A Third Big Week for Quarterly Earnings Reports

Many well-known companies have now announced their results for the July-August-September quarter. This flood of earnings reports will continue of another couple of weeks. While digesting this stream of data, investors are attempting to determine how much the slumping economy will slash fourth-quarter 2008 and full-year 2009 earnings.

We have already posted evaluations of the financial statements issued by:

• ConocoPhillips (NYSE: COP) - GCFR analysis
• Intel (NASDAQ: INTC) - GCFR analysis
• Microsoft (NASDAQ: MSFT) - GCFR analysis
• Nokia (NYSE: NOK) - GCFR analysis
• PepsiCo (NYSE: PEP) - GCFR analysis

What have we seen is this tiny, unscientific selection of earnings reports?

Company	Net Income Compared to Q/E Sept 2007	Net Income Compared to GCFR Estimate	Overall Gauge Score (100 = max)	Gauge Increasing the Most	Gauge Decreasing the Most
ConocoPhillips	+41%	+0.6%	48	Value	Profitability
Intel	+12.5%	+0.9%	62	Value	Growth
Microsoft	+2.0%	-0.4%	57	Cash Mgt	Growth
Nokia	-30%	+15%	51	Value	Profitability
PepsiCo	-9.6%	-9.8%	30	None	Value

Net Income was down at the two companies that interact most directly with consumers. Coincidentally or not, our earnings models were least accurate for these same two companies.

The fact that three of our earnings estimates were within 1 percent of the actual figures is mostly due to dumb luck, but it also suggests these companies didn't suffer significant unforeseen effects from the credit crisis during the quarter. The fourth quarter might be very different. With stocks battered so brutally, it's no surprise that the contrarian Value Gauge is the one moving up, while Growth and Profitability are suffering.


Well-known companies scheduled to report earnings during the week of 27 October include:
American Electric (NYSE: AEP), Alcatel-Lucent (NYSE: ALU), BP (NYSE: BP), CBS (NYSE: CBS), Chevron (NYSE: CVX), Eastman Kodak (NYSE: EK), Exxon Mobil (NYSE: XOM), FPL (NYSE: FPL), Hartford Financial (NYSE: HIG), Humana (NYSE: HUM), International Paper (NYSE: IP), Proctor & Gamble (NYSE: PG), Kellogg (NYSE: K), Kraft Foods (NYSE: KFT), Motorola (NYSE: MOT), Mylan Labs (NYSE: MYL), Newmont Mining (NYSE: NEM), Sony (NYSE: SNE), Tidewater (NYSE: TDW), U.S. Steel (NYSE: X), Verizon (NYSE: VZ), Visa (NYSE: V), Waste Management (NYSE: WMI), and Watson Pharmaceuticals (NYSE: WPI).

We previously posted third-quarter "look-aheads" for BP p.l.c. (NYSE: BP) (see this), Tidewater Inc. (NYSE: TDW) (see this), and Watson Pharmaceuticals, Inc. (NYSE: WPI) (see this). When these three companies release actual earnings, we will compare each Income Statement with our baseline and update the GCFR gauges.