Tuesday's Earnings Represent True Economy Strengths & Weakness (MMM, AAPL, CAT, DD, LMT, NSC, YHOO)

Tuesday is going to look like it is a true earnings bogey for the entire economy with major industrials and other companies which are representative of the strength or weakness of the entire economy.  We have earnings from 3M Co. (NYSE: MMM), Apple Inc. (NASDAQ: AAPL), Caterpillar (NYSE: CAT), DuPont (NYSE: DD), Lockheed Martin Corporation (NYSE: LMT), Norfolk Southern Corp. (NYSE: NSC), and Yahoo Inc. (NASDAQ: YHOO).  There are others reporting as well, but these below are the ones we have chosen to issue preview over.  Here we have given overall pull-backs from highs, detailed expectations, changes expected from last year, guidance expectations, and other individual metrics.

As far as conglomerates, 3M Co. (NYSE: MMM) is one of the topconglomerates besides United tech, Honeywell, or GE for determining thebroad economy.  The conglomerate is expected to post $1.38 EPS on $6.65billion in revenues for its Q3-2008, and next quarter estimates are$1.30 EPS and $6.65 billion in revenues.  If estimates are hit, thiswill still represent about 4% earnings growth.  With shares in themid-$50’s, 3M has lost roughly 40% of its value from its highs of late.

Apple Inc. (NASDAQ: AAPL) is set to report earnings tomorrow after theclose.  While the company is not the PC-leader at all and while it isnot the software leader at all, it is the MP3 player leader andtherefore the leader in music.  We’ll also get yet one more look atcellphones, because if iPhone sales are struggling and if thoseprojections are soft then you know what the verdict is for the rest ofhigher margin smartphones.  Analysts are looking for $1.11 EPS and$8.08 billion in revenues this last quarter, and the quarter ahead theyare looking for $1.66 EPS and $10.62 billion in revenues.  Steve Jobsis deemed as being a manager who sets expectations low, but settingexpectations too low for the coming quarter will not likely be given asmuch of a free-pass as before.

Caterpillar (NYSE: CAT) is set to report earnings before the open onTuesday.  The industrial equipment giant is and has been one of the keymeasurements for the status of "the global growth and that hastranslated into poor returns of late.  First call has estimates at$1.41 EPS and $12.43 billion in revenues for its Q3-2008 period, whilenext quarter estimates are $1.43 EPS and $13 billion in revenues.  Ifthe estimates are accurate, this will represent a drop of close to 1.5%in year over year earnings.  At around $40.00 Monday, "CAT" is downmore than 50% from 52-week highs.

DuPont (NYSE: DD) is representative of chemicals, fibers, materials,and even life & crop sciences materials.  Its shares are down morethan 30% from 52-week highs even after a 5% gain to above $35.75 onMonday.  First Call has its Q3-2008 estimates pegged at $0.51 EPS and$7.1 billion in revenues, and next quarter estimates are $0.50 EPS and$7.31 billion in revenues.

Lockheed Martin Corporation (NYSE: LMT) is set to report earnings andthis will be one of the first of the major defense contractors andsuppliers to post earnings.   First Call has estimates at $1.89 EPS on$10.74 billion in revenues for its Q3-2008 period, and next quarterestimates are $1.97 EPS and $11.12 billion in revenues.  This report onthe impact of the elections, commodity prices, and more could easilyspill over into earnings from the likes of General Dynamics (NYSE: GD),Raytheon (NYSE: RTN), and others.  This one has lost one-fourth of itsvalue from highs.  If it hits earnings projections, it will representright at 15% EPS growth.

Norfolk Southern Corp. (NYSE: NSC) is the third-largest rail carrier bymarket cap in the U.S. and it is set to post earnings after the closeon Tuesday.  This one can definitely spill over into other major railcarriers, and it could even roll over into truckers depending upon whatit says. Its shares are down nearly one-third from 52-week highs.  Itsearnings expectations are $1.21 EPS and $2.76 billion in revenues forits fiscal third-quarter, and next quarter estimates are $1.19 EPS and$2.76 billion in revenues.  If it hits earnings projections, hat willrepresent close to 19% growth.

Yahoo Inc. (NASDAQ: YHOO) is no longer the internet king.  But it stillrepresents a good view into what is going on as far as advertiserstreating the second and third destinations behind Google.  First Callhas its Q3-2008 estimates at $0.09 EPS and $1.37 billion in revenues,while next quarter’s estimates are $0.14 EPS on $1.52 billion inrevenues.  With this much of a change from quarter to quarter and witha slowing economy and trouble at the number two web destination, itmight be easy to point out that the numbers for Q4 seem a bitaggressive.  This is still earnings growth of about 10%, but that isn’ta great claim for a web giant.  Also remember that these revenues are"ex-TAC" or ex-traffic acquisition costs.  The problem with Yahoo!earnings is that the company is expected to send some 3,000 workersdown to the minor leagues.  This growth story is one of stagnation andtrying to hold its core leadership where it can.

Be advised that these numbers can change even the same morning of the report.

Jon C. Ogg
October 20, 2008