Earnings Preview 11/23/09 Investors will be able to say thanks next Thursday for a wonderful earnings season, one that is rapidly drawing to a close. There will be only 57 firms reporting quarterly results next week, including 10 members of the S&P 500. That group, however, contains some pretty important names, including computer giant Hewlett-Packard (HPQ), agricultural equipment king John Deere (DE) and investors will find out if Campbell Soup (CPB) really is "mm-mm good." The economic data is squeezed into the front part of the week due to the holiday: Monday •    Existing Home Sales are expected to rise to a seasonally adjusted annual rate of 5.65 million from 5.57 million in September. While existing home sales make up more than 85% of all home sales, their effect on the economy is minimal and largely indirect. Watch the inventory numbers, though -- ...

There were few surprises this weekend over how the Russian police handled a sizable protest by gay rights activists in Moscow, who sought to take advantage of the televised Eurovision event to bring attention to their persecuted status.  As human rights groups cry foul over the state's response, the Moscow Times reports that Peter Tatchell and Edvard Murzin, a heterosexual human rights activist, unfurled banners and shouted slogans including, "No compromises! Equal rights! Homophobia is a national disgrace!" (...) "Russian people don't have freedom."  Fred Weir at CSM has gently called this crackdown "a sign of a less harmonious Russia," while the Economist notes that the coincidence of the Eurovision Song Contest and the Victory Day parade of Russian military might show Vladimir Putin's concentration on the "external political effect" of the event. Embedded video ...

a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://1.bp.blogspot.com/_7ZckZ-8naz0/SeoR7M1ERHI/AAAAAAAACiE/K8qb29LcEho/s1600-h/Cusick.jpg"img style="margin: 0pt 10px 10px 0pt; float: left; cursor: pointer; width: 400px; height: 266px;" src="http://1.bp.blogspot.com/_7ZckZ-8naz0/SeoR7M1ERHI/AAAAAAAACiE/K8qb29LcEho/s400/Cusick.jpg" alt="" id="BLOGGER_PHOTO_ID_5326089218072790130" border="0" //aThe second portion of the a href="http://online.barrons.com/article/SB124000828983730469.html"Barron's editorial commentary/a contained this little nugget;br /br /span style="color: rgb(0, 153, 0);"The Congressional Budget Office reported that payroll-tax receipts will barely cover Social Security benefits next fiscal year./spanbr /br /To repeat a href="http://twitter.com/randomroger"my tweet/a from yesterday about this; uh-oh.br /br /Entitlements loom as a $50 trillion problem. The estimates about when it starts to run into trouble starts, I believe, in 2018 with some estimates call for it going under in 2042, if memory serves. Of course there are other folks who come up with much rosier scenarios. I don't know what is right all I can tell you is that I am not planning on having it--if I am wrong then all the better.br /br /I write about this ...

Fred’s, Inc. (FRED) reported solid second quarter results. Sales were up 5% year-over-year to $447 million with comp-store sales growth of 4.9%, and earnings per share of $0.10. The company previously announced its sales, and its EPS matched the consensus estimate. In addition, the management reiterated its guidance for fiscal 2008. The company expects to earn $0.72-$0.76 per share for fiscal year 2008 and $0.16-$0.18 per share in the third quarter.

However, Fred’s stores target lower-income customers, and those customers tend to be affected to a greater degree by higher energy and food costs. Gas prices remain high, and food prices continue to climb. Elevated food and energy prices are taking a large bite out of what low income households take home every week. Fred’s results will most likely be negatively impacted by further pricing pressures.

With its stock trading at 19.6x our fiscal 2008 EPS estimate and 17.0x our

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Fred’s Inc. (FRED) reported solid second-quarter sales of $447 million, up 5 percent year-over-year, with comp-store sales growth of 4.9 percent. The company’s sales growth indicates that Fred’s continues to benefit from customers trading down to lower cost alternatives as well as the management’s strategic efforts.

We increased our second-quarter EPS by $0.01 to $0.10, which is at the high end of the management’s EPS guidance of $0.07-$0.10. For fiscal 2008, our estimate goes from $0.70 to $0.72 and our 2009 EPS estimate goes from $0.78 to $0.80.

Nevertheless, the company’s positive factors are offset by negative factors such as high food and energy prices and difficulties in its core business. Fred's stores target lower income customers, and those customers tend to be affected to a greater degree by higher energy and food costs. Fred’s results will most likely be negatively impacted by further pricing pressures.

Moreover, Wal-Mart (

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