Earnings season: Wal-Mart in focus as stock hits all-time high

Expectations are high ahead of Wal-Mart earnings

Next week around 70 companies will report earnings in what is now a earnings season running on its last fumes. But one company will steal most of the attention and that is Wal-Mart (NYSE: WMT), the world's largest retail store chain. Expectations for Wal-Mart have increased a lot over the past year: the share price has climbed 43 percent since early October. The performance has been driven by good performance in its core business, as more US consumers are turn to discount stores as the economy continues to muddle through. As result the share price has hit an all-time-high lately,valuing the company at USD 249.9 billion. The Street is expecting EPS of 1.17 up 7.4 percent from the same period last year. The earnings stream is very predictable, so the earnings surprise is normally very low, with only one quarter since 2007 having an earnings surprise above 4 percent. Despite these impressive figures, I believe the downside risk on the earnings release is larger than the upside risk, given the recent run up in expectations and share price.

Source: Bloomberg L.P.

Will Maersk Line provide some light at the end of the tunnel?

Other relevant earnings releases worth watching next week are E.ON, A.P. Moeller - Maersk, Home Depot, Cisco and Deere & Co.

A.P. Moeller - Maersk (MAERSKB:Copenhagen) is a global industrial conglomerate with the world's largest container shipping company, Maersk Line, within its group. This is the only reason the company's earnings release is interesting. The shipping subsidiary's outlook for the rest of the year is an important gauge of what to expect from the global economy going forward, as Maersk Line operates on all the major shipping routes around the world and does business transporting goods back and forth between the continents.

Home Depot (XNYS:HD) has recovered from weak fundamentals in the US housing sector, and expectations about a definitive bottom in US housing have driven the share price up by 74 percent since the bottom last autumn in line with the homebuilders. The Street is expecting EPS of 0.98 up 13.7 percent YoY.

Cisco (NASDAQ:CSCO) is the world's largest provider of networking products and solutions, making it a good gauge of corporate IT spending. The company is in the midst of a turnaround and is struggling with a share price only 25 percent higher from its bottom in March 2009. Many investors are questioning the company's ability to grow at meaningfull growth rates, given its market shares in various product categories. As a result, the stock is trading at 9.7 times forward earnings compared to 13.5 times for the S&P 500. The analysts are expecting EPS of 0.46 up 37.9 percent YoY.

You can find earnings estimates for all next week's reports in the attached PDF.