Earnings season is ramping up, and investors should take note. Quarterly results and conference calls are an important financial snapshot of a company.
Like it or not, stocks tend to rise or fall post-earnings depending on if the company beats market expectations. Market expectations are typically defined by analysts’ estimates and corporate guidance.
A company’s whisper number is also a relevant indicator of expectations. A whisper number is the collective expectations of individual investors and wall street experts.
This week, there are three key companies posed to make moves post-earnings.
Canadian Pacific will release second-quarter results after the bell on Wednesday, July 18. Analysts expect the company to post earnings of $3.14 per share, up 12.6% year over year. The company’s whisper number is only slightly higher at $3.19 per share.
Will Canadian Pacific come out on top? The company hasn’t missed analysts’ estimates in over two years. Likewise, it has beat on earnings in eight of the past nine quarters. For a company the size of Canadian Pacific, this is impressive.
A word of caution: analysts have been lowering estimates in anticipation that the company’s quarter will come in softer than previously expected.
Rogers Communication Inc. (TSX:RCI.B)(NYSE:RCI)
Next up, Rogers Communication is the first of the Big Three telecoms to announce second-quarter earnings. It will do so before the bell on Thursday, July 19. Expectations are for a modest 4% earnings growth to $1.04 per share.
Similar to Canadian Pacific, Rogers hasn’t missed analysts’ estimates in two years and has beat on earnings in six of the past eight quarters. Likewise, over the past month, expectations have been lowered.
Of note, pay close attention to subscriber growth. In the first quarter, Rogers blew out subscriber estimates, and the company rallied 7% on the day of earnings. Look for another big move either way in light of a beat or miss.
Encana closes out the week as it reports second-quarter earnings before the market opens on Friday, July 20. The outlook for Encana isn’t attractive as it points to negative earnings growth. Analysts expect the company to post earnings per share of $0.11, down from $0.18 a year earlier.
A pattern seems to be emerging. Encana has handily beat analysts’ estimates in six straight quarters. Will they surprise again?
Estimates have been stable over the past month, which is a good thing. Furthermore, the company announced its intentions to buy back $400 million worth of shares outstanding in the next 12 months. The timing of repurchases are impossible for analysts to predict and could propel the company to another beat.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
Fool contributor Mat Litalien has no position in any of the companies listed.