Monday, January 7, 2013

This Week's Key Earnings

By now investors will be getting well into 2013 and looking forward to planning out the year. It’s a quiet week but we can always use these periods as a chance to discover and research new stocks. In addition it is the week of the JPMorgan Healthcare conference and anyone who is anyone in Biotech and Pharma will be there. It’s a great chance to find out what’s happening in healthcare.

With regards earnings news, it’s a pretty disparate collection of stocks but there are a few things here that will give some interesting industry color with which we can read across.


Acuity Brands (NYSE: AYI) gives results. The lighting company is a favorite of mine and I picked some up after it disappointed last time around. The Architectural Billings Index has perked up recently and this could be reflected in Acuity’s results even if the previous quarter to August was a bit weaker than expected. In addition with most of the LED lighting companies continuing to report good growth, I would expect an increase in Acuity’s LED based lighting and controls sales as a portion of their overall sales.  The market has anticipated a decent set of results so let’s see.

Inevitably, much of the focus will be on Alcoa (NYSE: AA) and more importantly what it says about its end markets. There is a summary of the developing trends linked here. I’m particularly interested to see what it says about conditions in North American commercial building and construction as I am expecting an improvement and perhaps a downgrade to expectations in China. Similarly, automotive in North America remains strong, but globally the market for heavy truck and trailer got weaker throughout last year. The really interesting thing will be to hear what Alcoa says about Europe because growth has been weak there,  so companies will start lapping easier comparables.

Other companies reporting are Lindsay Corp, Monsanto and Global Payments.


Constellation Brands and US investors will look forward to hearing if the wine will keep flowing like beer and AZZ Incorporated will give indication of how the power equipment market is shaping up this year.


The industrial sector has experienced some tougher conditions recently so any good news out of MSC Industrial Direct (NYSE: MSM) will be greatly received. The industrial supply company usually gives a great indication of where the US industrial sector is headed and along with Fastenal, I think it is the best stock to follow in this regard. However, MSC does usually have limited visibility so look out for a lot of variability in its commentary. I would be surprised if investors got anything more than a ‘cautiously optimistic’ out of the company.  It is also useful that Synnex Corp will give results and putting them together can give a good overall picture of the industrial sector.

The mass consumer market in the US was weak in 2012 and Supervalu (NYSE: SVU) has suffered disproportionately. However it would be churlish to merely discuss its markets and earnings potential. The real story here is of a company trying to survive its huge debt and possibly restructure by disposing of investors. The stock will greatly interest special situation or deep value investors, but it has little attraction for a growth focused investor like me.


The big news on Friday is the results from Wells Fargo (NYSE: WFC). It might not be the sexiest financial out there, but investors who are not interested in subsidizing prop traders flighty punting in the sector will be more attracted to it. The bank has been aggressively increasing exposure to the US mortgage market and what it says about future credit issuance is an important indicator for the US economy at large. The Federal Reserve has been trying to get banks to increase lending and perhaps 2013 is the year when it will happen. In addition look out for any commentary on a potential settlement over the foreclosure debacle.

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