The market is trading higher at the start of the week as we move deeper into the current earnings season. So far the current earnings season has been positive, and the street expects another strong round of reports this week.
This week's reports feature a diversified group of stocks among the biggest name stocks in the overall market. Each report has the potential to drive the broader market with reports in the consumer products, technology, and financial sector all providing a clearer picture of the health of the overall market.
At this point the market is trading higher as traders discount the potential impact of coronavirus, but if death tolls continue to rise traders are likely to take a more bearish view of stocks and the impact that the virus will have on the Chinese economy and the resulting impact on global economies.
With such a big problem on the horizon, the current earnings season has taken on extra importance, and companies that are able to deliver strong quarterly numbers will be partially shielded from a market sell-off should coronavirus fears start to drive the major indexes lower.
Here are a few big-name companies set to report quarterly numbers this week.
PepsiCo (PEP)
Soft drink giant PepsiCo (PEP) is scheduled to release its fourth-quarter results before the market open on Thursday. The company is expected to report earnings of $1.43 per share, but the street has a slightly higher number in mind with a whisper number of $1.48. The company has posted better than expected earnings the last three quarters, and another earnings beat should push the stock higher. PEP has trended steadily higher over the last 12 months and the stock hit a new all-time high in Monday's trading session. Earnings have risen 5.3% annually the last five years and looking ahead profits forecast earnings to rise at an annual rate of 3.9% over the next five years. With PEP trading at an all-time high, the stock is currently trading at 24 times future earnings, which is a little high considering the modest growth estimates and with shares priced for perfection the stock needs a strong set of quarterly numbers to build on its recent gains. PEP is currently trading at $145.61 with an average price target of $139.67.
Cisco Systems (CSCO)
Cisco Systems (CSCO) is expected to release its fiscal second-quarter numbers on Wednesday. The company will release its numbers after the market close with the consensus calling for earnings of $0.76 per share. The strong overall economy has helped drive profits at Cisco in recent years, with earnings up 7.8% per annum the last five years and looking ahead analysts expect the company to grow earnings at an annual rate of 7% over the next five years. The company has posted better than expected earnings each of the last nine quarters while revenues have topped estimates the last three quarters. The street expects another small earnings beat for the recent quarter with a whisper number of $0.78. The stock is trading at 14 times future earnings at $48.30 with an average price target of $53.17.
Western Union (WU)
Western Union (WU) will report Q4 numbers after the market closes on Tuesday. Analysts forecast earnings of $0.43 per share, versus $0.49 during the same period last year. The street expects a small earnings beat with a whisper number of $0.44 for the quarter. Western Union posted better than expected earnings last quarter after two straight earnings misses. WU stock has traded sideways over the last three months in the upper end of its 52-week high, and the stock is trading just shy of its all-time high. The company has shown modest earnings growth of 3% over the last five years, and looking ahead analysts expect the same with profits expected to rise 2.9% per annum over the next five years. Despite trading near its all-time high, there is a lot of value in WU with the stock trading at just 10.8 times earnings and 14.2 times future earnings. Analysts see the stock as overpriced with an average price target of $23.09 while WU is currently trading at $28.10
