Filed under: Earnings reports, Forecasts, FedEx Corp (FDX), Goldman Sachs Group (GS), Morgan Stanley (MS), Economic data

Last week's preview raised the question of whether consumers where turning to comfort foods in these uncertain times, specifically in terms of second quarter earnings of Campbell Soup (NYSE: CPB) and Krispy Kreme (NYSE: KKD). Campbell's strong earnings growth topped expectations, while Krispy Kreme narrowed its loss, though it fell short of estimates.

This coming week should bring reports from more food-related companies, from cereal maker General Mills and food packager CongAgra to grocery chain Kroger, to the parent companies of restaurants Cracker Barrel, Olive Garden, Red Lobster, Carl's Jr., and Hardees. Also look for reports from tech-related companies such as Oracle, Adobe, and Palm, as well as from financials Morgan Stanley and Goldman Sachs, and from economic bellwether FedEx.

Here's what analysts surveyed by Thomson Financial are expecting from some of the companies reporting earnings this week, as compared to their results from the same period of last year:

• Schiff Nutrition International Inc. (NYSE: WNI): $0.09 per share (+33.3%) on revenue of $45.2 million (+10.9%)
• Pall Corp. (NYSE: PLL): $0.60 per share (+23.3%) on revenue of $710.4 million (+9.9%)
• Brady Corp. (NYSE: BRC): $0.62 per share (+22.6%) on revenue of $385.7 million (+6.3%)
• AAR Corp. (NYSE: AIR): $0.45 per share (+20.0%) on revenue of $362.2 million (+18.4%)
• Marcus Corp. (NYSE: MCS): $0.47 (+19.1%) on revenue of $123.4 million (+10.0%)
• Oracle Corp. (NASDAQ: ORCL): $0.27 per share (+18.5%) on revenue of $5.5 billion (+18.6)
• IHS Inc. (NYSE: IHS): $0.48 per share (+10.4%) on revenue of $213.7 million (+16.6%)
• CKE Restaurants Inc. (NYSE: CKR): $0.20 per share (+10.0%) on revenue of $352.8 million (-2.8%)
• Dynamex Inc. (NASDAQ: DDMX): $0.42 per share (+9.5%) on revenue of $118.4 million (+9.0)
• General Mills Inc. (NYSE: GIS): $0.88 per share (+8.0%) on revenue of $3.3 billion (+6.7%)
• Kroger Co. (NYSE: KR): $0.41 per share (+7.3%) on revenue of $17.6 billion (+9.2)
• Best Buy Inc. (NYSE: BBY): $0.57 per share (+3.5%) on revenue of $9.7 billion (+11.2%)
• Apogee Enterprises Inc. (NASDAQ: APOG): $0.41 per share (+2.4%) on revenue of $242.0 million (+11.2)
• Adobe Systems Inc. (NASDAQ: ADBE): $0.46 per share (+2.2%) on revenue of $876.7 million (+2.9%)
• Progress Software Corp. (NASDAQ: PRGS): $0.45 per share (+2.2%) on revenue of $127.7 million (+4.8)
• Carnival Corp. (NYSE: CCL): $1.58 per share (-5.4%) on revenue of $4.8 billion (+12.1%)
• Darden Restaurants Inc. (NYSE: DRI): $0.61 per share (-16.4%) on revenue of $1.8 billion (+19.9%)
• CBRL Group Inc. (NASDAQ: CBRL): $0.92 per share (-20.0%) on revenue of $596.0 million (-5.7%)
• Comtech Telecomm Corp. (NASDAQ: CMTL): $0.48 per share (-23.8%) on revenue of $124.6 million (+5.8%)
• FedEx Corp. (NYSE: FDX): $1.18 per share (-25.3%) on revenue of $9.9 billion (+7.4%)
• ConAgra Foods Inc. (NYSE: CAG): $0.24 per share (-29.4%) on revenue of $2.8 million (-4.2%)
• Dress Barn Inc. (NASDAQ: DBRN): $0.30 per share (-37.5%) on revenue of $372.3 million (-2.0%)
• Morgan Stanley (NYSE: MS): $0.77 per share (-44.2%) on revenue of $6.3 billion (-21.0%)
• OMNOVA Solutions Inc. (NYSE: OMN): $0.05 per share (-54.5%) on revenue of $225.0 million (+14.3%)
• Goldman Sachs Group Inc. (NYSE: GS): $1.73 per share (-71.8%) on revenue of $6.2 billion (-49.5%)

Palm Inc. (NASDAQ: PALM) is expected to report that it swung to a loss of 18 cents per share in the most recent quarter, while Pier 1 Imports Inc. (NYSE: PIR) is expected to have narrowed its loss to 24 cents per share.

