Your Guide to the Dow's Earnings Season

Even though 2013 just started, it seems there's already been plenty of news affecting investors. Between the concluded last-minute deal to avoid the full brunt of the fiscal cliff, the Federal Reserve's suggestion that its accommodative monetary policy may someday end, and looming fights on Capitol Hill over the debt ceiling and sequestration-driven spending cuts, you've had plenty to keep you busy.

As if that weren't enough, earnings season is just around the corner. Although all 30 stocks in the Dow Jones Industrials (DJINDICES: ^DJI  ) will report earnings over the next couple of months, I want to highlight some of the most important releases, previewing expectations and explaining how a beat or a miss could have an impact not just on a single company's stock but also on the overall market.

Jan. 17: Bank of America (NYSE: BAC  )
As the Dow's biggest gainer in 2012, B of A has become the canary in the coalmine of the banking industry. Although other banks held up far better throughout the financial crisis and were quicker to recover, B of A grabs a huge amount of attention because of the extra effort it has had to make to pull itself back from the abyss of bad assets.

Expectations for B of A's fourth quarter indicate the new normal for the industry, as the bank is seen boosting earnings per share substantially over last year's first quarter even as its revenue could sink 11%. Beyond those headline numbers, though, look especially for CEO Brian Moynihan's take on B of A's 2013 prospects as he celebrates three years of tenure holding the reins of the banking behemoth.

Jan. 18: General Electric (NYSE: GE  )
It's easy to forget that GE took as hard a hit from the financial crisis as any true bank. With its extensive GE Capital division having increasingly made big bets in the finance industry, the credit crunch and meltdown in stocks forced the conglomerate to slash its dividend and retrench. Since then, though, it has emphasized its core industrial businesses, and it's had strong success with those efforts.

From a numbers perspective, expected earnings-per-share growth of 10% and modest revenue gains of 2% aren't likely to provide many surprises. But the key for investors will be to listen to CEO Jeff Immelt's comments on GE's alternative energy business and its recent foray into mining equipment. For alternative energy, the extension of wind-energy credits in the fiscal cliff deal should help the company's wind-turbine sales. GE's efforts on the mining equipment front are definitely riskier, but if it times the global recovery right, it could prove to be an inspired move.

Jan. 23: McDonald's (NYSE: MCD  )
Unlike the previous two stocks, McDonald's has something to prove in this earnings report. With shares having hit a 52-week low shortly after reporting disappointing earnings for its third quarter, investors are frightened at the fallout from the fast-food leader's same-store-sales decline in October.

Projections for flat earnings aren't the most inspiring calls in the world, but the real test for McDonald's will be to meet those estimates despite currency headwinds and other obstacles. After falling short of analyst projections in each of the past two quarters, McDonald's simply needs to show it has a firm grip on its business.

Jan. 24: Microsoft (NASDAQ: MSFT  )
Microsoft has as much at stake as McDonald's, but the scope of its fiscal second-quarter report is much larger. With the software company reporting on the success of the Windows 8 operating system release as well as its tablet and smartphone initiatives, Microsoft bulls and bears will be looking to see if the premise on which the company has relied for months will prove to meet everyone's expectations.

With projections for a slight dip in earnings per share on a 4.3% rise in revenue, Microsoft has set a fairly low hurdle. But with analyst estimates for the quarter having already fallen 14% in the past three months on ongoing reports of weak sales, shareholders need to see some sign of life from the company to justify their continuing to hold on to the stock.

Stay tuned
Every Dow earnings report is important, but these four companies could move the entire market depending on what they say in their quarterly releases. Be sure to keep an eye on their results and guidance as it comes in the next few weeks.

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