Service-Sector Earnings to Watch This Week

NEW YORK ( TheStreet) -- This week has no shortage of market-moving companies reporting earnings. This preview takes a look at companies categorized as being in the service sector that I believe you should watch. OMC Chart OMC data by YCharts

Omnicom Group ( OMC)

Background: Omnicom Group, together with its subsidiaries, provides advertising, marketing and corporate communications services in the Americas, Europe, the Middle East, Africa, Asia and Australia. It offers services in advertising, customer relationship management, public relations and specialty communications sectors. The company was founded in 1944 and is based in New York. Omnicom trades an average of 1.4 million shares per day and has a market cap of $14 billion.

52-Week Range: $39.72 to $54.76

Book Value: $12.31

Price-to-Book Ratio: 4.2

Omnicom is expected to report strong third-quarter earnings growth before the market opens on Tuesday. The consensus estimate is for earnings per share of 73 cents, a gain of 1 cent from 72 cents during the corresponding quarter last year. The lowest analyst EPS estimate is 71 cents, and the highest is 76 cents.

Most of the analysts covering the stock -- 14 out of 23 -- rate it a hold, which is the rating I'd give it. Seven rate it a buy, and one rates it a sell. The analysts may have missed a great opportunity as the stock surged 35% higher in the last year. The average analyst target price for Omnicom Group is $54.94.

Although the last year was great, in the near term I believe the downside risk is greater than the upside potential. For longer-term buy-and-hold investors, it doesn't matter, but if you're looking for an exit, sooner may be better than later.

Omnicom is in a relatively strong bull trend. The price is breaking below the 60-day moving average as I write this, resulting in lower expectations from me.

Omnicom pays a decent dividend amount, and it appears safe based on the historical payout rate. Investors are receiving $1.15 in dividends for a yield of 2.22%.

Shares short as a percentage of float is slightly elevated at 3.7% but not yet large enough to make me worry. As long as this number stays at less than 4%, I won't give it much thought. But if it starts to trend higher, I would recommend monitoring the stock for a possible exit. OMC Revenue Quarterly Chart OMC Revenue Quarterly data by YCharts

APOL Chart APOL data by YCharts

Apollo Group ( APOL)

Background: Apollo Group, through its subsidiaries, provides online and on-campus educational programs and services at the undergraduate, master's and doctoral levels. The company was founded in 1973 and is based in Phoenix. Apollo Group trades an average of 1.9 million shares per day and has a market cap of $3 billion.

52-Week Range: $25.77 to $58.29

Book Value: $7.49

Price-to-Book: 3.5

Investors aren't expecting an improvement in earnings. Analysts forecast EPS to come in lower than the year-ago quarter. The earnings release is planned after the market closes on Tuesday.

The consensus EPS estimate is currently 49 cents, down 53 cents, or 52%, from $1.02 a year earlier. Estimates from analysts range from a low of 44 cents to 56 cents.

Taken as a whole, the analysts are not bestowing much direction for Apollo Group. Eight out of 20 rate it a hold. Ten rate it a buy, and one rates it a sell. The stock fell a stomach-churning 31% in the last year, while the average analyst target price for Apollo Group is $39.50.

From a technical perspective, the chart on APOL is solidly bearish. The key 200-day moving average and other major moving averages are falling. We may have reached a near-term bottom, though. The price broke above the 60-day average, and if the price continues to remain above it, a $40 price target is reasonable.

The short interest is markedly elevated and should be treated as a warning that short-sellers anticipate upcoming price weakness. The current percentage of float that is sold short is 15.9%. APOL Revenue Quarterly Chart APOL Revenue Quarterly data by YCharts

URI Chart URI data by YCharts

United Rentals ( URI)

Background: United Rentals, through its subsidiaries, operates as an equipment rental company. It offers approximately 3,000 classes of equipment for rent to customers comprising construction and industrial companies, manufacturers, utilities, municipalities, homeowners and government entities. The company was founded in 1997 and is headquartered in Greenwich, Conn. United Rentals trades an average of 3.3 million shares per day and has a market cap of $3 billion.

52-Week Range: $19.76 to $47.98

Book Value: $15.43

Price-to-Book: 2.1

Strong third-quarter earnings growth is expected by Wall Street after the market closes on Tuesday. The consensus EPS mean is $1.12 a share, a gain of 20 cents, or 18%, from 92 cents during the corresponding quarter last year. The lowest analyst estimate is $1.01, and the highest is $1.25 per share. If earnings come in as expected or higher, this quarter will not only beat the same period last year, but also last quarter.

Analysts like this company. Out of the 14 analysts covering United Rentals, 12 rate it a buy, two rate it a hold and no analysts rate it a sell. The stock appreciated 69% in the last year, and the average analyst target price for United Rentals is $45.92.

In April the stock peaked, and it's now trading within a range of $28 to about $37. The 200-day moving average is climbing, but in the shorter term, the chart is bearish.

Shares are now trading beneath all the major moving averages, and a break below $30 a share appears probable.

Adding insult to injury, the short interest is markedly elevated and should be treated as warning that short-sellers anticipate continued price weakness. The current float short is 16.3%. URI Revenue Quarterly Chart URI Revenue Quarterly data by YCharts

GCI Chart GCI data by YCharts

Gannett ( GCI)

Background: Gannett operates as a media and marketing solutions company in the U.S. and internationally. The company was founded in 1906 and is headquartered in McLean, Va. Gannett trades an average of 4.2 million shares per day and has a market cap of $4 billion.

