The Week Ahead

Briefing.com lists over 500 -- we counted 517 -- companies expected to report earnings this week. The directory includes five companies that have been analyzed in GCFR: BUD, COP, PEP, MSFT, and TDW.

When the reports are received for each of these five companies, we will analyze the financial statements and compute new scores for our gauges. The updated scores with some commentary will be posted here as quickly as possible.

We have already provided a look-ahead to TDW's results. Time doesn't permit the same level of predictive analysis for the other companies, but we can offer today a few words about a few of the companies.

PEP: PepsiCo's finances exhibit less volatility than most of the other companies we follow. Inventory, debt, receivables, etc., are kept under control and don't deviate too much from quarter to quarter. Inventory levels in March tend to be a little higher than in December, so Inventory/CGS might have been about 47 days when the first quarter concluded. Year-over-year revenue growth slowed to 8 percent in December from the 11 to 12 percent range. If revenues bounce back a percentage point or two, we could dismiss ideas that December's results were the beginning of a slide. After a flat spell in late 2005 and early 2006, Net Income took off in late 2006. Income in 2005 was depressed, in part, by huge income taxes on repatriated international earnings. The increases in Net Income were not matched by increases in CFO. By our reckoning Free Cash Flow was down in 2006 relative to the prior year. Strong positive cash flow growth would be a good sign.

COP: It has been a year since the acquisition of Burlington Resources, so we will be looking to see if efficiencies have been realized. We will also look for continued actions to firm up of the balance sheet in the aftermath of the acquisition. Accounts Receivables spiked up in the fourth quarter, and we will check to see whether that move was an anomaly. More significantly, we will determine whether the decelerating growth in Revenue, Net Income, and Cash Flow has been reversed.

MSFT: We'll be looking to see how much January's launch of Vista increased revenues and earnings. Revenue growth has been around 11 percent per year. Net Income and CFO were 9 and 10 percent lower, respectively, in 2006 than 2005. New product sales should juice earnings and cash flow, but how much was spent on advertising?