Seven members of the S&P 500 will report earnings during the last week of May: Big Lots (BIG), Dell (DELL), H.J. Heinz (HNZ), Novell (NOVL), Polo Ralph Lauren (RL), Sears Holding (SHLD) and Tiffany & Co. (TIF). Joining them will be 53 companies with smaller market capitalizations.
The economic calendar will also be light. Key data will include:
Tuesday: May Conference Board consumer confidence index, April home sales, first-quarter Case-Shiller housing price index
Wednesday: April durable goods orders
Thursday: Preliminary first-quarter GDP, weekly jobless claims
Friday: April personal spending and income, May Chicago PMI, final May University of Michigan consumer confidence survey
There should also be a drop in the aggregate number of earnings estimate revisions due to seasonality. Fewer profit projections are typically revised heading into the third month of a calendar quarter as the number of profit reports drop. This is not a negative, but rather just one less catalyst to move stocks.
Fed Governor Randall Kroszner will talk about the mortgage markets on Tuesday morning. (He gave a similar speech this past Thursday.) Chairman Ben Bernanke will deliver a speech entitled "Liquidity Provision by the Federal Reserve" to a conference in Switzerland on Thursday afternoon. Vice Chairman Donald Kohn will be in New York on Thursday evening to discuss financial stability.
The overall lack of data could result in additional choppiness in the markets. Daily sentiment, changes in the price of oil and unscheduled events (e.g. merger announcements, upgrades and downgrades, etc.) will be the biggest influences.
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Companies That Could Issue Positive Earnings Surprises during the Week of May 26 - 30
Big Lots (BIG) receives a regular mention in this column, having issued eight positive earnings surprises in a row. More often than not, the stock has also traded higher following the release of earnings.
Can the closeout retailer extend its streak? Judging by the trend in earnings estimate revisions, possibly so. Four of the five covering brokerage analysts raised their first-quarter profit projections after the company said same-store sales rose 3.4%. The consensus earnings estimate of 36 cents per share is three cents above the average forecast of a month ago. Big Lots is scheduled to report on Thursday, May 29, before the start of trading.
Dollar Tree (DLTR) also realized higher sales. The discount retailer recently said that first-quarter sales totaled $1.051 billion, exceeding its internal forecast. Same-store sales rose 2.1%. Half of the covering brokerage analysts raised their profit forecasts in response, sending the first-quarter consensus earnings estimate two cents higher to 41 cents per share. The most accurate estimate is slightly more bullish at 42 cents per share. DLTR has issued three positive earnings surprises in the past four quarters. DLTR is scheduled to report on Wednesday, May 28, before the start of trading.
It's not just the discount retailers that could surprise to the upside. Tiffany & Co's (TIF) CEO, Michael Kowalski, recently said that first-quarter earnings would exceed his previous forecast approximately 39 cents per share. Three brokerage analysts promptly raised their first-quarter estimates in response to the comments. The revisions pushed the consensus earnings estimate two cents higher to 41 cents per share. TIF has issued four consecutive positive earnings surprises. Tiffany & Co. is scheduled to report on Friday, May 30, before the start of trading.
Companies That Could Issue Negative Earnings Surprises during the Week of May 26 - 30
Sears Holdings (SHLD) has missed earnings estimates twice in the past four quarters. Brokerage analysts appear to be bracing themselves for another disappointing quarter, as two of the five covering analysts have cut their first-quarter forecasts within the past 30 days. The consensus earnings estimate of 18 cents per share is two cents lower than the average forecast of a month ago. The most accurate estimate is even more bearish at 14 cents per share. Sears Holdings is scheduled to report on Thursday, May 29, before the start of trading.
About
The Author...
Charles Rotblut, CFA is the senior market analyst for Zacks.com. He can be reached at crotblut@zacks.com. Charles owns shares in Tiffany & Co. He writes the Earnings Preview article on Zacks.com. For this and other articles from Zacks, please visit www.zacks.com/articles/.
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