Happy New Year everyone. Thanks for being a part of Estimize and sharing your feedback with us, it’s been amazing to watch the community grow. Earnings season kicks off in mid January, and we will be doing a weekly series of blog posts to highlight notable releases and keep you up to speed. During earnings season, there are often 20 or more releases per day, or over 100 per week. We will choose a handful of stocks to analyze based on visibility, market cap, and general value to the Estimize community. If there are other assets you would like to see included in the write up, feel free to let us know on Twitter. Also, for real time information and updates on the assets you are estimizing on, we recommend using StockTwits.
Earnings season will start heating up as early as next week, January 9-13. That Monday, Alcoa ($AA) will release its fourth quarter earnings. It was a rough 2011 for Alcoa, seeing its share price drop by a whopping 44% and referred to as one of the “doggiest dogs.” For FQ4 2011, Wall Street analysts have estimated that EPS will be $0.04 and revenue will be $5.9 billion.
Looking back as far as the fourth quarter of 2009, Wall Street has often been high or low on Alcoa, but rarely accurate. Starting in the third quarter or 2010, we see a trend developing where Wall Street analysts begin to raise their EPS estimates, and by the second quarter or 2011 begin consistently overshooting the actual. For revenue, Wall Street has been more bearish on the stock, and for the past two quarters has estimated well beneath the actual. The Estimize, and general social finance community, seems to be far more bearish on the stock. On December 29th, the stock hit its 52 week low; as a global supplier of aluminum, Alcoa is largely dependent on the vibrancy of the transportation industry and the global economy. With slowdown in the auto, aircraft, and construction industries, Alcoa took a hit. Currently, the Estimize community is bearish on the stock, predicting an EPS of $0.03 and a revenue of $5.31.
Lennar Corporation ($LEN) reports its fourth quarter 2011 earnings on Wednesday, January 11th. The stock has been steadily climbing with minor fallbacks since October, with share prices rising from just over $12 to just under $20. Since the burst of the housing bubble, the stock has remained relatively stagnant within this range. LEN took a massive hit in 2008 when housing prices fell due to inflated prices and excess supply. However, sentiment in the housing sector seems to be improving slightly in 2012, mainly in the South, whereas the West saw a lot of overbuilding during the bubble. LEN also expanded into the Pacific Northwest in late 2011. A lot is still in question about the housing market, and uncertainty still plagues the industry. Homebuyers are skeptical that their homes will retain value and are still remaining on the sidelines.
Looking at the charts, Wall Street analysts have traditionally been underweight on LEN for both EPS and revenue. Wall Street is predicting a strong quarter for LEN, and seems to have confidence in the stock and the housing market at large. I am predicting a slight beat in EPS and a slight miss on revenues, as per the chart.
Now, for everyone’s favorite financial: JP Morgan Chase ($JPM), which release its fourth quarter 2011 earnings on Friday, January 13th. It’s been a bad couple of years for financials, namely $C $MS and $BAC. At times JPM seems to be the rare exception; as of January 3rd, JPM is up close to 5% on the year. Recently, JPM has been doused in even more bad press for mortgage fraud. However, at this point these headlines are becoming “the usual” and the stock seems to be intact, and remains one of the top dividend paying Dow stocks.
JPM has consistently beat Wall Street earnings predictions every quarter since the end of 2009. Analysts are predicting earnings of $0.95 EPS and revenues of $23.59 billion. In both EPS and revenue, Wall Street has been underweight on the stock; the Estimize community as well as the social finance community at large seem more bullish on the stock, and are predicting a beat, once again. The Estimize consensus for EPS is currently $1.17 for EPS and $24.12 for revenue.