Earnings Preview – MSO, OMX, WMT, JCP

February 16, 2010, 08:15 am ET, BY Momei- Contributor, Stock Traders Daily| Editor: Thomas H. Kee Jr. (Follow on LinkedIn)

(La Jolla, CA) Rising retail sales is one of the primary indicators of an economic recovery. So far for 2010, figures have been mixed as to whether or not we’re headed for a turnaround. We take a look this week at companies in the retail business (or directly impacted by the retail business) to see what Wall Street predicts for their most recent quarter.

We will hear first from Martha Stewart Living Omnimedia (NYSE: MSO) on Wednesday. While most people associate Martha Stewart Living with home cooking shows, the majority of the company’s profits come from its merchandising business, which is tied to retail sales. In fact, stronger than expected retail sales around the holidays is one reason that analysts are predicting a profit of $0.30 per share for MSO, along with $85 million in revenue. The company is also launching various new initiatives to boost its business in 2010. In a partnership with Home Depot, MSO will bring out its own brand of paint in March, while Home Depot will feature that along with other outdoor and storage products in its store. In terms of its show business, the company has left Network television and formed a partnership with Hallmark, which is known for its family programming. How will these new changes affect the company’s performance? Take a look at our free MSO trading report to find out. Shares of MSO closed $4.89 Friday.

Also reporting Wednesday is OfficeMax (NYSE: OMX), who is expected to report loss per share of $0.07 and revenues of $1.7 billion. While analysts believe company sales in the last quarter did not improve enough to turn it profitable, 2010 outlook is more favorable. Citigroup recently added OfficeMax to its list of Top Picks Live! as a favorite stock in the small/midcap, “Hardlines” Retail Sector. Citigroup believes that its lean cost structure would help grow margins back to pre-recession levels once sales pick up again. However, with the announcement last week that its CEO and Chairman, Sam Duncan, will retire in 2011, OfficeMax’s future is anything but certain. To find out what the exit of Sam Duncan and the board’s vision of a strategic turnaround mean for investors, feel free to check out our free OMX trading report. OMX closed at $14.76 Friday.

On Thursday Wall Street analysts are predicting that retail giant Walmart (NYSE: WMT) will report earnings per share of $1.12 and revenues of $113 billion. Strong results are expected to be driven by decreasing food costs and controlled SG&A expenses. In addition, analysts believe that the company, being a low-cost retailer, is well positioned for 2010, when consumers are expected to increase their spending but remain value conscious. Shares of WMT have remained relatively stable compared to others in 2009, showing a 52 week range of $46.48 to $55.20. WMT closed at $52.90 Friday. To see if this established player can break out of the mid-50s price range in the near future, download our free WMT trading report.

JCPenny (NYSE: JCP) rounds out our list of retailers and will report earnings Friday. Analysts are expecting earnings per share of $0.82 and revenues of $5.5 billion. Although sales have not rebounded as fast as predicted, effectively inventory and cost control should prevent the company from going into the red. Slow sales, however, have hurt the company’s stock in the last few months. Shares of JCP closed $24.89 Friday, down from around $37 a share as recently as October. JCP plans to target more products in the home/furniture category, which it believes will experience a faster turnaround. To view commentary on overall JCP strategy and 2010 outlook, take a look at our free JCP trading report.

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