Top 10 Earnings on Deck This Week (ERTS, ENER, PCLN, SQNM, TYC, AMAT, M, JWN, WMT, DIS)

Earnings season has wound down now with over 85% of the S&P 500 Index having reported.  Still, there are some key companies posting their quarterly results and some companies were screened out of this list which are still actively traded or widely held stocks.  Electronic Arts Inc. (NASDAQ: ERTS), Energy Conversion Devices, Inc. (NASDAQ: ENER), Priceline.com Inc. (NASDAQ: PCLN) and Sequenom Inc. (NASDAQ: SQNM) are on deck Monday. Also this week are earnings from Tyco International Ltd. (NYSE: TYC), Applied Materials Inc. (NASDAQ: AMAT), Macy’s, Inc. (NYSE: M), are Nordstrom Inc. (NYSE: JWN). Wal-Mart Stores, Inc. (NYSE: WMT) and Walt Disney Co. (NYSE: DIS) are our two DJIA components reporting this week.

We have included Thomson Reuters consensus estimates and included performance and other important color where applicable.  We have shown the share performance since the March 9 close that traders mark as the official end date of the bloody bear market.  One issue to consider is that we used the performance since June 30 to keep consistency for our prior previews even though some of the quarter-ends this coming week are technically August 31.

Electronic Arts Inc. (NASDAQ: ERTS) is on deck Monday afternoon.  As always, EA has a huge discrepancy between its non-GAAP and GAAP data.  The most recent short interest was over 21.5 million shares, which is actually the largest short interest position seen in EA over the last year.  This last quarter is a mere fraction of the importance of what lies ahead because the holiday season is the most important quarter in video games.  Estimates are $0.07 EPS and $1.13 billion in revenues, but the coming quarter we are already in has estimates of $0.88 EPS and $1.61 billion in revenues.  EA has lost its was as a stock as its $19.00 share price is in the middle of a $14.24 to $23.95 range in the last year.  But the slide that started in September 2008 was never recovered as it was almost $50 then and was a $60.00 stock  two years ago.  The stock is only up about 21% from March 9 and it is down over 10% since June 30.

Energy Conversion Devices, Inc. (NASDAQ: ENER), the solar play everyone used to love that can now find no love, is on deck Monday. Consensus estimates are -$0.31 EPS and $56.4 million.  Next quarter consensus is -$0.20 EPS and $71.65 million in revenues.  Its fiscal year is June-2010 and it is expected to lose money for the fiscal year.  The reason this will be interesting is to hear if there is any truth to anything regarding a takeover, particularly since this one had a rights offering in the last quarter.  This 15.3 million share short interest is going to be a reason in the reaction.  The stock has been an awful performer and the only good news is that it is now ‘only’ down about 70% from a 52-week high rather than down almost 90% like it had been before hose old $80 peak share prices went out of the 52-week parameters.

Priceline.com Inc. (NASDAQ: PCLN) is on deck for Monday afternoon and consensus estimates are $2.92 EPS and $693.9 million in revenues.  Next quarter estimates are $1.49 EPS and $506.8 million in revenues.  Priceline might not be a key economic company, but it gives insight into travel trends that can still be applied for hotels and airfare.  The stock is also up well over 200% from its 52-week lows, up over 100% from the March 9 close and up over 50% from the June 30 date.

Sequenom Inc. (NASDAQ: SQNM) is on deck and the actual earnings report is not what will be of interest.  Consensus estimates are -$0.28 EPS and $8.54 million in revenues.  But the issues to take here are that the company is still largely vacant after the wave of management firings and resignations over the botched data handling of its Down’s Syndrome test results.   It has recently hired a CFO and the company just entered into an amended exclusive technology license with Isis Innovation Limited for the fundamental patented noninvasive prenatal diagnostic technology.  Isis agreed to certain time-based commercial launch milestones and Sequenom agreed to make an immediate one-time payment of $1,000,000, increase royalty payments under the agreement during the final 12 months of the patent term and increase the specified minimum royalty amounts.  Cash-burn is key here… It ended with over $70 million in cash last quarter and what the company says about how long that lasts will be key and you know that the cash is being consumed much faster now and it is always possible that it will go to shareholder suit verdicts down the road for how poorly this company has handled everything.  That 21+ million share short interest is going to be a factor.

