This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Key Earnings Reports This Week

Stocks in this article: AA WFC JPM

NEW YORK ( TheStreet) -- Second-quarter earnings season officially kicks off after the bell Monday when Dow component Alcoa (AA) releases its quarterly results.

On Friday morning, another Dow component will report: JPMorgan Chase (JPM). We will also hear that morning from another too-big-to-fail bank, Wells Fargo (WFC).

I'm going to discuss the key issues for these companies' earnings and how to trade these three stocks based on analysis from my Web site, ValuEngine.

Earnings from Alcoa could be a leading indicator of whether the basic materials sector has built in the weakness in metals prices.

We know that aluminum prices have declined 5.0% over the past three months, and that Alcoa has been adversely affected by slowing economies in Europe and China. So the question is whether any additional bad news is priced into a stock in a sector where shares have on average declined 35.5% over the past year. Reflecting this weakness, the basic materials sector has become 14.5% undervalued, according to ValuEngine.

Alcoa ($8.73) is expected to report EPS of 5 to 7 cents after the close today. The stock is rated a Hold (3-Engine), according to ValuEngine, with a 12-month price target of $9.09. Alcoa stock is down 45.7% over the past 12 months with a five-year average return of negative 29.5%. The price-to-earnings ratio is favorable at 8.7 times forward estimates. The stock ended Friday priced at 75% of its book value.

Alcoa has a positive daily chart profile. It ended Friday above its 21-day simple moving average at $8.63, but below its 50-day and 200-day simple moving averages at $8.82 and $9.66. My monthly value level is $8.08 with my quarterly risky level at $9.78.

When you look at the finance sector you see stocks that on average are down just 1.4% over the past 12 months and up 15.3% year to date. ValuEngine shows the finance sector 4.9% overvalued.

The clouds overhanging the too-big-to-fail banks differ significantly for JPMorgan and Wells Fargo.

JPMorgan Chase ($33.90) is expected to report EPS of 82 cents before the market opens Friday, but I am not confident in that estimate, as investors will be on pins and needles as the bank discloses its "London Whale" derivatives loss. This trading loss was originally pegged at $2 billion, but recently I read that industry estimates have ballooned to $9 billion.

Another unknown is whether JPMorgan Chase will discuss its knowledge of the Libor pricing scandal, which so far has adversely affected Barclays (BCS), with German banking officials now looking at potential Deutsche bank (DB) involvement.

Another possible discussion might be JPMorgan's submission of its "living will," which I discussed in my article last week, "Too-Big-to-Fail Banks Submit 'Living Wills'.

1 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,888.02 +83.22 0.47%
S&P 500 2,070.53 -0.12 -0.01%
NASDAQ 4,766.3340 +0.9540 0.02%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs