Zacks Earnings Preview: Adobe Systems, Best Buy, FedEx, Kroger, and Oracle © Thomson Reuters 2009 All rights reserved
Zacks.com releases the list of companies likely to issue earnings surprises.
This week`s list includes Adobe Systems (Nasdaq: ADBE), Best Buy (NYSE: BBY) and
FedEx (NYSE: FDX). To see more earnings analysis, visit
Every day, Zacks.com makes 4 stock picks available, free of charge. To see them,
go to http://at.zacks.com/?id=5612.
The Week’s Events
This week brings the initial batch of third-quarter results. Seven early
reporters from the S&P 500 – all of whom have quarters ending in August – will
report, including: Adobe Systems (Nasdaq: ADBE), Best Buy (NYSE: BBY), FedEx
(NYSE: FDX), Kroger (NYSE: KR), and Oracle (Nasdaq: ORCL). In total, we will see
results from 20 companies.
So how will the third-quarter look? The Zacks Consensus Estimate calls for S&P
500 earnings of $13.50 per share, a 15.4% decline from a year prior.
Going back to the week’s events, the economic calendar will stay busy with
inflation, manufacturing and housing data being released.
* Tuesday: August Producer Price Index (PPI), August retail sales, September
Empire State survey, July business inventories
* Wednesday: August Consumer Price Index (CPI), August industrial production and
capacity utilization, September NAHB housing market index, weekly crude
inventories, weekly mortgage applications
* Thursday: August housing starts and building permits, September Philadelphia
Fed survey, weekly initial jobless claims, weekly natural gas inventories
President Barack Obama will speak about the financial crisis on Monday, which is
also the anniversary of Lehman Brothers’ collapse. The same day, Fed Governor
Elizabeth Duke and Richmond Federal Reserve Bank President Jeffrey Lacker will
give speeches. Duke will discuss regulation and accounting at the AICPA’s annual
conference in Washington D.C. Lacker will appear before the Charlotte chapter of
the Risk Management Association.
Friday will be a quadruple witching day. Stock option contracts, stock futures
contracts, market index options and market futures contracts will all expire.
This could lead to increased volatility.
We are in a fear and greed market with a relatively small group of traders
playing hot potato. Bonds are doing extremely well (fear), while the S&P 500
continues move higher (greed). It doesn’t make sense, but stocks are trending
higher. Dow 10,000 is only a few good days away and the fast money remains in
Companies That Could Issue Positive Earnings Surprises
One analyst just raised his fiscal third-quarter profit forecast on Adobe
Systems (Nasdaq: ADBE). The revision pushed the Zacks Consensus Estimate a penny
higher to 28 cents per share. The most accurate estimate is more bullish at 32
cents per share. Though the software company has only matched expectations over
the past 2 quarters, it did top during the previous 4 quarters. Adobe is
scheduled to report on Tuesday, Sep 15, after the close of trading.
Three analysts raised their fiscal second-quarter projections on Best Buy (NYSE:
BBY) over the past few weeks. The changes have resulted in a Zacks Consensus
Estimate of 41 cents per share, a penny higher than the average forecast of a
month ago. The most accurate estimate is slightly more bullish at 42 cents per
share. BBY has topped expectations for 3 consecutive quarters. Best Buy is
scheduled to report on Tuesday, Sep 15, before the start of trading.
FedEx Corporation (NYSE: FDX) preannounced fiscal first-quarter earnings of 58
cents per share today. The number is well above both the company’s guidance and
the Zacks Consensus Estimate of 43 cents per share. Fiscal second-quarter
guidance also looks strong at a range of 65 to 95 cents per share. Though the
surprise should be baked into the price, if reaction to the conference call is
favorable, there is the possibility of additional upside. FDX is scheduled to
report on Thursday, Sep 17, before the start of trading.
Charles Rotblut, CFA, is the senior market analyst for Zacks.com.
About the Zacks Rank
Since 1988, the Zacks Rank has proven that “Earnings estimate revisions are the
most powerful force impacting stock prices.” Since inception in 1988, #1 Rank
Stocks have generated an average annual return of +26%. During the 2000-2002
bear market, Zacks #1 Rank stocks gained +43.8%, while the S&P 500 tumbled
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recommendations (Rank #5) as Strong Buy recommendations (Rank #1). Since 1988,
Zacks Rank #5 stocks have significantly underperformed the S&P 500 (-0.8% versus
+8%). Thus, the Zacks Rank system allows investors to truly manage portfolio
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