Earnings Outlook: Consumer Stocks Master Card, Ralph Lauren, Ambev

Last week we finally saw what may be the beginning of the pullback that some have been calling for since Dow 8000.  The S&P broke through not only its major trendline but its 50-day Moving Average as well.  Though some believe that this recent downward activity is little more than a hiccup on the way to continuation of the larger uptrend, market sentiment certainly appears more hesitant now than it has in recent memory.

SP 11.2

In a week that may very well dictate whether the market can sustain its uptrend or experiences a full-blown correction, a handful of consumer companies that are reporting quarterly earnings may help tip the scale, for better or worse.

Mastercard (MA)

MA had a strong October, trading as high as $232 and change after beginning the month in the mid-190’s.  This was due in large part to its largest competitor, Visa (Symbol: V), which beat earnings estimates and painted a rosy outlook for the future of credit card transactions early in the month.  Both companies are pure plays on transactions, benefiting from the worldwide shift from cash to plastic.  Expect a volatile move after MA reports on Tuesday before the bell.

Analyst Estimates (High/Mean/Low): 3.12 / 2.94 / 2.60

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Ralph Lauren Corp. (RL)

RL has traded mostly sideways since mid-September and should give us a bit of insight into the state of mid- to high-end retailers when it reports Tuesday before the bell.  Though we know from Amazon (AMZN) that Internet retailing has been coming back, the jury is still out on the brick-and-mortar side of the business.  RL tested its 50-day Moving Average last week but bounced back up, indicating at least moderate support at current levels.

Analyst Estimates: 1.43 / 1.31 / 1.19

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Ambev (ABV)

ABV is the largest producer and distributor of beer, carbonated soft drinks and other non-alcoholic and non-carbonated products in Latin America.  It had a fairly strong October, and when it reports on Thursday before the bell, it should give us some insight into the health of the consumer sectors of LATAM and, to a lesser extent, Canada (where it also has operations).  ABV’s report may help move the needle, especially in emerging markets such as Brazil, where it is headquartered.

Analyst Estimate (Mean): 2.23

ABV 11.2

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