The Next Earnings Season Starts Tonight!


It's time for another earnings season!

Alcoa gets the party started
Alcoa kicks things off with a second-quarter report after tonight's closing bell.

The aluminum producer could use a hit this time. Share prices have plunged 9% year to date and 6% in the last three months as investors have worried about a slow recovery in global infrastructure investments. Alcoa has missed out on the 16% rally in the Dow Jones Industrial Average this year despite being a member of that illustrious index.

Analysts expect GAAP earnings of about $0.06 this time, up from a breakeven performance a year ago. Sales are forecast to slide 2% year over year to $5.8 billion.

Beating one of these numbers will likely not be enough to boost share prices; remember that Alcoa surprised analysts by an impressive margin on the previous quarter's bottom line but only met expectations when it came to revenue. The stock didn't exactly jump for joy over that mixed performance, and it has swooned ever since.

Let's see whether the Dow's smallest member can break out of these gloomy trends tonight.

Yum! Brands is fighting the flu
The parade continues on Wednesday, when Yum! Brands spills its second-quarter beans after the closing bell.

The parent company of Taco Bell and Pizza Hut is expected to report $0.54 of GAAP earnings per share on $2.9 billion in revenue. We're looking at year-over-year slowdowns in both cases, continuing the negative trends seen in the previous quarter.

YUM Revenue Quarterly YoY Growth Chart
YUM Revenue Quarterly YoY Growth Chart

YUM Revenue Quarterly YoY Growth data by YCharts.

The company is investing heavily in the Chinese market, hoping to unlock serious growth in the Middle Kingdom down the road. These efforts have been hampered by a regional outbreak of avian flu, which obviously puts the brakes on fried-chicken sales. Yum! has been down this road before, though, and it came up aces by tripling share prices since 2005. In other words, it's not the end of the world as KFC knows it.

That being said, Yum! needs to execute on the growth opportunities in front of it while battling the roadblocks. None of this comes easy. As CFO Pat Grismer put it in April's earnings call, "Potential means you haven't done it yet, OK?" The top line will be your guide to Yum!'s growth execution this time, while the bottom-line performance points to cost controls and management efficiency.

JPMorgan chases another earnings beat
On Friday morning, JPMorgan Chase closes out the week with another Dow member report.

In the second quarter, Wall Street analysts see earnings jumping 18% year over year to $1.43 per share and revenue climbing 8% to $24.8 billion. JPMorgan has delivered positive earnings surprises in each of the last five quarters -- often by huge margins. Furthermore, analysts have nudged their estimates upward over the last month.

The outperformance shows in the megabank's share prices. The stock has beaten the Dow with a 23% gain in 2013 and soared a market-crushing 60% over the past year. Even investors who bought in five years ago -- just beforethe global panic -- can look back at a market-beating 54% gain right now.

And that's before taking JPMorgan's increasingly generous dividends into account.

The financial landscape is changing right now as federal interest rates surge for the first time in years. Will JPMorgan crush analyst targets again despite these new headwinds? The company can outperform in good times and in bad, but I wouldn't exactly bet the house on a massive beat this time.

Put the pedal to the metal
These are just the appetizers before the entree. Thousands of companies and two-thirds of the Dow will report earnings over the next three weeks.

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