US Earnings Preview For Aug 3 - 7

More than 870 companies will report as earnings season shifts away from large-cap companies to a higher proportion of mid- and small-cap companies.

The S&P 500 will still be prominently represented, however, with 89 members scheduled to release results. Included in this group are Dow components Cisco Systems (CSCO), Kraft Foods (KFT) and Proctor & Gamble (PG).

This will be a big week for both consumer staple stocks and homebuilding stocks, with leading companies in both groups reporting.

We’ll start to see July economic data with the ISM manufacturing survey published on Monday and the monthly jobs numbers released on Friday.

• Monday: July ISM manufacturing survey, July construction spending, July auto sales
• Tuesday: June personal income and spending, June pending home sales
• Wednesday: July ISM services index, June factory orders, July ADP employment survey, weekly crude inventories
• Thursday: weekly initial jobless claims
• Friday: July unemployment and change in nonfarm payrolls, June consumer credit

Fed Governor Daniel K. Tarullo will talk about bank supervision before the Committee on Banking, Housing, and Urban Affairs on Tuesday morning. The next Fed meeting will be held on Aug 11-12.

The market has been responding favorably to earnings reports. The question will be whether the S&P 500 has enough momentum to get past its Nov 4 close of 1,005. This could be a point of tough resistance, though the trend still favors the bulls.

I’m not going to a call an end to the rally yet, but after this week, the tailwind provided by earnings news will begin to disappear. We’re headed for a trading range; we just don’t know what the upper and lower levels of that range will be.

Companies That Could Issue Positive Earnings Surprises

One analyst just raised his second-quarter forecast on Kraft Foods, bringing the total number of positive revisions made in July to 4. The changes have pushed the Zacks Consensus Estimate 1-cent higher to 54 cents per share. The most accurate estimate is more bullish at 55 cents per share. The food company has topped expectations twice during the past 4 quarters. Kraft is scheduled to report on Tuesday, Aug 4, after the close of trading.

Polo Ralph Lauren (RL) has topped expectations for 7 consecutive quarters. A recent positive revision by 1 analyst pushed the Zacks Consensus Estimate for the fiscal first-quarter back up to 49 cents per share. The most accurate estimate is more bullish at 50 cents per share. Fiscal 2010 forecasts have been rising, a sign that the company could make relatively positive comments about its outlook. Polo Ralph Lauren is scheduled to report on Wednesday, Aug 5, before the start of trading.

Four brokerage analysts raised their fiscal fourth-quarter projections on Cisco Systems (CSCO) in July, including 2 within the past week. The revisions have resulted in a Zacks Consensus Estimate of 25 cents per share, versus 24 cents a week ago. CSCO has topped expectations for 3 consecutive quarters. Cisco Systems is scheduled to report on Wednesday, Aug 5, after the close of trading.

SandRidge Energy (SD) has topped expectations by an average margin of 7 cents per share during the past 4 quarters. During the past few weeks, 6 analysts raised their second-quarter profit projections. These revisions have resulted in a 4-cent increase in the Zacks Consensus Estimate, to 13 cents per share. SandRidge Energy is scheduled to report on Thursday, Aug 6, after the close of trading.

Companies That Could Issue Negative Earnings Surprises

CBS Corporation (CBS) has missed expectations twice during the past 3 quarters. Recent cuts by 5 brokerage analysts have lowered the second-quarter Zacks Consensus Estimate to 9 cents per share, a decline of 1 cent. The most accurate estimate is more bearish at 7 cents per share. CBS is scheduled to report on Thursday, Aug 6, after the close of trading.

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