After a quiet opening week to earnings season, this week brings a torrent of earnings reports from Dow components and industry bellwethers.
Monday starts with Citigroup Inc. (NYSE:C) reporting, and it’s going to kick off a big week for financials.
The banking theme continues on Tuesday with Comerica and Goldman Sachs Group, Inc. (NYSE:GS) reporting numbers. We also have three bellwethers reporting.
In healthcare, Johnson & Johnson (NYSE:JNJ) will update investors on how its revival in pharmaceuticals is going. Within pharma, I would look for ongoing strength with Remicade (rheumatoid arthritis) and growing Stelara (psoriasis) sales. However, the real question will be over its consumer products division.
A brief look at the previous results reveals that it is still under performing, and it needs to get the brands affected by quality problems back into production. Similarly, OTC/Nutritionals and skin care have been weak in recent quarters. The third major division is medical devices & diagnostics. The company is ‘evaluating options’ with its diagnostics operations, and continues to integrate Synthes in to its orthopedics offerings. In summary, the focus in these results should be on execution with its consumer products.
The key things to look out for in Intel Corporation (NASDAQ:INTC)’s results will be its gross margin outlook and inventory situation. Historically, the stock has tended to trade in the direction of its gross margins, and the declines last year have mirrored poor stock performance. While these issues will govern the short to mid-term performance, investors should also focus on the development of its longer-term plans to invest in solutions for ultrabooks and tablets. Intel is somewhat late to the party with some of these things, but it has the scale and financial firepower to get back on track.
The Coca-Cola Company is the third major bellwether to give results today. In addition, industrial play W.W. Grainger, Inc. (NYSE:GWW) will give more color on current conditions.
This day will see numbers coming out from Abbott Laboratories (NYSE:ABT), American Express Company (NYSE:AXP), Bank of America Corp (NYSE:BAC), Core Labs, Crown Holdings, Sandisk, and Textron. Alcoa recently talked of better conditions for business jet orders, so it will be interesting to hear what Textron has to say because it too gave a good forecast late last year.
I’m also looking out for Dover’s results. It has had some difficulty with its sound solutions division, and it will be interesting to hear what it says about is smartphone-based sales because Nokia is a major customer.
In rather obscure fashion, I am going to focus on Quest Diagnostics Inc (NYSE:DGX). This is not the sexiest stock nor is it in the most fashionable industry, but, I think there is an interesting value case here. It generates a lot of cash and is a dominant player within an industry in need of consolidation.
Moreover there are a number of management initiatives in place in order to try get to the kind of growth rates that its rival Lab Corp (which reports on Friday) has been able to achieve. It’s a boring stock, but it’s cheap and if a turnaround can be achieved, it will surely appreciate.
There are some interesting health care plays reporting today with results from Baxter, Cepheid, and Intuitive Surgical. Banking is represented by Morgan Stanley. Industrial giant Danaher reports, as does Tier 1 telco carrier Verizon Communications Inc. (NYSE:VZ). PepsiCo is a company with a strategy that lacks coherence in my humble opinion. It is also a decent yielding stock in a hot category right now. The market has been very keen to bid up food stocks lately.
There are also some interesting housing and construction plays reporting. I’m not convinced by Restoration Hardware’s valuation justifies the uncertainty over its growth strategy. As for PPG and Sherwin-Williams, the former has significant exposure to China and the latter is attractive thanks to its U.S. housing exposure, but the stock is hardly cheap.
Google Inc (NASDAQ:GOOG), International Business Machines Corp. (NYSE:IBM), and Microsoft Corporation (NASDAQ:MSFT) also give numbers. As ever, the market will focus on the relationship between cost per click and paid clicks growth at Google Inc (NASDAQ:GOOG).