Earnings Preview For The Week July 21 - 25

Earnings season rotates away from the financial sector, which should be good for the broader markets.

More than 630 companies are confirmed to report, including 151 members of the S&P 500. Dow components will include 3M [[mmm]], AT&T [[t]], Bank of America [[bac]], Boeing [[ba]], Caterpillar [[cat]], E.I. DuPont [[dd]], McDonald’s [[mcd]], Merck [[mrk]] and Pfizer [[pfe]].

The economic calendar is fairly light. Key reports will include:

• Monday: June Leading Indicators
• Wednesday: Federal Reserve Beige Book, weekly crude inventories
• Thursday: June existing home sales, weekly initial jobless claims
• Friday: June durable goods orders, June new home sales, revised July University of Michigan consumer confidence survey

The Federal Reserve’s web site is not listing any scheduled speeches for Fed officials.

Active traders may want to pay particular attention to the Nasdaq. Approximately one-quarter of the reports will come from the tech sector. Among the more notable names are Apple [[appl]], Juniper [[jnpr]] and Qualcomm [[qcom]].

Bullish guidance will help to restore confidence in earnings projections and allow the overall stock market to rebound higher.

Companies That Could Issue Positive Earnings Surprises during the Week of July 21 - 25

AK Steel [[aks]] continues to be able to exert pricing power thanks to strong demand for carbon steel. Brokerage analysts think the price hikes will contribute to the bottom line, as is evidenced by the rise in the consensus earnings estimate. Forecasts for the second-quarter have risen 2 cents over the past 30 days to $1.14 per share. AKS has topped projections for 5 consecutive quarters. AK Steel is scheduled to report on Tuesday, July 22, before the start of trading.

Several brokerage analysts have raised their second-quarter quarter profit projections on EnCana [[eca]] within the past few weeks. The consensus earnings estimate of $1.83 per share is 16 cents above the average forecast of a month ago. The most accurate forecast is even more bullish at $1.88 per share. This Canadian oil sands company has topped expectations for 5 consecutive quarters. EnCana is scheduled to report on Thursday, July 24, before the start of trading.

Second-quarter forecasts on McDonald’s [[mcd]] have risen in the past few days. Three brokerage analysts revised their projections within the past 7 days, pushing the consensus earnings estimate a penny higher to 85 cents per share. The most accurate estimate is more bullish at 86 cents per share. MCD has beat expectations for four consecutive quarters. McDonald’s is scheduled to report on Wednesday, July 23, before the start of trading.

Potash Corporation of Saskatchewan [[pot]] topped forecasts during the past 2 quarters by an average margin of 20 cents per share. Ahead of the company’s second-quarter report, analysts are anticipating another positive surprise from this fertilizer company. The consensus earnings estimate has been revised higher by 7 cents over the past 30 days to $2.54 per share. The most accurate forecast is more bullish at $2.60 per share. Potash is scheduled to report on Thursday, July 24, before the start of trading.

Companies That Could Issue Negative Earnings Surprises during the Week of July 21 - 25

UnitedHealth Group [[unh]] recently slashed its full-year guidance, citing pressure on premiums and a decrease in margins related to Medicare Part D. All of the covering brokerage analysts slashed their forecasts in response, causing the second-quarter consensus earnings estimate to fall by 18 cents to 64 cents per share. UNH has missed expectations for 2 consecutive quarters. UnitedHealth Group is scheduled to report on Tuesday, July 22, before the start of trading.

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