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Zacks Earnings Preview: Chattem, Circuit City, Alcoa, General Electric and Genentech

Zacks.com releases the list of companies likely to issue earnings surprises. This weeks list includes Chattem (NASDAQ:CHTT) and Circuit City (NYSE:CC). To see more earnings analysis, visit http://at.zacks.com/?id=3207.

Earnings Preview is written by Charles Rotblut, CFA, Senior Market Analyst for Zacks.com.

The news lately hasn't improved much, but the behavior of the stock market certainly has. There is definitely something to be said for this divergence as the equity markets usually discount the economic picture six to nine months out. Perhaps we are going to be looking at brighter economic data down the road. At least this is one assumption that can be made going by the recent performance of stocks.

Moving on to the earnings on tap this week, just 40 companies are scheduled to release results. This small cluster will include S&P 500 members Alcoa (NYSE:AA), General Electric (NYSE:GE), Genentech (NYSE:DNA), Bed Bath & Beyond (NASDAQ:BBBY) and Progressive Corp. (NYSE:PGR).

Even though this is the "official start" to earnings season, this week is generally still light, although several notable companies such as GE, AA, and DNA will be telling us how they did over the past three months. Next week will start the usual deluge of reports.

It isn't a huge week for economic data, but traders will no doubt be scrutinizing the FOMC Minutes for more clues as to what the Fed will do next. Also, the weekly jobless claims number has become more relevant lately since the labor market has been weak. The Labor Department told us last week that employers slashed 80,000 jobs in March, which surely has a recessionary flavor to it. Last week, jobless claims jumped over the psychological 400,000 level.

Other economic data will include:

  • Monday: Consumer Credit
  • Tuesday: Pending Home Sales and FOMC Minutes
  • Wednesday: Crude oil inventories
  • Thursday: Weekly initial jobless claims
  • Friday: Preliminary University of Michigan Sentiment

Keep in mind that some of the biggest influences on market direction may be unscheduled events, particularly any new developments from the financial sector.

Companies That Could Issue Positive Earnings Surprises during the Week of Apr 7 - Apr 11

Chattem Corp. (NASDAQ: CHTT) has seen its earnings estimates for the current quarter increase two cents over the past 60 days to 96 cents per share. The company has posted an average surprise of 11.9% over the past four quarters, so upside surprises are old hat. Current-year estimates have risen four cents to $3.96 per share. Look for the company's report on Wednesday April 9, before the market open.

Companies That Could Issue Negative Earnings Surprises during the Week of Apr 7 - Apr 11

Circuit City (NYSE: CC) has been having a tough time of it recently trying to battle a weak consumer spending environment as well as competing with larger and more established rivals such as Best Buy (NYSE: BBY). Analysts have collectively cut their estimates by eight cents to a loss of two cents per share for the quarter ending in February 2008. Similarly, current-year estimates have dropped 14 cents to a loss of $1.41 per share. The company has missed estimates in each of the past four quarters by an average margin of 88%. CC will report its results Wednesday, April 9.

Charles Rotblut, CFA, is the senior market analyst for Zacks.com.

Want to turn earnings surprises into quick profits? Learn how by visiting http://at.zacks.com/?id=3206.

About the Zacks Rank

Since 1988, the Zacks Rank has proven that "Earnings estimate revisions are the most powerful force impacting stock prices." Since inception in 1988, #1 Rank stocks have generated an average annual return of +32%. During the 2000-2002 bear market, Zacks #1 Rank stocks gained +43.8%, while the S&P 500 tumbled -37.6%. Also note that the Zacks Rank system has just as many Strong Sell recommendations (Rank #5) as Strong Buy recommendations (Rank #1). Since 1988, Zacks Rank #5 stocks have underperformed the S&P 500 by 129% annually (+5% versus +12%). Thus, the Zacks Rank system allows investors to truly manage portfolio trading effectively.

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Contacts:

Zacks.com
Charles Rotblut, CFA
312-265-9352
pr@zacks.com
Visit: www.Zacks.com

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