Alcoa and General Electric Will Take A Back Seat To The Credit Crisis This Week
Earnings will likely take a back seat this week as the credit crisis continues to dominate the markets.
However, with heavy-hitters such as Alcoa Inc.
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PowerRating), General Electric Co.
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PowerRating) and Costco Wholesale Corp.
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PowerRating) releasing third-quarter results this week, investors will get a good reading on how the overall economy is faring.
Last week, Alcoa shares hit a five-year low as investors hammered industrial companies on prospects for slowing economic growth. With the stock trading at a PE of 8, investors may be tempted to snatch up some shares ahead of its earnings report expected Tuesday after the close.
However, the stock tends to narrow or reverse its after-hours move in the following regular session, doing so in the past four quarters. Alcoa is expected to report an 11% drop in third-quarter earnings per share to $0.57 on revenue of $7.3 billion. On July 8, the stocks rose 3.8% in after-hours trading after its second-quarter results beat the Street. The stock reversed direction the following regular session, ending down 2.5%.
General Electric is due with its results in the pre-market on Friday, October 10, and analysts polled by Thomson First Call expect the company to report a flat profit of $0.48 per share on revenue of $47.9 billion.
Last week, the stock lost more than 10% after announcing a share offering on Thursday that was priced at a discount to the stock’s closing price the previous day. It has lost ground in recent weeks as investors become more concerned over risks related to its financial arm and after it slashed its third-quarter earnings outlook and halted a stock buyback.
GE is one for shorts to watch and longs to approach with wariness. GE has seen an earnings-driven pre-market decline in 9 of the 14 quarters MidnightTrader.com has tracked. The issue has followed five of those downside moves with more aggressive declines in the ensuing regular session.
Cassie Slane is a Senior Editor at www.MidnightTrader.com.