US Earnings Preview For Dec 15 - 19

This will be the last busy week of the year for the financial markets. Among the scheduled events are early fourth-quarter earnings reports, a Fed meeting and quadruple witching.

The 49 companies scheduled to release fourth-quarter results include 15 S&P 500 members. The companies most likely to attract attention are Best Buy Co, Inc. (BBY), FedEx Corporation (FDX), Goldman Sachs Group, Inc. (GS), Lennar Corporation (LEN) and Oracle Corporation (ORCL).

Carmax, Inc. (KMX) conference call could have more listeners than usual given the Senate’s failure to pass an automotive rescue package. KMX will report on Friday, Dec 19, before the start of trading.

The Fed will hold a one-day meeting on Tuesday, Dec 16. Futures are calling for a 75-basis point cut. (A 50-basis point cut is not out of the realm of possibilities, however.)

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

Key economic data will include industrial production and utilization, housing starts and the Phili Fed survey.

• Monday: December Empire State index, November industrial production and capacity utilization
• Tuesday: November consumer price index (CPI), November housing starts, November building permits, Fed meeting
• Wednesday: weekly crude inventories
• Thursday: December Philadelphia Fed survey, November Leading Indicators, weekly initial jobless claims

Friday will be a quadruple witching day. Both options and futures contracts will expire, which can cause additional volatility.

Unscheduled events remain a wildcard, particularly any changes involving the Big 3.

Companies That Could Issue Positive Earnings Surprises

Trends in earnings estimate revisions do not suggest any of the companies reporting will top expectations. This is partially due to the fact that several of the companies have lowered guidance.

Companies That Could Issue Negative Earnings Surprises

Last month, Best Buy (BBY) cut its guidance for the remainder of fiscal 2009, which ends in February. Citing “significant changes in the consumer environment,” the company warned that same-store sales could be down 1% to 8%.

Nearly all of the covering brokerage analysts cut their projections in response, lowering the fiscal third-quarter consensus estimate by 13 cents to 27 cents per share. The most accurate estimate is more bearish at 25 cents per share. Investors should also note that the electronic retailer’s fiscal second-quarter results were 9 cents below expectations. Best Buy is scheduled to report on Tuesday, Dec 16, before the start of trading.

After nearly a perfect record of topping expectations, Goldman Sachs Group, Inc. (GS) missed third-quarter estimates by 8 cents. The trend in earnings estimates suggests that the financial firm could disappoint investors again. During the past 30 days, 11 of the 16 covering brokerage analysts have cut their fiscal fourth-quarter estimates. The reductions caused the consensus estimate to plunge to a projected loss of $3.37 per share from a profit forecast of 84 cents per share. The most accurate estimate is more bearish at a loss of $3.61 per share. Goldman Sachs is scheduled to report on Tuesday, Dec 16, before the start of trading.

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