Yet another earnings season has nearly arrived. 24/7 Wall St. wanted to look at the current trends to alert its readers what to be on the leery side of in this coming earnings season as third-quarter results are announced and as investors begin to look to the fourth quarter and into 2015.

Investors will want to consider several key issues in this coming earnings season in particular, though there are many other issues as well. Some of our key issues are the dollar against the euro and other currencies and a slowing emerging market story. Deflationary pressure could be an issue, as could stock market and growth sector valuations. Even the quality of balance sheets should start to matter. One bit of good news is that key dividend hikes should still be seen, even if stock buybacks may be slowing.

These are the seven earnings season surprises that investors need to brace for in this October reporting season.

The Alcoa Barometer Lives Again!

Alcoa Inc. (NYSE: AA) has moved its earnings report from the first part of the week out to Wednesday, October 8, after the close. What is so different now is that Alcoa is getting in an ever better position, one less and less dependent just on aluminum trends. This stock has now effectively doubled off of its 52-week lows and is becoming more favorable to analysts who were very late to the transformative turnaround story. Alcoa is sometimes used as a barometer for earnings trends ahead. We expect that the Alcoa barometer will be used again now that it is becoming key for components and product parts.

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King Dollar — Could be a Joker!

The U.S. dollar has screamed higher. Maybe it is just that outside economies (particularly Europe) have been so weak. Either way, the currency markets are always on a relative basis, and it is very possible that companies are starting to feel the pressure when it comes to exports from the United States becoming uncompetitive in price. This may not be absolute as of yet, but another six months of this trend would be potentially devastating for U.S. companies that ship goods and services out of the country. The United States is not really an island, but it is beginning to feel that way.

Deflation Is (Almost) Here!

If you do much driving, you have probably noticed that the price at the pump has been dropping. Oil broke under $90 a barrel, and metals have fallen handily. This could be great news for consumers for a little while, and airlines and transportation players, retailers and the like may feel a bit of rejoice here. The problem grows larger if oil prices drop much further because that economic shale boom is based on higher oil prices. Energy stocks are also a large part of the S&P 500, and we featured what can happen if oil stays under $90 for long. Metals companies are feeling the heat as well. Companies like Cliffs Natural Resources Inc. (NYSE: CLF) simply cannot make money in this environment (see awful analyst downgrade).

Lower Emerging Market Expectations!

Many key corporations have relied on growth coming from the major emerging markets for the past decade or two. This has been a boon for the likes of General Electric Co. (NYSE: GE), Caterpillar Inc. (NYSE: CAT) and a whole host of others that have reaped these rewards. The question ahead is what this means now, when emerging growth and the global growth story is slowing. This overlaps with the currency and strong dollar issue, but we have started seeing serious slowing projections to the global growth and the emerging markets. The IMF talked down global growth and Fitch has put global growth risks to the downside.

DJIA Dividend Hikes to Continue!

We have seen several Dow Jones Industrial Average (DJIA) components raise their dividends in recent weeks. This is likely to continue. 24/7 Wall St. offered DJIA stocks likely to hike dividends soon, and McDonald’s Corp. (NYSE: MCD) already did. We see four other DJIA dividend hikes potentially coming in October. We still see several more announcements coming before year-end where DJIA stocks will raise their dividends. This may be a comfort factor for investors. By the way, the trend of buybacks has slowed, as we noted, likely because CEOs must have started thinking that share buybacks at all-time highs might not be as good of a use of cash as actions such as looking for selective acquisitions.

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Value Starts to Finally Matter Again!

The market seems to have gotten used to the notion that the S&P 500 trades at close to 17 times expected earnings per share. This is not the most expensive it has been, but it is far from the cheapest, and this mega-bull market is now five and a half years old. It is the belief of 24/7 Wall St. that valuation is starting to matter again, and companies trading at 20 times revenues and 100 times earnings are likely going to have to prove that they can keep growing to avoid “market multiple adjustments” for what investors are willing to pay. Companies like Amazon.com Inc. (NASDAQ: AMZN) may have to start working toward higher margins again, and despite a bounce this stock is down nearly $100 from its highs on October 2 — hence why Wall Street still won’t buy Amazon. Speaking of value, will book value discounts drive investors into selective lagging bank stocks?

Debt and Balance Sheet Quality Discussions Arrive!

It is generally considered gospel that the Federal Reserve will begin hiking interest rates in 2015. This is despite weakness in Europe and Asia. The junk bond market has seen an extended period now where it is getting harder to sell debt at the same tight spreads ahead of an interest rate hiking cycle. Some companies did not refinance their debt or leverage up their balance sheets in time at the lows. If companies have missed this opportunity, the market may treat them a bit differently than those companies who did make the proper balance sheet adjustments while they could. This window hasn’t closed, but it no longer has a mile-wide opening to it.

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There are of course many other issues that investors have to consider. The days and weeks ahead of each earnings season are often good times to reflect on portfolios and investment strategies.

You probably noticed that we did not cover the mid-term elections, which fall right in the middle of this coming earnings season. The verdict is still out on that front, and we will address that as the outcome starts to look more clear.

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