This week is the busiest of earnings season for the 30 stocks in the Dow Jones Industrials (^DJI +0.19%). Fully 11 current members of the Dow either have reported or will report earnings this week, and the nervousness level is running high, with analysts looking for a weak quarter overall from an earnings perspective.
If you let yourself get whipsawed by quarterly results, though, it's easy to lose your long-term vision of what a company will do over years and even decades. On the other hand, if you're ready to pounce on what you know will be only a short-term reaction for a stock, you may end up getting the bargain of a lifetime.
To keep the right mindset, it's important to look beyond a single quarter's results to keep your vision squarely focused on the future. With that in mind, I've already taken a look at the 2013 prospects for several companies set to report either today or tomorrow morning. Let's now turn our attention to the five companies that report during the remainder of the week.
A lot of strength
The first thing to notice about these five companies is that analysts expect a lot from the group as a whole next year. The highest expectations are for Verizon (VZ +0.14%), which is seen growing earnings per share at a 14% rate in 2013. Much of Verizon's promise comes from the introduction earlier this year of its "Share Everything" plans, which eliminated lower-tier pricing for limited voice and text and replaced them with more data-driven offerings. The company believes it can successfully boost revenue and overcome the impact of subsidized smartphones with the plans, and given how hungry most users are for coverage, Verizon has a great chance of succeeding.
Next up, with projected EPS growth of 12% is General Electric (GE +1.30%), which has surprised many investors with the speed with which it recovered from its near-meltdown during the financial crisis. Not only have metrics like rising net interest margin helped lift the company's GE Capital unit off the floor, but other moves such as GE's restructuring into separate energy infrastructure divisions have helped the company become more transparent and run more efficiently. With the company's dividend back into healthy territory, investors are already reaping plenty of benefits from GE's success.
McDonald's (MCD 0.59%) rounds out the top three with 10% projected EPS growth next year. With its worldwide presence, McDonald's is exposed to changing economic conditions in all of the markets it serves. Growth rates for earnings at McDonald's have slowed this year, due in part to the rising value of the U.S. dollar and in part to challenging conditions in Europe. But confidence about the longer-term prospects for the eurozone, as well as the rest of the global economy, underpin 2013 expectations for the stock.
Even American Express has started to make waves in the earnings space with calls for an 8% increase next year. Recently, the company's brand-new Bluebird prepaid card partnership with retail giant Wal-Mart promises huge exposure and a big widening of the customer base for the traditionally high-end financial-services company. By adding the under-banked to its list of target clients, AmEx could give itself a big boost.
The one exception to the solid earnings growth among companies reporting in the second half of the week is Travelers (TRV 0.42%). Yet the insurance company's experience over the past few years shows just how hard it is to predict earnings in this industry with any accuracy. After a horrible 2011, Travelers is seen nearly doubling its earnings in 2012, with the season thus far having been much more reasonable. But in 2013, a lot will depend on what the weather holds. Moreover, with low interest rates persisting until 2015 at best, Travelers will continue to see pressure on its investment income.
Don't miss a minute
If you focus too much on backward-looking earnings, you won't know what the future could bring. Visionary investors, on the other hand, can get much better results by focusing on what matters.
