The week in preview: Alcoa, GE kick off earnings season

Filed under: Earnings reports, Forecasts, General Electric (GE), Alcoa Inc (AA), Economic data

Alcoa Inc. (NYSE: AA) kicks off the new earnings seasons when it reports third quarter results on Tuesday. The Pittsburgh-based aluminum producer, which celebrated its 120th anniversary with the launch of its website, is expected to post a profit of 54 cents per share, down 15.6% from the same quarter of last year, on revenue of $7.2 billion, down 2.1%. While Alcoa has tended to fall short of estimates in recent quarters, in the second quarter it did offer a positive surprise of almost 3%. Its long-term earnings per share growth forecast is 14.8%, a little less than the S&P 500, and analysts polled by Thomson Financial on average recommend buying Alcoa, and have for more than 90 days. Shares reached a new 52-week low last week, and are down 48.9% from a year ago.

General Electric Co. (NYSE: GE) is also expected to report a slip in earnings this week. Analysts anticipate that the conglomerate will post a third-quarter profit of 45 cents per share, down just 6.3% from a year ago, on revenue of $47.7 billion, which is up 12.1%. GE has tended to eke out small positive surprises in recent quarters, by less than 1% in the second quarter. GE's long-term earnings per share growth forecast is only 11.0%, which is less than the sector average and the S&P 500. The consensus recommendation has recently swung to hold GE, but Warren Buffett has bought in to the tune of $3 billion. GE also reached a new 52-week low last week as the markets tumbled. GE shares are down 48.1% from a year ago.

Here are what analysts expect to be some of the biggest earnings decliners when they report this week:

• Premier Exhibitions Inc. (NASDAQ: PRXI): $0.01 per share (-94.1%) on revenue of $18.5 million (+15.0%)


• Sealy Corp. (NYSE: ZZ): $0.08 per share (-63.6%) on revenue of $389.8 million (-12.7%)


• Ruby Tuesday Inc. (NYSE: RT): $0.11 per share (-47.6%) on revenue of $329.8 million (-4.9%)


• Cantel Medical Corp. (NYSE: CMN): $0.10 per share (-28.6%) on revenue of $62.5 million (0.0%)


• Host Hotels & Resorts Inc. (NYSE: HST): $0.28 per share (-26.3%) on revenue of $1.2 billion (-3.6%)

Premier saw a management shake-up and announced restructuring in August. Sealy, Ruby Tuesday, and Host have been feeling the effects of the economic slowdown.

Among the week's anticipated earnings gainers are Costco Wholesale Corp. (NASDAQ: COST), Yum! Brands Inc. (NYSE: YUM), and Safeway Inc. (NYSE: SWY). Their expected profits of 93 cents, 54 cents, and 47 cents per share, respectively, would be marginally higher than a year ago. Revenues are also expected to be up 12.4%, 8.3%, and 3.1% respectively. All three of these stocks have beat estimates in recent quarters. Costco just saw an upgrade from Goldman Sachs, but Safeway, like rival grocers, is struggling with economic conditions.

Here are the biggest expected earnings gainers this week:

• Kane Anderson Energy Development Co. (NYSE: KED): $0.34 per share (+70.6%) on revenues of $6.2 million (+23.0%)


• Lindsay Corp. (NYSE: LNN): $0.70 per share (+54.3%) on revenues of $111.9 million (+52.3%)


• Centennial Communications Corp. (NASDAQ: CYCL): $0.10 per share (+40.0%) on revenues of $258.1 million (+4.1%)


• International Speedway Corp. (NASDAQ: ISCA): $0.71 per share (+25.4%) on revenues of $204.8 million (+4.3%)


• Team Inc. (NASDAQ: TISI): $0.24 per share (+25.0%) on revenues of $123.3 million (+19.2%)


• Robbins & Myers Inc. (NYSE: RBN): $0.70 per share (+21.4%) on revenues of $230.0 million (+11.1%)

Kane Anderson is in the process of selling off its Millennium Midstream Partners, and the international growth of Lindsay, which designs and manufactures irrigation systems, prompted a buy recommendation from Piper Jaffray. Except Lindsay, all stocks on the above list currently have consensus recommendations to buy -- oil services company Team, which caught the eye of The Motley Fool back in August, is rated as a strong buy.

Analysts are also looking for IDT Corp. (NYSE: IDT), Monsanto Co. (NASDAQ: MON), and Navisite (NASDAQ: NAVI) to have narrowed their losses to 33 cents, 9 cents, and 4 cents per share, respectively. Monsanto and Navisite are also expected to post sales increases of 22.2% and 19.6%, respectively. Monsanto just raised its full-year forecast on strength of its herbicide sales, and telecom IDT earlier said it expects to return to profitability in FY 2009. All three stocks closed Friday at or near their 52-week lows.

Other economic data scheduled to be released this week include:

• Public debt (Sept. 2008): Monday, 3:00 PM


• TIPP Economic optimism index (Oct. 2008): Tuesday, 9:00 AM


• Job vacancies (Aug. 2008): Tuesday, 10:00 AM


• Consumer credit outstanding (Aug. 2008): Tuesday, 3:00 PM


• Pending home sales (Aug. 2008): Wednesday, 10:00 AM


• Wholesale trade (Aug. 2008): Thursday, 10:00 AM


• Trade balance (Aug. 2008): Friday, 8:30 AM


• Import price index (Sept. 2008): Friday, 8:30 AM


• U.S. Treasury budget balance (Sept. 2008): Friday, 2:00 PM

Other economic events scheduled for this week include:

• Fed's Evans speaks on the "Economic Outlook and Productivity Trends in Manufacturing": Monday, 12:00 PM


• Fed's Stern speaks on "Repercussions from the Financial Shock": Tuesday, 11:00 AM


• CBS Corp. investor presentation to discuss CBS Interactive Business: Tuesday, 4:30 PM


• Fed's Plosser on central banking and expectations for Fed's policies: Wednesday, 7:45 AM


• Limited Brands September 2008 Pre-recorded Sales Call: Wednesday, 4:30 PM


• Chevron third quarter 2008 interim update: Thursday, 5:00 PM

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