Tyco International Ltd. (NYSE: TYC) is on deck for Tuesday as that day’s key report.  Estimates are $0.54 EPS and $4.32 billion in revenue, and next quarter estimates are $0.56 EPS and $4.25 billion in revenues.  This September quarter also marks its fiscal year-end with estimates of $2.29 EPS and $17.15 billion in revenues (almost a 15 P/E and under 1-times revenues).  Tyco is still active in security and is still somewhat misunderstood by many who consider it a large conglomerate before it broke itself up.  But shares are up over 100% from its 52-week lows, up over 100% from the March 9 close, and shares are up 33% from June 30.

Applied Materials Inc. (NASDAQ: AMAT) is on deck for Wednesday afternoon. The chip equipment maker, and now solar player, is the king of its sector to most traders and investors.  As cap-ex and equipment purchasing has greatly lagged the overall chip and tech recovery, what the company says for its outlook will potentially be key for evaluating semiconductor companies on their expenses.  Estimates are $0.03 EPS and $1.31 billion in revenues for its October quarter, which is also its year-end with estimates of -$0.15 EPS and $4.8 billion in revenues.  While many analysts expect a recovery for 2010, with estimates at $0.35 EPS and $6.14 billion in revenues, there is the notion of what to say about valuation.  With a loss for 2009 and with a P/E ratio of 35 for next year, the bulls have to bet that the semiconductor companies are going to hike orders well above what the official expectations reflect.  At $12.40, this is up almost 50% from March 9 and up about 12% from June 30.

Macy’s, Inc. (NYSE: M) is also the first of the big retail plays for the week.  The issue will not be on last quarter so much, but what it calls for in the coming and current holiday quarter.  Estimates for the last quarter are -$0.10 EPS and $5.2 billion in revenues.  But next quarter estimates are $1.11 EPS and $7.67 billion in revenues.  Talking about all the if-then scenarios for retail is something we just won’t do because you have already endured it for a year.  But the stock was just upgraded at JPMorgan and its same store sales were “only” down 0.8% in October.  We are also getting to the point that the year-ago comparable store sales will not look like as much of a disaster as what we have seen for the last year.  Still, valuation has to be brought up as it trades at about 18-times a normalized current year earnings expectation.  Macy’s shares are up over 200% from March 9 and are up 63% since just June 30.

Nordstrom Inc. (NYSE: JWN) is on deck Thursday.    Estimates are $0.37 EPS and $1.81 billion, but the current quarter we are in (next quarter estimates) for the key Holiday season is expected to be $0.59 EPS and $2.33 billion in revenues.  The issue here on valuation is that the stock trades at an expected 19.5-times Jan-2010 fiscal earnings and even about 16.5-times Jan-2011 estimates.  The good news for the sector is that the companies are getting to the point that the year-ago comparable store sales will not look like as much of a disaster as what we have seen for the last year.  Nordstrom’s shares are up over 150% from March 9 and are up over 70% since just June 30.

Wal-Mart Stores, Inc. (NYSE: WMT) is on deck for Thursday morning.  The retail king of the recession and DJIA component is expected to post $0.81 EPS and $99.8 billion in revenues.  The company is no longer a guidance or same-store-sales champion, but estimates for the coming Holiday quarter we are now in are $1.12 EPS and almost $114.4 billion in revenues.  Wal-Mart has been an incredibly poor performer of a stock despite its status of being a recession winner.  Shares are not even up 10% from the March 9 close and are up about 6% from June 30.  The company did recently announce its expansion plans that seemed impressive, and the one issue that the company does have going for it now is that there is far less anti-Wal-Mart sentiment now that so much of the country has become its client base whether it was intended or not.

Walt Disney Co. (NYSE: DIS) is on deck for Thursday after the close.  Estimates are $0.40 EPS and $9.26 billion in revenues, and the coming December quarter estimates are $0.41 EPS and $9.67 billion in revenues.  If you just assume a meeting of estimates for the last quarter and the Q4 period for its fiscal Dec-2009 year, the Mouse House trades with a current year ratio of about 16-times earnings (and about 15.3-times 2010 estimates).  There are many moving parts here, and the Marvel Entertainment, Inc. (NYSE: MVL) deal is a drop in the bucket.  Disney shares are up 82% since the March 9 close and up 22% sine June 30.

Be advised that these Thomson Reuters can and likely will change some as the week goes on after analysts have made their last-minute changes.

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JON C. OGG
NOVEMBER 8, 2009