Earnings Preview: Just A Handful Of Earnings

The second quarter earnings season is over, and now we are getting the first of the third quarter. We define any fiscal period ending in August, September and October to be the third quarter. Still, we are just talking about a trickle of reports — a total of 40 companies will announce earnings next week. However, that includes six from the S&P 500, including Paychex (PAYX: 27.23 +0.98 +3.73%), Jabil Circuit (JBL: 13.57 +0.89 +7.02%), Walgreen's (WAG: 30.36 +0.85 +2.88%), Family Dollar (FDO: 43.40 +0.13 +0.30%), Micron Tech (MU: 7.199 +0.529 +7.93%) and McCormick (MKC: 41.72 +0.67 +1.63%). That is an interesting cross-section of companies and together they should give some interesting clues on the overall economy.

With little action on the earnings front, all eyes will be focused on the economic data. We will have a fairly active week on the data front, starting with data on home prices with the Case Schiller index, followed by measures of consumer confidence. Later in the week we get the final read on second quarter GDP and personal income and spending in September. Not a super heavy load of data, but enough to be interesting.

Monday

• Nothing of significance.

Tuesday

• The Case Schiller home price index should show a year over year increase in home prices that was slightly lower in July than June. While the index is the gold standard for measuring home prices, it is also very late data. Not only is this July data when we are almost in October, but it is actually a three month moving average of May, June and July data. The May and June data was still being supported by the homebuyer tax credit. The real weakness in the Case Schiller data is not likely to show up for another few months, but with a massive inventory overhang relative to sales in existing homes, the weakness will show up.
• Consumer Confidence is expected to rise slightly to 54.0 for September from 53.5 in August. That is still a very low level, as in a healthy economy it will be closer to 90. While theoretically important since the Consumer represents 71% of the economy, the actual track record of this survey, and the University of Michigan number due out later in the week, is not very good at actually forecasting consumer behavior. Still, an increase would be better than a decline.

Wednesday

• No economic releases of note.

Thursday

• Weekly initial claims for unemployment insurance come out. They rose by 12,000 in the last week, to 465,000 — the first increase after four straight weeks of declines. After a huge downtrend from mid-April through the end of 2009, initial claims have been locked in a tight "trading range." Look for them to fall modestly next week, but stay within the trading range. We probably need for weekly claims (and the four-week moving average of them) to get down to closer to 400,000 to signal that the economy is adding enough jobs to make a dent in the unemployment rate. A rate of over 500,000 signals that the unemployment rate is probably headed back up and a high probability of a double dip.
• Continuing claims have also been in a downtrend of late. Last week they fell by 48,000 to 4.489 million. That is down 1.578 million from a year ago. Most of the longer-term decline due to people simply exhausting their regular state benefits which run out after 26 weeks. Federally paid extended claims rose by 208,000 to 5.172 million.  Looking at just the regular continuing claims numbers is a serious mistake. They only include a little over half of the unemployed now given the unprecedentedly high duration of unemployment figures. A better measure is the total number of people getting unemployment benefits, currently at 9.661 million, which is up 160,000 from last week. The total number of people getting benefits is now 262,000 below year-ago levels. Make sure to look at both sets of numbers! Many of the press reports will not, but we will here at Zacks.
• The final look at second quarter GDP is expected to be unchanged from the second look at 1.6% growth. However, there is much more to the report than the overall number. The composition of the growth makes a big difference to how sustainable that growth is. Growth coming from firms investing in new plant and equipment, for example, is better than growth that comes simply from rebuilding inventories.
• The Chicago PMI, one of the "regional mini-ISM's" is expected to rise to 57.0 from 56.7 in August. That would indicate a fairly healthy level of growth in the manufacturing in the Midwest, and an acceleration of activity from last month.

Friday

• Personal Income is expected to have risen by 0.2% in August, matching its 0.2% increase in July. Personal Spending is expected to have slowed to 0.3% from 0.4% in July. However, if the increase in spending is higher than the increase in income, it means that the savings rate is declining. In the short term that is good for the economy, but in the long term it is very harmful.
• The University of Michigan Consumer Sentiment index, like the consumer confidence index is expected to post a slight rise, but remain at a very low level. In this case the consensus expectations are for a rise to 66.9 from 66.6.
• Construction Spending is expected to decline by 0.3% in August. That is actually a significant improvement over the 1.0% decline in July.
• The ISM manufacturing index is expected to have declined to 55.0 from 56.3 in August. This is a "magic 50" index where 50 represents the line between expansion and contraction. Thus the index will be showing a relatively healthy rate of expansion in August, but a slower rate than in July.
• Auto and Truck sales are expected to be close to unchanged in September relative to August. On a year-over-year basis they will look very strong, but that will be from the end of the Cash for Clunkers hangover a year ago.

