Though some companies have already started reporting earnings for the third quarter, things will really be ramping into gear this week, with several big names coming out with their results.
Though there's absolutely no single metric that can give you an accurate measure of where the economy is at, investors sometimes look at certain companies as bellwethers -- indicators for larger macroeconomic trends at play.
This week, I'll be focusing on three such companies, which vary greatly by both industry and size. I'll tell you what to look for, and at the end, I'll offer up a special free report on the other major event on our time horizon: the presidential election.
Below are the three companies I'll be watching, when they report results, and what analysts are expecting.
|
Company |
Earnings Date |
Expected EPS |
Expected Revenue |
|---|---|---|---|
|
Intuitive Surgical (ISRG 1.33%) |
Tues. Nov. 16 |
$3.50 |
$535 million |
|
Halliburton (HAL +1.56%) |
Weds. Nov. 17 |
$0.68 |
$7.1 billion |
|
Philip Morris (PM +0.43%) |
Thurs. Nov. 18 |
$1.39 |
$8.2 billion |
Source: E*TRADE.
Intuitive Surgical
By far the smallest of the three companies on this list, Intuitive could be a good proxy for certain companies in the medical devices field. The company's da Vinci Surgical Robot has gained wide enough acceptance that its usefulness is generally accepted in the medical community.
For that reason, a low number of orders may be more representative of tight hospital budgets than dissatisfaction with the company's key product. If this is the case, other medical device companies like Accuray (NASDAQ: ARAY) -- which makes the CyberKnife, which helps deliver radiation to tumors -- could face similar troubles.
During the last conference call, the company said there was a significant slowdown in prostatectomies, and that the trend could continue for some time.
Stepping away from the macro view, investors shouldn't get too worried about a slowdown in Europe. The situation will resolve itself -- someday -- and Intuitive Surgical has no control over when that will be. In the meantime, I recently thought the stock's price was tempting enough to add more shares to my own account.
Halliburton
Though it may not be the biggest player in the oil services field, earnings from Halliburton can give investors an idea for where the industry may be headed.
There are two things to keep in mind for this week's earnings:
The company is currently working through an oversupply of guar on its hands -- a substance that is used in the fracking process. That may negatively impact earnings, but is more of a short-term problem.
The bigger piece to keep your eye on will be the possible increase in rig counts worldwide that the company is helping to service. As the globe's appetite for oil grows, and supplies dwindle, companies are willing to spend more and more money to extract the substance -- much to Halliburton's benefit.
Philip Morris International
One important thing to remember with Philip Morris is that it's not the same company many may remember from decades past. Back in 2003, Altria (MO 0.11%) split with Philip Morris; the former focuses on cigarette sales stateside, while the latter focuses internationally.
Though they're certainly not "necessity" goods, cigarettes' addictive nature makes them regular purchases by billions of people every day. For that reason, a dip in sales could be indicative of a larger pattern of penny-pinching, while steady output could represent a more stable global outlook.
Of course, there are other factors that could come into play, like possible legislation internationally, or huge swaths of people choosing to give up the habit for health reasons. But since there's been no big news on either of these fronts over the past three months, that's unlikely.
Instead, investors should focus on whether the company can continue its recent revenue growth. Analysts are expecting revenue to increase by 5% between 2012 and 2013 -- though it's actually expected to take a slight dip this quarter from the same time last year.
