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Earnings Estimates (High/Mean/Low): $0.74 / $0.726 / $0.69

Amidst growing fears of a double-dip in both the US and international economies, many investors have begun to find high-beta names unsuitable for their portfolio.  A quick glance at the yield on a 10-Year Treasury is evidence enough of this flight to safety, and, as such, companies like Heinz (NYSE: HNZ) continue to attract Street attention.  With FQ1 earnings scheduled for this Wednesday, we’ll get a nice peak into the state of what should be a stable, relatively recession-proof business, ketchup.

HNZ has built up a solid chart over the past few months.  After breaking its 200-day moving average on 6/28, shares retook the line less than a week later and have since successfully re-tested the mark twice, first on 7/30 and then again on 8/12.  Shares closed up last week at $46.85 and are up 8.4% YTD.

HNZ has beaten estimates in ten of the past eleven quarters and the past eight in a row.  Mean estimates of $0.726 represent an 8% YoY gain.  The conference call is currently scheduled for 8:30 a.m. Eastern the morning of the report.

As we discussed above, investor sentiment has largely begun to swing in favor of “safety” names.  HNZ is particularly well-suited to be mentioned as a part of that group, as much of their earnings, and a growing portion thereof, are derived from higher-growth overseas markets.  A dividend yield of nearly 4% is just the icing on the cake.

There’s little reason to open up a new position ahead of the report, as the climate of negativity is liable to affect post-earnings trading in any number of ways.  On a post-earnings selloff, look to get behind shares on a test of the 200-day, and on a pop look to be a buyer on a breakout of the aforementioned range.  Either way, you should consider HNZ a solid candidate for your portfolio, particularly if you’re looking to incorporate additional elements of stability.

Disclosure: No holdings in HNZ.

Earnings: Q4 profits, excluding items, of $0.42 vs. estimates of $0.38 and $0.39 in Q4 last year.

Revenue: Up 28% YoY to $159 million.

Jeff Weiss, the company’s Chairman and CEO, stated, “I am excited to announce another year of record performance for our Company with consolidated total revenue growing by 15.7% to a record $610.9 million for the fiscal year, while consolidated adjusted EBITDA increased to a record $182.2 million, a 31.6% increase over the prior fiscal year. This record performance was achieved despite a challenging global economy still suffering with high unemployment and a significantly reduced average work week for hourly wage based workers.”

Comment: Dollar Financial (NASDAQ: DLLR) provides a wide range of consumer financial products and services including check cashing, single-payment consumer loans, longer-term installment loans, pawn lending, debit cards, phone/gift cards, bill payment, money orders, money transfers, foreign exchange, gold buying and legal document processing services.  As of June 30, 2009, DLLR’s global store network consisted of 1,206 locations, and it demonstrated to the Street last Thursday that now may be the time to get behind shares.

Besides the beat on EPS and revs, operating margins rose to 41.4% from 34.7% and fees from consumer lending, the company’s cash cow, shot up 28% YoY, though check-cashing revs fell marginally.  Pawn related revenue nearly doubled, but remains a relatively small piece of the DLLR pie.

DLLR issued positive guidance, forecasting FY11 earnings from operations of $2.05-$2.30 vs. estimates of $2.01.  Management also announced the acquisition of Folkia Group for approx. $28 million, a deal that is expected to be immediately accretive.

Shares traded up huge off the news, adding more than 26% in a single day.  DLLR had seen it’s price fall by more than 40% since mid-April as news relating to a class action suit out of Canada overhung shares.  With the Q4 beat and management commentary, the Street seems to have had those concerns at least partially alleviated.

With it’s recent downtrend officially broken, look for shares to test resistance in the $20.24-$20.72 range.  If they can push through, a move towards $23-$24 would be the next objective.  From a longer-term standpoint, particularly after seeing post-earnings selloffs in companies like J. Crew (JCG), Coach (COH) and Tiffany & Co. (TIF) in just the past week, a move into a company like DLLR may be the way to go.  All three of the above and many more have warned of a second half slowdown, and it’s in those environments that a payday loan/check-cashing company is likely to thrive.

As we’ve expounded here at Wall St. Cheat Sheet over and again, an underclass is developing in America.  When those afflicted can no longer participate in the conventional economy, companies like DLLR will be the one’s laying in wait, offering them near-usurous short-term financing.  As the underclass expands, profit opportunities for DLLR cannot but expand in lock-step.

Disclosure: No holdings in DLLR.

Earnings: Q2 profits of $0.53 vs. estimates of $0.46 and $0.29 in Q2 last year.

Revenue: Up 14% to $407.5 million vs. estimates of $403 million.

According to investment firm Brean Murray, “investors [are] likely worried about the difficult comparisons J. Crew faces in the second half of the fiscal year, but [sic] the company [will] benefit from a highly differentiated viewpoint and a fashion-driven core consumer who will pay full price for the right offerings.”

Comment: J.Crew Group (NYSE: JCG) blew away the numbers for Q2, upping profits 88% YoY, but weak guidance is pressuring shares after-hours.  Management forecasted Q3 earnings of $0.55-$0.65 vs. expectations of $0.71 and lowered their FY2010 target by $0.10 to $2.25-$2.35.  Inventory per square foot also increased by about 10%.

