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Zacks Earnings Preview: Ciena, Dell, Dollar Tree, DryShips and Sears Holdings

Zacks.com releases the list of companies likely to issue earnings surprises. This weeks list includes Dollar Tree (Nasdaq: DLTR), DryShips (Nasdaq: DRYS) and Sears Holdings (Nasdaq: SHLD). To see more earnings analysis, visit http://at.zacks.com/?id=3207.

Earnings Preview is written by Charles Rotblut, CFA, Senior Market Analyst for Zacks.com.

Memorial Day. Soldiers are remembered, women can start wearing white and CFA candidates are busy cramming for the June 2 exams. The markets will, of course, be closed.

Memorial Day week have a limited number of earnings reports. Out of the 61 companies reporting, 10 are members of the S&P 500 including Ciena (Nasdaq: CIEN), Dell (Nasdaq: DELL) and Sears Holdings (Nasdaq: SHLD). Some merger deals may be announced, but market direction will mostly be determined by investor sentiment.

Economic data could influence sentiment. The Conference Board will release its May consumer confidence survey results on Tuesday. Minutes from the May 9 Federal Open Market Committee (aka the Fed) meeting should be published on Wednesday. Thursday features the first revision to first-quarter GDP, April construction spending and the May Chicago PMI index. Friday features May employment data, the May ISM manufacturing survey, April personal spending and income and the University of Michigans final May consumer confidence index. Yes Virginia, that is a lot of data.

The ability of the markets to build on recent gains will also be watched closely. The S&P 500 has struggled to advance into record territory, an indication of resistance. Continued failure to move higher will be viewed as a short-term bearish event. Its worth noting, however, that the broad-based index is only up about 6.6% year-to-date hardly a sign of irrational exuberance. More importantly, the S&P 500 is trading at just 16.3x projected 2007 profits and the trend in earnings estimate revisions has been positive in response to first-quarter earnings. Nonetheless, stocks never rise in a straight line, it now costs $50 to fill up my wifes Honda Accord, the Middle East is still unstable and those cicadas are about to bug everyone.

But summer does brings sun, outdoor concerts and vacations, so put a smile on your face and enjoy the warm weather.

Companies That Could Issue Positive Earnings Surprises during the Week of May 28 June 1

DryShips (Nasdaq: DRYS) ended a streak of three consecutive misses when it reported better-than-expected fourth-quarter profits last February. One analyst recently revised his first-quarter projections higher, a precursor to possibly another strong report. The revision pushed the consensus estimate up six cents to its current level of 94 cents per share. DryShips is scheduled to report on Wednesday, May 29, after the close of trading.

Dollar Tree (Nasdaq: DLTR) recently said that same-store sales rose 5.8% in the first quarter. The discount retailer credited better inventory management and strong seasonal sales. Nine analysts raised their first-quarter profit projections following the release of the data, sending the consensus estimate two cents higher to 36 cents per share. DLTR has topped expectations three times in the past four quarters. Dollar Tree is scheduled to report on Wednesday, May 30, before the start of trading.

Companies That Could Issue Negative Earnings Surprises during the Week of May 28 June 1

Earlier this month, Sears Holdings (Nasdaq: SHLD) stated that same-store sales at K-Mart declined 4.7% and domestic same-store sales at Sears declined 2.4% during the first quarter. The company blamed fewer transactions at K-Mart and a drop in appliance sales at Sears for the weakness. Based on the sales data, SHLD anticipates reporting earnings of $1.30 to $1.53 per share a range that includes 27 cents of special items. All of the covering brokerage analysts cut their forecasts following the companys guidance. The first-quarter consensus estimate of $1.21 is 25 cents below the forecast of a month ago. SHLD has both exceeded and missed expectations during the past two quarters. Sears Holdings is scheduled to report on Thursday, May 31.

Want to turn earnings surprises into quick profits? Learn how by visiting http://at.zacks.com/?id=3206.

About the Zacks Rank

Since 1988, the Zacks Rank has proven that "Earnings estimate revisions are the most powerful force impacting stock prices." Since inception in 1988, #1 Rank stocks have generated an average annual return of +31.9%. During the 2000-2002 bear market, Zacks #1 Rank stocks gained +43.8%, while the S&P 500 tumbled -37.6%. Also note that the Zacks Rank system has just as many Strong Sell recommendations (Rank #5) as Strong Buy recommendations (Rank #1). Since 1988, Zacks Rank #5 stocks have underperformed the S&P 500 by 132% annually (+5.1% vs. +11.9%). Thus, the Zacks Rank system allows investors to truly manage portfolio trading effectively.

Zacks "Profit from the Pros" e-mail newsletter offers continuous coverage of the industries and the stocks poised to outperform the market. Subscribe to this free newsletter today by visiting http://at.zacks.com/?id=3567.

About Zacks

Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leonard Zacks. As a PhD in mathematics Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros by going to http://at.zacks.com/?id=3568.

Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.

(a) Zacks Rank performance is the total return (price changes + dividends) of equal weighted portfolios, consisting of those stocks with the indicated Zacks Rank, assuming zero transaction costs. These returns are not the result of a backtest; these are actual returns since 1988. The stocks in the Zacks Rank portfolios were available to Zacks clients before the beginning of each month (monthly rebalancing). Performance results from 1988 through September 2006 are based on a subset of all Zacks Rank stocks that excludes stocks covered by only one analyst and ADRs. Starting in October 2006 and going forward the performance numbers for the Zacks Rank is based upon the full universe of stocks which is more reflective of the list of stocks that customers will find on the Zacks websites. 2007 returns are for the period of Jan 1 Mar 31, 2007.

(b)The S&P 500 Index ("S&P 500") is a well-known, unmanaged index of the prices of 500 large-company common stocks selected by Standard & Poor's. The S&P 500 includes the reinvestment of all dividends, no transaction costs, and represents the gross returns before management fees.

Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.

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