The takeover of Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE), as well as this past week's focus on the struggles of Lehman Brothers (NYSE: LEH), has renewed scrutiny on the financials just in time for Goldman and Morgan Stanley's fiscal third quarter results. As the list above indicates, both are expected to report much lower earnings. Goldman offered positive surprises in recent quarters -- $4.58 per share in the previous quarter beat estimates by 34%. Morgan Stanley, on the other hand, offered positive surprises in just two of the past four quarters, including beating by four cents per share ($0.95) in the previous quarter. Goldman, no surprise, as the better long-range EPS forecast at 15.6% to Morgan's 11.8%. However, analysts recommend holding GS but buying MS. Shares of both companies have fallen more than 25% year to date.

FedEx, the world's largest package delivery service, is sometimes seen as a bellwether of the economy. The Memphis-based just this past week boosted its fiscal first-quarter profit forecast due to cost containment and lower-than-expected fuel costs. The anticipated 25.3% drop in earnings year over year mentioned above would also amount to a 18.6% decline from the previous quarter's $1.45 per share. While FedEx missed expectations by a penny in that quarter, in the previous three quarters the company beat expectations. Its long-term EPS growth forecast is 12.8%, which is better than the industry average and that of rival United Parcel Service (NYSE: UPS). The analysts' consensus recommendation is currently to buy FedEx. Shares have crept up more than 3% in the past three months.

Other economic data scheduled to be released this week include:

• Industrial production (Aug. 2008): Monday 9:15 AM
• Consumer price index (Aug. 2008): Tuesday 8:30 AM
• NAHB housing market index (Sep. 2008): Tuesday 1:00 PM
• FOMC interest rate decision (Sep. 2008): Tuesday 2:15 PM
• Housing starts (Aug. 2008): Wednesday 8:30 AM
• Leading economic indicators index (Aug. 2008): Thursday 10:00 AM

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Filed under: Earnings reports, Forecasts, FedEx Corp (FDX), Goldman Sachs Group (GS), Morgan Stanley (MS), Economic data

Last week's preview raised the question of whether consumers where turning to comfort foods in these uncertain times, specifically in terms of second quarter earnings of Campbell Soup (NYSE: CPB) and Krispy Kreme (NYSE: KKD). Campbell's strong earnings growth topped expectations, while Krispy Kreme narrowed its loss, though it fell short of estimates.

This coming week should bring reports from more food-related companies, from cereal maker General Mills and food packager CongAgra to grocery chain Kroger, to the parent companies of restaurants Cracker Barrel, Olive Garden, Red Lobster, Carl's Jr., and Hardees. Also look for reports from tech-related companies such as Oracle, Adobe, and Palm, as well as from financials Morgan Stanley and Goldman Sachs, and from economic bellwether FedEx.

Here's what analysts surveyed by Thomson Financial are expecting from some of the companies reporting earnings this week, as compared to their results from the same period of last year:

Continue reading The week in preview: Eyes on Morgan Stanley, Goldman Sachs, FedEx

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Russia’s brutal invasion of Georgia, which threatens a crucial oil and gas transit route (the Baku-Tbilisi-Ceyhan (BTC) pipeline) that was originally built to skirt Russian territory and diminish Moscow’s domination of energy routes to Western Europe is a[More...]

Filed under: Newsletters, Commodities, Agriculture, Stocks to Buy, Union Pacific Corporation (UNP)

"Railroads are a play on three big secular themes: the drive for increased energy efficiency, growth in coal and the agriculture boom," says Elliott Gue, a energy sector expert who has just returned from Japan where he was covering the G8 Summit.

Meanwhile, in his The Energy Srategist, he states, "Railroads are now among the most fuel-efficient forms of freight transport available." Here, he offers a bullish review of Union Pacific (NYSE: UNP).

"My long-held thesis on the group has been that the railroads are no longer totally dependent on the US economy for their growth.

