For the past 18 quarters, corporate earnings for the S&P 500 have grown at double-digit rates over the same quarter a year earlier.
That record-setting streak could be at risk.
Fourth-quarter earnings for the S&P 500 should increase in the high 9 percent range, David Wyss, chief economist with Standard & Poor’s in New York, predicted on a visit to Denver last week.
Not every market watcher agrees that the earnings party is winding down.
“We will do just fine (for) the fourth quarter,” said Lincoln Anderson, chief investment officer with Linsco/Private Ledger, the nation’s largest independent stock brokerage firm.
Anderson predicts that corporate earnings will extend their record run with increases in the mid-teens.
Why watch earnings? In the late 1990s, stocks tended to race ahead of their earnings. Since 2001, they have underperformed earnings growth in most years.
With the price-to-earnings ratio for the S&P 500 expected to hold steady at around 15, earnings growth will be the main driver of stock-price gains this year, Anderson said.
Below are some of the Colorado earnings reports worth watching in the days and weeks ahead.
Crocs Inc.
Some analysts derided the Niwot- based shoemaker as a one-product wonder when it went public last February, but the company and its stock have defied expectations, rising from $21 to near $50.
Crocs has snapped up several companies: Fury Inc., a Canadian maker of hockey and lacrosse gear; Exo Italia, an Italian shoe designer; and Jibbitz Inc., a Boulder maker of accessories that fit into the holes in some models of Crocs shoes.
The company has expanded its product line and struck licensing deals with the Walt Disney Co., National Football League, National Hockey League and more than 75 colleges and universities to use popular images on its shoes.
Analysts are calling for earnings of $0.43 per share for the fourth quarter and $1.53 for 2006. They are expecting 2007 earnings to rise 35 percent.
Some see an overvalued Cinderella story. Just before Christmas, The Motley Fool investment website called Crocs the “Worst Stock for 2007.”
Delta Petroleum Corp.
Oil prices have tumbled by more than one-fourth since summer, raising concerns about falling earnings for oil and gas producers.
Delta’s stock hit $30 a share in December but now trades a tad over $21.
Analysts expect the Denver- based company to lose $0.14 a share in the fourth quarter and $0.41 a share for 2006. Despite the losses, Delta is raising $56.4 million in a stock sale this week.
Pharmion Corp.
Shares of the Boulder biotech company have been on a tear since the start of 2007 after the company said its sales would outpace earlier estimates.
Pharmion also announced plans to file European marketing applications for its Thalidomide, Satraplatin and Vidaza drugs, which treat myeloma, prostate cancer and bone-marrow disorders, respectively. Drugs in the company’s pipeline also are moving forward in testing.
“With successful outcomes for certain of these activities, 2008 could begin a period of rapid sales and earnings growth for Pharmion,” Patrick Mahaffy, Pharmion’s chief executive, recently told investors.
The company should generate a loss of $1.83 per share in the fourth quarter and $2.69 for 2006, analysts estimate.
Emergency Medical Svcs.
The Greenwood Village-based ambulance operator has seen its stock shoot up 18 percent this month alone.
On Jan. 19, the company said it expects to earn $1.11 to $1.18 a share this year, compared with forecasts of $1.09 a share. Analysts expect the company to earn $0.26 a share in the fourth quarter when it releases earnings Feb. 8.
Western Union
Concerns over possible immigration reform have kept a damper on the Greenwood Village-based money transfer company’s stock since a spinoff from First Data Corp. in October.
Earlier this month, Western Union succeeded in getting a judge to bar the Arizona attorney general from seizing its customers’ money transfers made outside of Arizona to a border region of Mexico. The seizures were part of a broader investigation into smuggling of humans and drugs.
Analysts expect the company’s earnings release on Wednesday to show earnings of $0.26 a share in the fourth quarter and $1.12 for 2006.
Denver Post staff writers Kristi Arellano and Will Shanley contributed to this report.
Staff writer Aldo Svaldi can be reached at 303-954-1410 or asvaldi@denverpost.com.
