Earnings tomorrow from CAT, Copper, and Coke enough to keep the rally going?

07/20/2009 5:32 pm EST


Jim Jubak

Founder and Editor, JubakPicks.com

Quite a set of economic indicators in tomorrow’s earnings reports. And all before the stock market rings the opening bell at 9:30 ET too.

Caterpillar (CAT), an important indicator of prospects in the construction and industrial sectors, is expected to report earnings of 22 cents a share on revenue of $8.8 billion. That would be a big step down from the 39 cents a share the company reported in the first quarter of the year. Expect that the company will bring down its guidance for the year 2009 year from the $1.25 goal it set last quarter to something more like the current Wall Street consensus of $1.03. The key to market reaction on the quarter will be evidence that the company was able to cut costs enough during the quarter to maintain its prices.

Freeport McMoRan Copper & Gold (FCX) has been a key commodity indicator recently because copper has been leading commodity prices higher in anticipation of growing demand from China.

 The stock exited last week on strength on a report from fellow miner Rio Tinto (RP) of a big increase in copper and gold production from the companies Grasberg joint venture. Analysts have added about 10 cents a share to their earnings estimates for the second quarter in the last week. The company will hold its conference call at 10 a.m. ET tomorrow shortly after reporting results.

And finally in the consumer sector, Wall Street analysts expect that Coca Cola (KO) has lost some of its recent fizz. Earnings estimates for the June quarter have fallen from 96 cents a share at the end of prior quarter to just 89 cents now. Much of that is a reaction to the weaker earnings announced by other stocks in the sector as a result of the dollar’s strength during the quarter. (A strong dollar means that every euro, baht, or whatever in revenue that Coke has to translate back into the U.S. currency puts fewer dollars on the company income statement.) Analysts, though, are likely to try to look through the dollar figures to unit volumes to see if Coke can keep up its recent momentum.
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