"It's no longer appropriate to look at this sector as viciously economy sensitive. The traditional relationship between the broader market and the rails has been breaking down for several years, but this trend appears to be accelerating.

"In 2007, according to the Association of American Railroads (AAR), the average railroad moved a ton of freight a distance of 436 miles on a single gallon of diesel fuel. That makes freight trains roughly three to four times more fuel efficient than trucks.

"Union Pacific is the largest railroad in the US and has long been one of my favorites. The company's network is nearly 33,000 miles long and is concentrated in the West and Midwest. It also offers a convenient example of the bullish forces at work for the rails, particularly in the coal and agriculture industries.

Continue reading Union Pacific (UNP): 'Railroad renaissance'

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"Railroads are a play on three big secular themes: the drive for increased energy efficiency, growth in coal and the agriculture boom," says Elliott Gue (http://www.thestockadvisors.com/ccount/click.php?id=2179), a energy sector expert who has been in Japan covering the G8 Summit.Meanwhile, in his The Energy Srategist (http://www.thestockadvisors.com/ccount/click.php?id=2179), he states, "Railroads are now among the most fuel-efficient forms of freight transport available." Here, he offers a bullish review of Union Pacific (http://www.thestockadvisors.com/quote.htm?sym=unp) ( NYSE: UNP (http://www.thestockadvisors.com/quote.htm?sym=unp)). "My long-held thesis on the group has been that the railroads are no longer totally dependent on the US economy for their growth. "It’s no longer appropriate to look at this sector as viciously economy sensitive. The traditional relationship between the broader market and the rails has been breaking down for several years, but this trend appears to be accelerating. "In 2007, according to the Association of American Railroads (AAR), the average railroad moved a ton of freight a distance of 436 miles on a single gallon of diesel fuel. That makes freight trains roughly three to four times more fuel efficient than trucks. "Union Pacific is the largest railroad in the US and has long been one of my favorites. The company’s network is nearly 33,000 miles long and is concentrated in the West and Midwest. It also offers a convenient example of the bullish forces at work for the rails, particularly in the coal and agriculture industries."Union Pacific’s energy segment is its largest by revenue; it accounts for just shy of 20% of the company’s business. Coal transport from a region of the West known as the Powder River Basin comprises the majority of Union Pacific’s energy transport business. "Strong demand for coal transport has made this segment a real bright spot for the railroad in recent years. Better still, Union-Pacific still transports coal under contracts signed years ago at lower freight rates. As these contracts expire, Union Pacific should see strong pricing gains as it signs new deals. "Agriculture is its most profitable business lines in terms of average revenue per car. This segment is roughly 80% grain and grain products (like ethanol) shipments. "Industrial products account for around 19% of total revenues; the trends in this business aren’t particularly positive. In particular, the housing bust has brought a severe slowdown in demand for construction-related products and commodities such as lumber. "The chemicals segment is a solid, growing business for Union Pacific. Demand for fertilizers is booming because of rising prices for agricultural commodities. And shipments of petroleum-related chemicals have also remained firm. "Overall, this rundown of Union’s business illustrates that the majority of the company’s segments aren’t particularly sensitive to US economic growth; some, such as coal and agricultural shipments, are driven more by overseas demand. "Even more important, even in segments showing flat or falling volume growth, Union Pacific has been able to boost pricing. This is a phenomenon many analysts call the railroad Renaissance."In short, weak returns and profitability throughout much of the '80s and ’90s meant that railroad operators didn’t invest much in expanding their networks. Much of the cash they did invest was directed at improving fuel efficiency or taking other steps to cut costs. "With capacity constrained and demand for shipments rising, railroads for the first time in decades had real power to raise prices. "This pricing power should continue; in order for the rails to invest the capital needed to expand their capacity, they’ll need to earn a decent return on their investment. Most of the big rails have begun to plow some of their free cash flow into expansions. "A final trend is worth noting: The railroads are taking steps to cut their costs and improve the traffic flow across their lines. Union Pacific has implemented a scheduled railway, adopted a sophisticated computer system and locomotives designed to reduce fuel consumption, and added to capacity on parts of its network where there are visible bottlenecks. "The result: Union Pacific’s costs have been falling, and network reliability improving. These steps have also added to profitability. Overall, I rate Union Pacific as a buy."

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