend, and traders will be interested if there is to be any cut, because their dividend of $0.41 per quarter will not be covered by earnings should they come in at expectations.
YTD: +37%     One Month: +2.5%

BlackRock (BLK): Analysts expect earnings of $1.90, on revenue of $1.12 bn which is nearly 15% below last year.  BlackRock has had a stellar year, and is currently pushing new 52 week highs.  Tomorrow will be the test to see whether they deserved it.  Certainly, the relentless rebound from market lows will have benefited the company, although traders will be interested in whether funds under management have increased and where those funds are flowing too.  The conference call should be of great interest to the street, to hear first hand what the company is seeing from the people who invest through it.  Estimates have increased dramatically over the last year as the market rose, however, investors will still be looking for the company to beat those estimates to justify the approximately 150% gain since market lows.
YTD: +72%     One Month: +11%

Coach, Inc. (COH): Analysts expect EPS of $0.39 on $748.73 mm of revenue, equating to a small drop compared to the year ago quarter.  For this company, closely watched will be same store sales and ASPs as traders try to get a handle on retail sales.  Certainly the street expects the company to beat these estimates, as expectations have not risen in the past 90 days, and the dollar decline should help this company which gets a large portion of its sales from its strong international presence.
YTD: +66%     One Month: +2.5%

UAL Corporation (UAUA): The holding company for United Airlines is expected to report a loss of $0.94 per share on revenue of $4.34 bn, or a 22% decline from the year ago quarter.  Analysts will be looking for the company to beat those numbers, and will be interested in fuel hedging strategies as the price of crude inches up again.
YTD: -34%     One Month: -15%

During Market Hours:
Pfizer (PFE): The pharmaceutical giant is expected to post earnings of $0.48 on $11.42 bn of revenue, a decline of 6% compared to last year.  Now that the Wyeth deal has been closed, investors will be interested to see the effects on the bottom line, and to hear management’s report of how things are going with the integration and how any cost savings are panning out.  Earnings estimates have been flat for the past 90 days, and traders will expect earnings to come in above expectations.
YTD: +1.5%     One Month: +9%

After Market Close:
Canadian National Railway (CNI): The railroad company is expected to post EPS of $0.82 on revenues of $1.86 bn, a decline of 14% over last years equivalent quarter.  These earnings will show people whether consumer and business spending is picking up, as the railroad traffic will increase if the economy is improving.  An interesting point is whether energy transportation will increase, given the increased price of oil, CNI will give another data point showing whether or not the oil sands mining operations have picked back up.  The declining dollar may hurt CNI as 19% of their revenue comes from U.S. domestic traffic.
YTD: +44.5%     One Month: +4%

Intuitive Surgical (ISRG): This once high-flying manufacturer of surgical instrument has produced some schizophrenic earnings in the past, but is expected to post an EPS of $1.46 on revenue of $256.44 mm. Analysts have increased their EPS expectations drastically over the past 90 days, and the stock has responded by rising dramatically.  With such a highly valued PE, traders are always looking for the company to beat earnings, but probably never before as much as now.  The street has widely missed the company’s earnings the past two quarters, and will be looking for some more stability this time around.
YTD: +108%     One Month: +6.5%

Yahoo! Inc. (YHOO) – The internet giant is expected to post $0.07 EPS on revenues of $1.12 bn, a decline of 15% from a year ago.  Believe it or not, rumors are still swirling about a more formal tie-up with Microsoft, especially in light of Microsoft’s Bing which got off to a great start but has tapered since then.  Look for questions about this in the conference call, and my guess is that the response will be a sharp negative.  Carol Bartz has had a few quarters at the helm of Yahoo, and the company isn’t looking as weak as it did during the crazy Jerry Yang-playing-CEO period, but eventually the company will have to produce some good numbers to back up the tough talk.
YTD: +41%     One Month: -1%

-AH

Disclosure: Long Microsoft

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