5 Stocks To Watch This Week 1/20/15

(Photo Credit: Christopher)

Earnings season kicks into high gear on this short week with over 100 companies reporting fourth quarter results. Here are 5 of the most anticipated earnings releases to watch over the next four days.

Tuesday - Morgan Stanley

Morgan Stanley (MS) gets the earnings week off to a delayed start Tuesday morning after the markets reopen from their Martin Luther King Jr. Day hiatus. Last week’s action featured earnings releases from a slew of large banks including JPMorgan, Goldman Sachs, and Citigroup who started things off on a sour note.

As news of lackluster bank earnings has begun to break analysts on Wall Street and Estimize have been taking their Morgan Stanley estimates down significantly. The directionality of analyst estimate revisions heading into a report are often a leading indicator. Since January 8th the Wall Street earnings consensus has fallen from 56 cents per share to 49 cents per share while the Estimize consensus has dropped 3 cents per share from 61 to 58. 

Tuesday - Netflix

Streaming video company Netflix (NFLX) reports Tuesday afternoon. In last quarter’s report Netflix set guidance for the current period much lower than expected. Netflix announced that they expect to earn 44 cents per share this quarter, at the time of that announcement the Estimize consensus was $1.06.

The caveat here is that Netflix always lowballs its own guidance number. According to guidance data available on Estimize Netflix has averaged an 11 cent beat against its own guidance over the past 2 years.

While the earnings picture at Netflix is less than optimal right now, the company continues to execute very well on the revenue front as it adds new subscribers and top tier original content including programs like House of Cards and Orange is the New Black.

In the second and third quarters of last year Netflix’s year over year revenue growth rate accelerated from 24% to 25% and then to 27% sequentially. The company’s rate of sales growth hasn’t taken a single step backward within the past 8 quarters. On Tuesday the Estimize community believes Netflix will maintain the 27% yoy revenue growth that it recorded in November.

Wednesday - eBay

E-commerce and online auction company eBay (EBAY) is scheduled to report Wednesday afternoon. eBay will announce 4th quarter earnings as it continues its preparations to spin off PayPal into a separate company as announced at the end of September.

This quarter Estimize contributors are looking for results that are marginally better than the Wall Street consensus. The Estimize community is looking for an 11% gain to the bottom line and 9% higher sales. An 11% earnings hike would top the relatively weak results from last quarter. If sales come in 9% higher as expected eBay would fall short of its two year low (12%).

Investors will also be looking for more information about the PayPal spin off as Apple Pay continues to make headway in gaining consumer and merchant adoption for mobile payments. 

Thursday - Starbucks

Coffee giant Starbucks (SBUX) reports Thursday after the close. Last summer Starbucks raised prices in an effort to support the company’s bottom line as it continues to expand its menu to include more dinner and meal options.

Earnings growth at Starbucks has been solid. Over the past 4 quarters earnings have grown between 17% and 25% yoy. On Thursday the Estimize community is projecting 81 cents per share which would top the Street’s view by a penny and represent a 15% yoy increase.

On the revenue side Estimize contributors are looking for a slight miss against the Wall Street consensus. While the Estimize consensus reflects marginally lower expectations than the Street contributors are still looking for an 11% revenue bump, which is right in-line with results from the past year.

Friday - McDonald’s

McDonald’s (MCD) has been under fire lately for its underperforming monthly sales figures. Critics have argued that the golden arches serve an expansive and confused menu. The concern is that McDonald’s growing menu is leading to slower turnover times and longer lines resulting in lost business during meal rushes.

Last month McDonald’s announced a menu overhaul to address its lackluster performance. The fast food joint has also launched a massive marketing campaign to enhance its image.

US comparable sales were down 4.6% year over year in November and in October US comps dropped by 1% yoy.

The past few monthly sales numbers have lead to lower estimates for the upcoming quarter. The Estimize community is forecasting a 13% drop in year over year earnings.