By Wallace Witkowski, MarketWatch
SAN FRANCISCO (MarketWatch) -- How recent consumer optimism
contributed to the bottom line in the third quarter will start
becoming more evident this week as major retailers begin posting
financial results for the period.
Stocks had another good week with the Dow Jones Industrial
Average (DJI) rising 1.1% and the S&P 500 Index (SPX) finishing
up 0.7% to carve out new closing highs, with the Nasdaq Composite
Index (RIXF) squeaking by with a less than 0.1% gain.
Consumer sentiment and consumer confidence are at highest levels
they've been in seven years as energy prices dropped over the
summer, suggesting that retailers could see a big benefit.
It's also those sectors that are carrying the highest forward
price-to-earnings ratios with consumer staples at 18.8x and
consumer discretionary at 17.8x, according to John Butters, senior
earnings analyst at FactSet.
The S&P 500 itself is carrying around an elevated forward
P/E ratio of 15.8x. That only becomes "average" if one includes the
huge P/Es around the turn of the century into the mix.
The week sees two Dow components reporting: Cisco Systems Inc.
on Wednesday and Wal-Mart Stores Inc. on Thursday.
With nearly 90% of the S&P 500 having reported, earnings are
projected for growth of 7.6%. Also, this earnings season is seeing
the highest percentage of companies topping earnings-per-share
estimates since the second quarter of 2010 at 77%, according to
FactSet. Then again, those estimates did drop notably during the
quarter.
Earnings growth was estimated at 4.6% by the end of the third
quarter, which makes the current growth seem pretty good. When the
quarter started, however, earnings had been expected to grow by
9.5%, according to FactSet data.
Notable companies reporting earnings this week
Report Date Company/Ticker (FactSet estimated EPS / revenue)
Nov. 10 Rackspace Hosting Inc. (16 cents / $458.3 million)Sotheby's (loss of 38 cents / $91.3 million)
Nov. 11 Fossil Group Inc. ($1.82 / $878.5 million)D.R. Horton Inc. (48 cents / $2.42 billion)Beazer Homes USA Inc. ($1.10 / $503.2 million)J.C. Penney Co. (loss of 81 cents / $2.81 billion)
Nov. 12 Cisco (53 cents / $12.16 billion)Macy's Inc. (51 cents / $6.35 billion)Rockwell Automation ($1.82 / $1.8 billion)NetApp Inc. (69 cents / $1.55 billion)ADT Corp. (48 cents / $878.5 million)
Nov. 13 Wal-Mart ($1.12 / $118.36 billion)Nordstrom Inc. (72 cents / $3.11 billion)Kohl's Corp. (74 cents / $4.41 billion)Viacom Inc. ($1.68 / $3.9 billion)Applied Materials Inc. (27 cents / $2.26 billion)Tyco International Ltd. (56 cents / $2.72 billion)
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