Week in Preview: Earnings Season Winds Down

Tiffany & Co. is expected to report earnings growth
Tiffany & Co. is expected to report earnings growth

Most of the S&P 500 companies have already reported earnings results for the most recent quarter. But scheduled to release their results this week are Medtronic (MDT) and Novell (NOVL), which analysts surveyed by Thomson Reuters expect to post earnings per share, or EPS, about same as last year, as well as JDS Uniphase (JDSU), Patterson Companies (PDCO) and Tiffany (TIF), for which analysts foresee year-over-year earnings growth. Of these, the expectations are highest for Tiffany.

Tiffany Expected to Shine

During the three months that ended in July, Tiffany launched an iPhone app and increased its quarterly dividend. Analysts expect the New York-based specialty retailer to report that earnings per share came to 53 cents, a 26.4% increase from a year earlier. Second-quarter revenue is expected to have grown 12.8% to $690.8 million. So far, analysts predict full-year earnings of $2.61 per share, up 22.9%, on $3.0 billion in revenue, an 11.8% increase. Earnings results topped consensus estimates in four of the past five quarters, by 11 cents per share in the first quarter.

Tiffany's long-term EPS growth forecast is 14.3%, which is better than the industry average. The earnings multiple of 16.4 times is less than the industry average and the trailing price-earnings ratio of 18.9. The First Call analysts' recommendation has been to buy Tiffany for more than 90 days. The mean price target on shares is currently $54.16. Shares closed Friday at $43.30, which is about nine bucks shy of the 52-week high, but up 10.4% in the past month.

Three of Canada's big five banks -- Bank of Montreal (BMO), Canadian Imperial Bank of Commerce (CM) and Royal Bank of Canada (RY) -- are also scheduled to report their fiscal third-quarter results this week. (Look for results from Bank of Nova Scotia (BNS) and Toronto-Dominion (TD) the following week.)

The View on Canadian Banks

Bank of Montreal and Canadian Imperial are expected to report higher per-share earnings of $1.18, up 11%, and $1.53, up 11.1%, respectively, but Royal Bank's earnings are expected to have fallen year-over-year to 94 cents a share, down 8.7%. But analysts predict both sequential and year-over-year earnings growth in the fourth quarter for all three banks. Earnings from all three have tended to be better than consensus estimates in recent quarters.

The long-term EPS growth forecasts for each of these banks is 10%, and their earnings multiples are less than the industry average, but only Canadian imperial has a consensus buy recommendation. However, TheStreet.com likes all three for their dividend yields. Shares of all of these banks are down from 52-week highs in April. Bank of Montreal closed the week at $55.78, down 14.6%; Canadian Imperial at $65.12, off 15.2%; and Royal Bank at $49.05, a drop of 18.9%.

High Expectations for SemTech

Semiconductor maker Semtech (SMTC) is anticipated to be one of the week's best in terms of earnings growth. Analysts anticipate that the Camarillo, Calif.-based company will report earnings of 38 cents per share, an increase of 53.6% from the same period last year. During the three months ended in July, Semtech named a new CIO, and analysts expect revenue for that period to have jumped 66.8% to $110.6 million. Thus far, the consensus forecast is for sequential and year-over-year growth of both earnings and revenue in the third quarter. Semtech's earnings have increased in each of the past five quarters, as well as topping consensus estimates.

Semtech's long-term EPS growth forecast of 12% is higher than the industry average and that of competitor National Semiconductor (NSM). The earnings multiple is 10.6, down from the trailing PE ratio of 15.2. Semtech reports no long-term debt, and the consensus recommendation shifted from holding to buying Semtech in the past 30 days. The mean price target on the shares is $20.93. At $16.39, the share price is 6.8% lower than three months ago, as well as below the 50-day and 200-day moving averages.

Elsewhere on the Economic Calendar

Numbers for existing home sales in July are due Tuesday, while new home sales and housing starts for July are due out Wednesday. Existing sales are expected to be lower, but new home sales are expected to be higher.

Durable goods numbers for July are due Wednesday, and gross domestic product for the second quarter and consumer sentiment for August close out the week on Friday. Analysts expect the GDP to be revised downward.