Week in Preview: Earnings, Consumer Credit, Trade and Federal Budget Balance
A week full of mixed economic data took its toll on the markets last week, but things will likely settle down somewhat this coming week.
- Monday: Fed releases October data on consumer credit outstanding.
- Tuesday: TIPP Economic Optimism Index is due.
- Wednesday: Labor Dept. offers initial jobless claims numbers for last week, EIA's crude oil inventory last week, October wholesale trade numbers from the Census Bureau.
- Friday: Trade balance data for October, Bureau of Labor Statistics releases its Import Price Index for November, preliminary Michigan Consumer Sentiment Index is due, and the Treasury Dept. releases the federal budget balance in November.
Things are fairly quiet on the earnings front as well. Here are a few highlights for the coming week:
Dollar General (DG), the Tennessee-based discount-store operator, announced record sales results during its third quarter. Analysts polled by Thomson Reuters forecast earnings for that period to have risen 31.4% from a year ago to 35 cents per share.
Dollar General, which went public in 2009, is also expected to post revenue of $3.2 billion for the three months that ended in October, a 10.3% increase from the same period of last year. So far, the consensus estimate for the full year calls for earnings of $1.78 per share (+26.4%) and revenue of $13.1 billion (+10.8%). Earnings bested consensus estimates in the past three quarters, by as much as seven cents per share.
Its long-term earnings-per-share growth forecast is 18.6%, and its forward price-to-earnings ratio (its stock price divided by a year's worth of forecasted earnings) is 17, which is down from the trailing price-to-earnings ratio (the stock price divided by a year's worth of already-reported earnings) of 20.7. A falling price-to-earnings ratio indicates expected growth. Dollar General's price/earnings-to-growth ratio, which compares that price-to-earnings ratio to a company's growth, stands at a solid 0.9.
First Call has rated Dollar General a buy for more than 90 days. Barclays expects a positive surprise. The mean price target is currently $33.86 per share. But shares recently hit a 52-week high of $33.73. At Friday's close, the stock price was 19.3% higher than three months ago.
Analysts anticipate that nation's largest auto-parts chain, AutoZone (AZO), will Tuesday report that its fiscal first-quarter earnings grew 17.1% year-over-year to $3.40 per share. During the three months that ended in November, Memphis-based AutoZone announced additional share repurchases. Revenue for that period is predicted to have grown 7.6% to $1.7 billion. And analysts foresee similar year-over-year growth of earnings and revenue for the second quarter. AutoZone's earnings per share has surpassed expectations in recent quarters, beating consensus estimates by as much as 53 cents per share.
AutoZone's long-term earnings-per-share (EPS) growth forecast of 15.4% is higher than that of competitor Advance Auto Parts (AAP). AutoZone's forward price-earnings ratio of 15 is lower than its trailing price-earnings ratio, as well as the industry average, indicating a potentially good value. With a PEG ratio of 0.97 and a whopping 551% return on equity, a consensus of analysts continues to recommend buying AutoZone. Shares have marched steadily upward this year, growing 67.8% so far to end the week at $265.20.
During the three months that ended in October, Smithfield Foods (SFD) sold assets to reduce debt. The world's largest pork producer is expected to post per-share earnings of 55 cents for that period, compared to a year-ago loss of 26 cents per share. Analysts estimate its fiscal second-quarter revenue has increased 19.4% to $3.2 billion, and predict year-over-year earnings and revenue growth for the third quarter. Earnings results have not fallen short of consensus estimates in the past four quarters.
The long-term EPS growth forecast is 9% and its forward P/E ratio is 9.6, which is much less than the trailing P/E and the industry average. The PEG ratio is 1.07. On average, analysts average recommend buying Smithfield Foods, with a mean price target of $19.80. At $18.10, shares have grown 8.3% in three months and recently rose above their 200-day moving average.
Other companies expected to post strong earnings results this week include Analogic