52-Week Range: $9.82 to $19.99

Book Value: $10.22

Price-to-Book: 1.7

Investors expect Gannett to report earnings growth for the third quarter when it reports before the market opens Monday.

The mean analyst EPS estimate is 53 cents, a gain of 9 cents, or 17%, from 44 cents during the corresponding quarter a year ago. Analysts' estimates this quarter range from 48 cents to 55 cents.

From a technical perspective, GCI looks interesting. The 200-day moving average is climbing and is bullish overall. The stock appreciated 74% in the last year, and the average analyst target price for Gannett is $19.25.

This stock currently has an annualized dividend paying 68 cents, for an impressive 3.8% yield.

Short interest of more than 10% should give pause to investors looking at this company. The current percentage of the float short is 10.2%. GCI Revenue Quarterly Chart GCI Revenue Quarterly data by YCharts

MCD Revenue Quarterly Chart MCD Revenue Quarterly data by YCharts

McDonald's ( MCD)

Background: McDonald's franchises and operates McDonald's restaurants in the global restaurant industry. Its restaurants offer various food items, soft drinks, coffee and other beverages. The company operates approximately 33,500 local restaurants serving approximately 69 million people in 119 countries each day. The company was founded in 1940 and is headquartered in Oak Brook, Ill. McDonald's trades an average of 5.4 million shares per day and has a market cap of $93 billion.

52-Week Range: $85.92 to $102.22

Book Value: $13.92

Price-to-Book Ratio: 6.6

Investors are expecting McDonald's to report slightly improved third-quarter earnings before the market opens on Friday. The consensus EPS estimate is presently $1.48 a share, an improvement of 3 cents, or 2%, from $1.45 during the corresponding period last year.

Analysts' EPS estimates this quarter range from $1.41 to a high of $1.53. Analysts also expect McDonald's to beat last quarter's EPS, which was $1.32.

The majority of analysts believe McDonald's continues to offer a buying opportunity. Sixteen of the 30 analysts covering the company rate it a buy. Some (12) are taking a more cautious approach, and rate it a hold. As of the last update I have, one analyst recommends selling some or all holdings. McDonald's appreciated 5% over the last year, and the average analyst target price for the stock is $99.34.

McDonald's isn't in a bear or bull trend. I expect to see a lot of the same in the next quarter's earnings estimates as well.

McDonald's does pay a decent dividend with a yield of 3%. Considering the global strength, the yield in itself may be attractive for longer-term buy-and-hold investors.

The last reported short interest is paltry. Shares sold short were only 1.1% of the average trading float. MCD Chart MCD data by YCharts

EBAY Chart EBAY data by YCharts

eBay ( EBAY)

Background: eBay provides online platforms, services and tools to help individuals and merchants in online and mobile commerce and payments in the United States and internationally. The company was founded in 1995 and is headquartered in San Jose, Calif. eBay trades an average of 11 million shares per day and has a market cap of $60 billion.

52-Week Range: $28.15 to $50.65

Book Value: $14.68

Price-to-Book Ratio: 3.15

eBay is anticipated to report fantastic third-quarter earnings on Wednesday. The consensus estimate is currently 55 cents a share, an improvement of 7 cents, or 12.7%, from 48 cents during the same period last year. Analysts' EPS estimates are as low as 52 cents and as high as 58 cents.

Twenty four of the 36 analysts covering the company rate it a buy and 12 rate it a hold. The average analyst target price for eBay is $51.54.

Bidding for eBay stock remains profoundly brisk. The stock climbed 54% in the last year. At the rate they're going, shares look like they'll make an all-time high in 2013.

Short-sellers are not interested in betting against this one. Short interest is a nonfactor at a rate of 1% of the float. EBAY Revenue Quarterly Chart EBAY Revenue Quarterly data by YCharts

VZ Chart VZ data by YCharts

Verizon Communications ( VZ)

Background: Verizon Communications provides communications, information, and entertainment products and services to consumers, businesses, and governmental agencies worldwide. The company was founded in 1983 and is based in New York. Verizon Communications trades an average of 13 million shares per day and has a market cap of $130 billion.

52-Week Range: $35.32 to $47.32

Book Value: $13.04

Price-to-Book Ratio: 3.54

Investors expect Verizon to report improving third-quarter earnings on Oct. 18. The consensus EPS estimate is presently 65 cents a share, 9 cents, or 14%, great than the 56 cents the company during the corresponding period last year. Estimates from analysts range from a low of 60 cents up to 71 cents.

If Verizon Communications meets or beats estimates in the upcoming report, its EPS will also surpass the 64 cents the company reported in the last quarter.

The stock appreciated 28% in the last year, and the average analyst target price for Verizon Communications is $44.43.

Verizon Communications is in a modest bull trend. The closing price on Friday was at the 60-day moving average. At the same time, the 90-day moving average is quickly approaching, and the chart may turn bearish by the end of the year. I like the company and I love the yield, but the share price may be too pricey.

The company currently pays $2.015 per share in dividends for a yield of 4.4%. The last reported short interest is paltry and should not be considered a meaningful influence. Short interest is 1.7% of the average trading float. VZ Revenue Quarterly Chart VZ Revenue Quarterly data by YCharts

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

At the time of publication, Weinstein held no positions in stocks mentioned.

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