By Angelo Young -
As we enter the fifth week of the third-quarter corporate earnings season, big American companies haven’t fared as poorly as some feared. As of Monday, nearly 90 percent of S&S&P 500orporations have posted their June-to-September results and, as expected, profits and revenue are declining for the first time since the recession.
But the numbers are turning out to be better than expected. When the third-quarter earnings season began early last month, most economists expected an overall U.S. corporate earnings drop of 5 to 6 percent from the same period last year. Instead, the slowdown in growth stands at 1.29 percent, according to S&P Capital IQ.
Energy and raw materials have been battered by a global China-led slowdown and an oil supply glut, while a strong U.S. dollar squeezes company earnings overseas. These factors have more than offset gains in the healthcare, tech and consumer discretionary sectors.
Dan Farley, regional investment director at U.S. Bank, said investors should be cautious about growth expectations moving forward.
“We think the holiday season could be shaping up to being pretty decent considering the recent jobs report, but what's more relevant than that is looking forward to 2016,†Farley said. “We see some pretty large growth expectations for next year, at 8 ½ to 9 percent earnings growth. We think it will probably be more like 6 percent.â€
Friday’s robust U.S. jobs report has set the stage for a possible U.S. interest rate liftoff starting in December, which would begin to raise the cost of borrowing for the first time in nine years, which would in turn dig into corporate earnings in 2016.
Earnings season is shifting to big U.S. retailers this week, including high-end merchandiser Nordstrom and its more mainstream rival Macy’s. Here are some of the forecasts for companies reporting earnings this week based on economists polled by Thomson Reuters:
Monday
Dish Network Corp. NASDAQ:DISH reports earnings on Monday before markets open in New York. Analysts polled by Thomson Reuters expect the Colorado-based satellite television provider to report lower revenue in the July-September quarter compared to the same quarter last year, to $3.79 billion from $3.68 billion. But net income is expected to rise to $190.1 million, or 41 cents per share, from $146.0 million, or 31 cents per share. The company’s shares are priced at around $64 and they’ve lost nearly 13 percent of their value this year.
Hertz Global Holdings Inc. NYSE:HTZ reports earnings on Monday before markets open. The Florida-based car-rental business is expected to report lower earnings in the July-September quarter, to $3.07 billion from $3.12 billion in Q3 2014. But the owner of the Hertz, Dollar, Thrifty and Firefly brands is expected to more than double its net income, to $335.9 million, or 73 cents per share, from $149.0 million, or 32 cents per share. The company has been on an aggressive $200 million cost-cutting plan and was forced earlier this year to correct accounting issues dating back to 2011. Hertz is trading at around $19 a share, which is down about 25 percent since the start of the year.
Priceline Group Inc. NASDAQ:PCLN reports earnings on Monday before markets open. The Connecticut-based online travel-booking services provider is forecast to report $3.05 billion in revenue for the July-September quarter, up from $2.84 billion in the same period the previous year. Net income is expected to be $1.14 billion, or $21.99 per share, from $1.06 billion or $20.03 per share. The company’s stock is trading at around $1,449 per share and the price is up 27 percent for the year.
WednesdayÂ
(U.S. stock markets will be open for Veterans Day.)
Macy's Inc. NYSE:M will report earnings on Wednesday before markets open. The Ohio-based department store chain is expected to report lower earnings in the July-September quarter compared to the same period last year, to $6.12 billion from $6.20 billion. Net income is seen dropping to $180.2 million, or 53 cents per share, from $217 million, or 61 cents per share. The company’s shares are trading at around $49 and have lost about 26 percent this year.
ADT Corp . NYSE:ADT will report earnings before markets open Wednesday. The Florida-based maker of subscription-based home and business security and health monitoring systems is expected to report higher revenue in the three months ended September, to $897.1 million from $883.0 million. Net income is forecast to be $76.1 million, or 44 cents per share, from $82.0 million, or 47 cents per share.
Popeyes Louisiana Kitchen Inc. NASDAQ:PLKI will report earnings after the closing bell Wednesday. The Atlanta-based fried-chicken chain is expected to report revenue of $62.0 million in the July-September quarter, up from $54.9 million in the year-ago period. Net income for the fast food chain is expected to rise to $10.3 million, or 45 cents per share, from $9.8 million, or 42 cents per share. Popeyes’ shares are trading at around $54, down nearly 4 percent for the year.
Thursday
Kohl's Corporation NYSE:KSS will report before the opening bell on Thursday. The Wisconsin-based specialty department store will report higher revenue, to $4.42 billion from $4.37 billion in the three months ended September. Net income is expected to drop to $136.3 million, or 72 cents per share, from $142 million, or 70 cents per share. Kohl’s shares are trading at around $47 and their price has dropped nearly 24 percent this year.
Applied Materials Inc. NASDAQ:AMAT will report after markets close on Thursday. The Santa Clara, California, maker of equipment used to produce flat-screen displays and solar panels is expected to post $2.40 billion in revenue for the three months ending September, up from $2.26 billion in the same period last year. Net income is forecast to be $328.3 million, or 27 cents per share, up from $290 million, or 23 cents per share. The company’s share price is trading at around $17, down nearly 32 percent for the year.
Cisco Systems, Inc. NASDAQ:CSCO will report its earnings after the bell on Thursday. The San Jose, California, networking hardware maker is forecast to report $12.65 billion in revenue for the three months ending September, up from $12.25 billion in the same period last year. Net income is seen rising to $2.38 billion, or 45 cents per share, from $1.83 billion, or 35 cents per share. Cisco stock is trading at around $28 and has gained 2.28 percent for the year.
Nordstrom Inc . NYSE:JWN will report its earnings after markets close on Thursday. The Seattle-based upscale department store is seen boosting revenue for the three months ending September to $3.28 billion from $3.04 billion in the year-ago period. Net income is forecast to drop slightly, to $140.8 million, or 73 cents per share, from $142.0 million, or 73 cents per share. Nordstrom’s stock is trading at around $66 per share, down about 17 percent for the year.
Friday
JC Penney Company Inc. NYSE:JCP will report its earnings before markets open on Friday. The Plano, Texas, department store chain is expected to report higher revenue for the July-September quarter, to $2.89 billion from $2.76 billion in the same three months last year. The struggling 113-year-old merchandiser is expected to narrow its losses to $178.5 million, or 58 cents per share, from $188.0 million, or 62 cents per share. Penney’s stock is trading at around $9 per share and has gained nearly 35 percent since the start of the year.