Week in Preview: New Earnings Season, Employment Data


Alcoa (AA), Marriott (MAR) and Yum! Brands (YUM) kick off the new earnings season this week. Analysts surveyed by Thomson Reuters are looking for moderate year-over-year earnings and revenue growth in the third quarter from each of these dividend payers. Note that Marriott and Yum! Brands have exceeded consensus estimates in recent quarters and have First Call consensus 'buy' recommendations as well. They are also trading near their 52-week highs, while Alcoa shares are closer to the 52-week low, despite a 22% rise in the past three months.

PepsiCo's Effervescent Revenue

During the three months that ended in September, PepsiCo (PEP) announced investments in Vietnam and was included in Dow Jones sustainability indexes. The beverage and snack giant is expected to post EPS of $1.22, which compares to $1.08 per share a year ago. Third-quarter revenue is expected to have surged 38.7% to $15.4 billion. Looking ahead to the full year, the forecast is for $4.16 per share earnings (+10.2%) on revenue of $57.3 billion (+32.6%). PepsiCo earnings results have met or beat consensus estimates in the past five quarters.

PepsiCo's long-term EPS growth forecast of 8.9% is better than that of rival Coca-Cola (KO), and its price-earnings (PE) ratio of 15.3 is less than the industry average. PepsiCo's return on equity (ROE) is 40.0%. The First Call recommendation has been to buy PEP for more than 90 days, and the mean price target is currently $74.15. The Motley Fool considers it a Buffett-type stock. Shares are 8.9% higher than three months ago and recently have been trading near the 52-week high of $67.61.

Mosaic's Big Earnings Growth

Miner and fertilizer producer Mosaic Co. (MOS) is anticipated to be one of the week's biggest earnings gainers. For its fiscal first-quarter, the consensus forecast calls for earnings to have jumped 68.1% from a year ago to 72 cents per share. During the three months that ended in August, Plymouth, Minn.-based Mosaic reported strong demand and closed on investment in a joint venture. Revenue for that period is expected to total nearly $2 billion. That's a 35.2% increase from the same period of last year. And analysts also expect sequential and year-over-year earnings and revenue growth in the second quarter. Though Mosaic only topped earnings expectations in one of the past four quarters, its EPS increased sequentially each time.

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However, Mosaic has a long-term EPS growth forecast of only 8%. Its forward PE ratio is 16.6, but that's less than the industry average and the trailing PE ratio of 31.4. This dividend payer keeps more than enough cash on hand to cover long-term debt, and it has a ROE of 54.3%. Its annual stockholder's meeting is scheduled for October 7. The stock has surged 53.3% in the past three months and ended last week at $59.62.

Jobs Numbers and Other Economic Data

Other quarterly reports scheduled for this week include Constellation Brands (STZ), Costco Wholesale (COST) and Monsanto (MON).

The week's economic data releases include:

  • Monday: Pending home sales in August and factory orders in September

  • Tuesday: ISM nonmanufacturing survey for September

  • Wednesday: ADP employment index for September

  • Thursday: Job vacancies in August, Monster Employment Index for September, consumer credit in August, September same-store sales of retailers and initial jobless claims for last week

  • Friday: Wholesale trade in August and unemployment data for September

Job losses are expected to have declined, with the private sector adding jobs, but the unemployment rate could rise to 9.7% as more people reenter the labor market and seek work.

Also, late next week is the annual meeting of the IMF and World Bank.