Week in Preview: Earnings from Tyson, Analog Devices, Deere
Among quarterly results scheduled for this holiday-shortened week, investors may be thankful for earnings results from Tyson Foods (TSN). The Arkansas-based poultry and meat producer reported on its sustainability efforts and also was named McDonalds' (MCD) supplier of the year during its fiscal fourth quarter. Analysts polled by Thomson Reuters forecast earnings for that period to have doubled from a year ago to 56 cents per share.
Tyson is also expected to post revenue of $7.8 billion for the three months that ended in September, which is 7.4% more than in the same period of fiscal 2009. And the consensus estimate for the full year calls for earnings of $2.08 per share (an 87% jump) and revenue of $28.7 billion (up 7.3%). Tyson's earnings have been better than expected in recent quarters, beating consensus estimates by as much as 24 cents per share.
Tyson's long-term EPS growth forecast is 7.3%, and its forward price-earnings (P/E) ratio is 8.6, which is much less than the industry average. The PEG ratio is 1.2 and the dividend yield is 1%. The First Call recommendation has been to buy TSN for more than 90 days, and the mean price target is currently $20.55 per share. Shares have faced resistance from the 100-day moving average since July, slipping 5.9% in the past three months and closing Friday at $15.64.
Campbell Soup (CPB), which often finds a place on the holiday table, is expected to post lower earnings this week.
Analog Devices
Analysts anticipate that integrated circuits maker Analog Devices (ADI) will report that its fiscal fourth-quarter earnings grew 48.6% year-over-year to 70 cents per share. During the three months that ended in October, Analog Devices collaborated with Altera (ALTR) and continued to innovate. Revenue for that period is predicted to have jumped 32.2% to $755.8 million. For the full year, analysts foresee earnings of $2.32 per share (+58.2%) on revenue of $2.7 billion (+36.2%). Analog's EPS have grown in each of the past five quarters, topping consensus estimates each time.
The long-term EPS growth forecast of 16% is higher than that of competitor Texas Instruments (TXN). Analog's forward P/E ratio is 13.5, but that's less than the trailing P/E of 17.6, as well as the industry average. The PEG ratio is 0.8, the dividend yield is 2.4%, and the company keeps ample cash on hand to cover long-term debt. The consensus recommendation remains to buy ADI. Citigroup recommended buying the stock ahead of the earnings report. After facing resistance around $31 for much of the year, shares have climbed recently and ended the week at $35.18.
Analysts are looking for earnings growth in this week's reports from Hewlett-Packard (HPQ) and Medtronic (MDT) as well.
Deere
Deere (DE) is expected to be one of the biggest earnings winners this week. During the three months that ended in October, the agricultural and construction equipment giant announced the sale of its wind energy unit and relaunched its John Deere Financial unit. Illinois-based Deere is expected to post EPS for that period of 94 cents, a year-over-year rise of 75.5%. Its fiscal fourth-quarter revenue is estimated to have increased 31.1% to $6.2 billion. Analysts also predict full-year earnings of $4.49 per share (+37.4%) on revenue of $23.3 billion (+12.4%). Earnings results have bested consensus estimates in the past five quarters, by as much as 48 cents per share.
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Deere's long-term EPS growth forecast is 9.7% and its forward P/E ratio is 15.6, which is less than the trailing P/E of 20.4 and the industry average. The PEG ratio is 1.6, the dividend yield is 1.5% and the ROE is 15.4%. Analysts on average still recommend buying DE. UBS upgraded the stock on Friday. The mean price target is $80.40. Shares have climbed 18.7% in the past three months are trading shy of the recent 52-week high of $79.66.
Focus Media (FMCN) is also anticipated to report strong year-over-year earnings growth this week.
Economic Data
A flurry of economic data is due out before the Thanksgiving holiday. On tap Tuesday: National Association of Realtor's (NAR) existing-home sales for October and a revised third-quarter gross domestic product (GDP) estimate. Wednesday will bring numbers for new-home sales, housing starts, personal income/spending and durable goods orders in October, as well as the University of Michigan Consumer Sentiment Index and the minutes of the Federal Reserve's FOMC meeting of Nov. 2 and 3, in which QE2 was decided upon.
GDP is expected to be revised upward from 2% to 2.3%. Economists believe measures for home sales, personal income and spending, durable goods orders and consumer sentiment may rise marginally, but economic conditions overall remain soft.