Company	Ticker	Qtr End	EPS Est	Year Ago EPS	Last EPS Surprise %	Next EPS Report Date	Time	Daily Price
CAL-MAINE FOODS	CALM	201008	-0.06	-0.16	35.38	20100927	BTO	$29.76
NATUZZI SPA-ADR	NTZ	201006	999	-0.1	N/A	20100927	BTO	$3.54
PALATIN TECH	PTN	201006	999	0	-999	20100927	BTO	$0.18
PAYCHEX INC	PAYX	201008	0.34	0.34	3.23	20100927	AMC	$26.25
WOLSELEY -ADR	WOSCY	201007	999	999	N/A	20100927		$2.33
AVATECH SOLUTNS	AVSO	201006	999	-0.03	N/A	20100928	BTO	$0.70
JABIL CIRCUIT	JBL	201008	0.41	0.1	7.69	20100928	BTO	$12.68
LANDEC CORP	LNDC	201008	0.1	0.08	-11.11	20100928	AMC	$5.55
MATRIX SERVICE	MTRX	201006	0.13	0.26	77.78	20100928	BTO	$8.96
MODUSLINK GLBL	MLNK	201007	999	0	N/A	20100928	AMC	$7.02
PRO-DEX INC -CO	PDEX	201006	999	0.06	N/A	20100928		$2.22
RADIANT LOGIST	RLGT	201006	0.01	0	0	20100928		$0.36
SEALY CORP	ZZ	201008	0.05	0.05	0	20100928	AMC	$2.53
STANDARD MICROS	SMSC	201008	0.26	-0.12	-14.29	20100928	AMC	$20.49
SUTOR TECH GRP	SUTR	201006	0.09	0.03	-25	20100928	BTO	$1.72
WALGREEN CO	WAG	201008	0.44	0.44	-17.54	20100928	BTO	$29.51
ACTUANT CORP	ATU	201008	0.28	0.18	18.52	20100929	BTO	$21.49
ALLSCRIPTS HLTH	MDRX	201008	0.16	0.13	6.67	20100929	AMC	$17.90
AMER GREETINGS	AM	201008	0.46	0.39	-5.06	20100929	BTO	$19.71
CHINA PRECISION	CPSL	201006	0.04	0.05	0	20100929		$1.79
FAMILY DOLLAR	FDO	201008	0.51	0.43	1.32	20100929	BTO	$43.27
MICRON TECH	MU	201008	0.41	-0.1	9.52	20100929	AMC	$6.67
OMNOVA SOLUTION	OMN	201008	0.23	0.24	52.63	20100929	AMC	$7.33
SYNNEX CORP	SNX	201008	0.74	0.67	2.94	20100929	AMC	$24.81
THOR INDS INC	THO	201007	0.63	0.44	5	20100929	DMT	$26.49
WORTHINGTON IND	WOR	201008	0.24	0.11	50	20100929	AMC	$14.63
XYRATEX LTD	XRTX	201008	0.94	0.28	12.7	20100929	AMC	$16.03
ACCENTURE PLC	ACN	201008	0.63	0.63	5.8	20100930	AMC	$42.43
AEHR TEST SYS	AEHR	201008	999	-0.27	N/A	20100930	AMC	$1.35
AMER APPAREL	APP	201006	-0.11	0.06	0	20100930	BTO	$1.25
AZZ INC	AZZ	201008	0.71	0.89	1.79	20100930	AMC	$40.73
CHRISTOPHER&BNK	CBK	201008	-0.05	-0.06	50	20100930	AMC	$7.29
CRA INTL INC	CRAI	201008	0.3	0.31	26.67	20100930	BTO	$16.31
DEMANDTEC INC	DMAN	201008	-0.09	-0.07	-21.43	20100930	AMC	$9.02
LAWSON SOFTWARE	LWSN	201008	0.07	0.04	0	20100930	AMC	$8.02
MCCORMICK & CO	MKC	201008	0.59	0.57	8.89	20100930	BTO	$41.05
MSCI INC-A	MSCI	201008	0.33	0.27	12.9	20100930		$33.67
OCE VANDER GRIN	OCENY	201008	999	-0.44	N/A	20100930	DMT	$10.12
RESOURCES CNCTN	RECN	201008	0	0	0	20100930	AMC	$12.67
SMART MODULAR	SMOD	201008	0.2	0	26.32	20100930	AMC	$5.85