The Week Ahead: Keep an Eye on Those Forward Numbers

 | Apr 15, 2013 | 6:00 AM EDT  | Comments
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The second week of April delivered some big returns, with all major stock market indices climbing more than 2%. That has brought the Dow Jones Industrial Average up to a 13.4% climb since the start of the year, with the S&P 500 and the Nasdaq Composite up 11.4% and 9.1%, respectively. These strong moves, of course, do not reflect on March's weaker-than-expected retail sales, nor the tumble in consumer sentiment as recorded in the April Michigan sentiment reading. Instead, we've seen these gains off the Wednesday release of minutes from the Federal Open Market Committee, which support the growing view that the Federal Reserve will be backstopping the economy for some time to come after.

Last week also saw Alcoa (AA) kick off a coming flood of first-quarter earnings reports; the company itself delivered better-than-expected earnings, but a miss on revenue. This earnings season, I and other investors will be watching not just the top and bottom lines, but also their expected rate of growth for the coming quarters. Data from FactSet show that profit-growth targets have already adjusted downward for the first quarter, and now sit at nearly zero for companies tracked by the S&P 500. By comparison, on Dec. 31 analysts had expected an average growth rate of 2.2%. 

Helping fuel that downward revision have been the 88 companies that have thus far issued negative earnings-per-share guidance for the first quarter, as opposed to 22 with positive forward numbers, per FactSet. That is not a favorable ratio at all, in my book. S&P 500 stocks are collectively trading at 14.7x the $108.20 EPS consensus, per Thomson Reuters, and these slower-than-expected growth rates are likely to cap the market's upside. They could even drive some profit-taking in the weeks ahead.

While we saw only a handful of earnings last week, that will change in spades over the next five days, with more than 265 companies scheduled to release their numbers. On Friday, JPMorgan (JPM) and Wells Fargo (WFC) kicked off the financial-sector earnings, and that's set to continue in the coming days as we hear from a number of large institutions -- Citigroup (C), Bank of America (BAC), Goldman Sachs (GS) and TD Ameritrade (AMTD), among others. 

On the economic side, we'll get our latest read on the housing sector Tuesday with March housing starts and building-permits numbers. In addition, some related companies -- Hooker Furniture (HOFT), Stanley Furniture (STLY), Restoration Hardware (RH) Sherwin Williams (SHW) and Select Comfort (SCSS) -- are all scheduled to report March-quarter results this week. That will tell us if the recent housing strength is starting to translate into a pick-up for companies outside of the homebuilders.

The March consumer price index is due Tuesday, as well, which will reveal whether inflationary pressures have cooled for the consumer along with the dip in gas prices. In the manufacturing economy, the week ahead brings the industrial-production index and capacity-utilization readings, as well as quarterly results from United Rentals (URI), W.W. Grainger (GWW), General Electric (GE) and Honeywell (HON). 

Turning back to earnings, on tap this week are two particularly notable reports. One is Intel (INTC), given the cloud hanging over the PC market, and the other is Yahoo! (YHOO), which should impart more detail on CEO Marissa Mayer's Internet strategy. Talk about two divergent stocks: Yahoo has risen more than 55% over the last six months, while Intel has gone essentially unchanged. Management commentary and potential forecasts will determine whether the shares will remain on those respective paths, or if a change might lie ahead. My money says that, at least as far as Intel is concerned, there is little reason to get excited in the near term.

Here's a more comprehensive look at what will be coming your way this week.

___________________

Economic Calendar

Monday, April 15

  • Empire Manufacturing (April)
  • National Association of Home Builders Housing Market Index (April)

____

Tuesday, April 16

  • Consumer Price Index (March)
  • Housing Starts (March)
  • Building Permits (March)
  • Industrial Production (March)
  • Capacity Utilization (March)

____

Wednesday, April 17

  • Mortgage Bankers Association Mortgage Index (Weekly)
  • Federal Reserve Beige Book (April)

____

Thursday, April 18

  • Initial & Continuing Jobless Claims (Weekly)
  • Philadelphia Fed Index (April)
  • Leading Indicators (March)

____

Friday, April 19

  • (No major economic releases)

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Corporate Earnings

Monday, April 15

  • Citigroup (C)
  • Hooker Furniture (HOFT)
  • Joe's Jeans (JOEZ)
  • Charles Schwab Corp. (SCHW)
  • Stanley Furniture (STLY)

____

Tuesday, April 16

  • TD Ameritrade (AMTD)
  • BlackRock, Inc. (BLK)
  • Comerica (CMA)
  • Goldman Sachs (GS)
  • W.W. Grainger (GWW)
  • Intel Corp. (INTC)
  • Johnson & Johnson (JNJ
  • The Coca-Cola Company (KO)
  • U.S. Bancorp. (USB)
  • Wolverine World Wide (WWW)
  • Yahoo! Inc. (YHOO)

____

Wednesday, April 17

  • Abbott Labs (ABT)
  • American Express (AXP)
  • Bank of America (BAC)
  • The Bank of New York Mellon (BK)
  • Badger Meter (BMI)
  • eBay Inc. (EBAY)
  • Greenhill & Co. (GHL)
  • Mattel Inc. (MAT)
  • Piper Jaffray (PJC)
  • PNC Financial (PNC)
  • Select Comfort (SCSS)
  • United Rentals (URI)

____

Thursday, April 18

  • Acacia Research (ACTG)
  • Advance Micro Devices (AMD)
  • Peabody Energy (BTU)
  • Cubist Pharmaceuticals (CBST)
  • Cypress Semiconductor (CY)
  • Danaher Corp. (DHR)
  • E*Trade Financial (ETFC)
  • Google (GOOG)
  • Morgan Stanley (MS)
  • Pepsico (PEP)
  • Philip Morris (PM)
  • Restoration Hardware (RH)
  • Sherwin Williams (SHW)
  • Snap-on Inc. (SNA)
  • Verizon Communications (VZ)

____

Friday, April 19

  • American Movil (AMX)
  • Briggs & Stratton (BGG)
  • Rockwell Collins (COL)
  • General Electric (GE)
  • Honeywell International (HON)
  • Kimberly-Clark (KMB)
  • Schlumberger (SLB)
  • Suntrust Bank (STI)
  • Sensient Technologies (SXT)
  • Under Armour (UA)

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