US Earnings Preview For Nov 10 - 14

Earnings season for the retail sector starts.

Dow (^DJI) component Wal-Mart Stores (NYSE:WMT) will be joined by fellow S&P 500 members Abercrombie & Fitch (NYSE:ANF), Kohl’s (NYSE:KSS) and Macy’s (NYSE:M). Approximately 10% of the companies reporting will be from the retail sector.

Outside of the retail sector, there will not be many reports that should influence market direction. The most notable names will be Agilent Technology (NYSE:A), Applied Materials (NASDAQ:AMAT) and Tyco International (NYSE:TYC). In total, there will be 240 companies reporting, 21 of which are in the S&P 500 (^GSPC).

The economic calendar will be very light.

• Thursday: October Treasury budget, September trade balance, weekly initial jobless claims, weekly crude inventories (moved from Wednesday)
• Friday: October retail sales, Preliminary November University of Michigan consumer confidence, October import and export prices, September business inventories

Fed Chairman Ben Bernanke will speak about central bank coordination at a conference in Germany on Wednesday morning. Vice Chairman Donald Kohn will speak on Tuesday in Luxembourg. His speech is titled “Productivity and Innovation in Financial Services”.

Trading is likely to remain volatile, though the Dow is staying in a trading range of 8200-9450. There could be some reaction if President-Elect Obama names a nominee for Treasury Secretary.

Tuesday is Veteran’s Day. The U.S. markets will be open. Be sure to thank a veteran and a current member of the military for their service.

Companies That Could Issue Positive Earnings Surprises

ACECOM Technology (NYSE:ACM) has topped analysts’ forecasts for 5 consecutive quarters. Ahead of the consulting firm’s third-quarter report, 1 brokerage analyst has raised his forecast. The revision bumped the consensus earnings estimate up a penny to 37 cents per share. ACECOM Technology is scheduled to report on Wednesday, Nov 12, before the market opens.

Wal-Mart Stores (NYSE:WMT) benefited from an increase in frugal consumers. The largest discount retailer enjoyed a 2.4% increase in October same-store sales, excluding fuel. Though the third-quarter consensus estimate remains unchanged at 76 cents per share, WMT does have a history over surpassing expectations. During the past 4 quarters, the company has issued 3 positive surprises. Wal-Mart Stores is scheduled to report on Thursday, Nov 13, before the start of trading.

Companies That Could Issue Negative Earnings Surprises

Starbucks (NASDAQ:SBUX) missed estimates last quarter by 2 cents per share. The most accurate estimate of 13 cents per share is 2 cents below the consensus estimate. Furthermore, during the past 30 days, 2 brokerage analysts have lowered their fiscal fourth-quarter expectations. These are signs that the coffee chain could disappoint again. Starbucks is scheduled to report on Monday, Nov 10, after the close of trading.

Earnings estimates have recently been cut on several retailers, including Abercrombie & Fitch, Kohl’s and Macy’s. Many of these companies do have a recent history of topping expectations, however. Therefore, it is difficult to say whether their third-quarter earnings will disappoint shareholders. My assumption is that even if earnings match or top expectations, guidance will be weak.

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