Schaeffer's Trading Floor Blog

Blue-Chip Earnings Preview: McDonald's Corporation, United Technologies Corporation, and Microsoft Corporation

Taking a closer look at MCD, UTX, and MSFT ahead of their earnings reports

by 7/21/2014 11:43 AM
Stocks quoted in this article:

Blue-chip earnings will be in focus this week, with a number of Dow components slated to take the stage. Kicking things off bright and early tomorrow morning will be fast food giant McDonald's Corporation (NYSE:MCD) and aerospace issue United Technologies Corporation (NYSE:UTX). Meanwhile, software concern Microsoft Corporation (MSFT) is scheduled to unveil its results after Tuesday's close. Here's a quick look at this trio of names as earnings approach.

  • Over the past eight quarters, MCD has missed analysts' bottom-line expectations five times, resulting in an average single-session post-earnings loss of 1.5%. For the company's second quarter, Wall Street is calling for a per-share profit of $1.44 -- a 6-cent improvement over MCD's year-ago results. Ahead of tomorrow's report, MCD is fielding a fundamental folly -- and over the weekend, issued an apology to China for its questionable meat supplier on the mainland. At last check, the stock was down 1.1% to trade at $97.92, and could be poised to extend this decline, should a poorly received earnings report spark a re-evaluation of ratings among analysts. At present, McDonald's Corporation's 12-month price target of $106.69 stands in territory yet to be charted, and not a single one of the 26 covering analysts maintain a "sell" or worse suggestion toward MCD.

  • UTX is down 0.8% to trade at $112.69 today, due in part to broad-market headwinds. The stock could be poised to pare a portion of these losses in the near term, should UTX's post-earnings history repeat itself. After exceeding consensus earnings estimates in each of the past eight quarters, the security has gone on to average a gain of 0.3% in the subsequent session -- which widens to 0.4% when going out one week. For United Technologies Corporation's second quarter, analysts are expecting a profit of $1.71 per share -- one penny more than what the company earned last year. On the charts, UTX has been testing support atop its 200-day moving average in recent weeks, but today's pullback has the stock trading south of this trendline, which is currently located at $113.27.

  • MSFT has been a standout on the charts in 2014, with the shares up nearly 19% to trade at $44.51. Over the past three quarters, the stock has performed well in the wake of its bottom-line wins, and has averaged a single-session post-earnings pop of 2.7%. Another well-received quarterly report could have more brokerage firms jumping on the bullish bandwagon. Currently, 68% of covering analysts maintain a "hold" or "sell" suggestion on the outperforming equity, while the consensus 12-month price target of $43.52 stands at a discount to Microsoft Corporation's current price.

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