Add that all up and you’ve got a stock that’s trading down 6.76% after-hours on top of a 0.65% decline during regular trading.  Shares last changed hands at $31.17, a price they haven’t hit since around this time last year.

This news coincides with another story reported earlier today at the Wall St. Cheat Sheet regarding Coach (COH), indicating impending weakness at higher-priced retailers, a sector that held up through much of the downturn.  This may be a result of an American consumer who many say have now completely acclimated to a recessionary environment and find themselves comfortable spending less money.

JCG has always been known to be among the best retailers at executing high-margin strategies, but the company seems to be losing steam.  Until we see a well-founded reason to get back behind shares, J. Crew looks like a stock worth avoiding.

Disclosure: No holdings in JCG.

Earnings: Q2 loss of ($.13) vs. ($.15) consensus and a loss of ($.03 ) in Q2 last year.

Revenue: Decreased 15.9% Year-over-Year from $48.8 Million last year t0 $42.1 Million this year in the same period, versus $41.87 Million consensus, passing expectations.

Tom Rogers, President and CEO of TiVo, stated “TiVo remains on solid financial footing, exceeding our revenue and earnings guidance and with a strong balance sheet of over $240 million in cash and short-term investments, and no debt.”

Comment: Shares of TIVO are trading down 1.71% following the company’s earnings release after-the-bell, trading at $8.32 per share, compared to the closing price of $8.47.

In the chart above, TIVO shares are trading above the 50-day moving average, yet below the 200-day moving average. The company has been plagued by a lawsuit with EchoStar (SATS), but exudes confidence in their ability to win the litigation suit. The proof will reside in the ultimate court decision. Meanwhile, in the 2nd quarter, TIVO inked deals with Suddenlink Communications, the seventh largest U.S. cable operator currently with 1.3 million subscribers, and Cox Communications, the third largest U.S. cable television operator. A key attraction to the stock right now is TIVO’s cash position of over $2 per share and zero debt on their balance sheet. TIVO stock hit a 52-week low in July of this year. Since then, TIVO shares have rebounded and consolidated recently. If TIVO can continue to grow sales while reducing costs, then TIVO shares could become even more compelling than they are today.

Earnings: Q3 profits excluding items of $0.61 vs. estimates of $0.53 and $0.18 in Q3 last year.

Revenue: Up 52% YoY to $550 million, in-line with management’s revised guidance and at the high end of the company’s original guidance.

CEO Hock Tan noted that Avago (NASDAQ: AVGO) “reached a historic milestone in the third quarter of fiscal 2010.  In addition to another record net revenue quarter, Avago’s non-GAAP Gross Margins surpassed 50% as [the company] continued to execute well on [its] strategy of expanding gross margins.”

He added that, “business remains robust and our proprietary products continue to gain momentum as we win more programs at major OEMs.”

Comment: Avago designs, develops and supplies a range of analog semiconductor devices with a focus on III-V-based products.  This form of compound semiconductor is desirable for its thermal properties, which allow for higher-efficiency power consumption.  They are used in FBAR filters, power amplifiers, front-end modules and light emitting diodes, primarily in wireless handsets and equipment.

On top of its earnings and revenue beat, AVGO also gave solid guidance for the current Q, forecasting a 3%-6% rise in revenue QoQ to $566.5 million-$583 million vs. estimates of $557 million.  Unadjusted gross margins rose to 47.8% from 38.8%.

Shares shed 1.38% during after-hours trading after dropping 0.78% on the day, last changing hands at $19.96.  An on-again, off-again secondary offering from major shareholder KKR has been weighing on shares for the better part of a month, and seems to still be in AVGO’s way.  Still, despite the potentially dilutive effects of such an offering, AVGO saw its debt rating upped by S&P this past Monday.  S&P cited revenue strength and appropriate debt level as its reason for boosting AVGO’s rating to BB+, or on notch below investment grade.

From a technical standpoint, AVGO was able to hold its 200-day moving average on August 11th, a day in which big negative news concerning the semi space took down the whole sector.  That indicator, which now rests at about $19.50, is just $0.46 below today’s after-hours close, and shares may be ready to test the mark again.  If AVGO can make it through a second test, that should definitely be taken as a cause to give shares a second look.  Given their exposure to smartphones, AVGO is better situated to weather weakness in semis than many of its peers.  As such, putting on a pairs trade vs. a weaker competitor may be the way to go.

Disclosure: No holdings in AVGO.

Pleasanton, Calif-based Ross Stores Inc (ROST) announced earnings on August 19th with a dose of cautious sentiment in a very shaky market. Considering the retailer is known for discounted accessories, apparel and home-related merchandise, you would assume business is plush for Ross Stores. The stock is up over 16% since the start of the year, so the discount retailing trend has been the ROST friend. But, will the trend continue? Here is the latest earnings breakdown:

Earnings: Q2 profits of $1.07 vs. $1.07 consensus and a gain of $.82 in Q2 last year, an 23.4% rise in profits Year-over Year.

Revenue: Increased 8% Year-over-Year from $1.77 Billion last year t0 $1.91 Billion this year, versus $1.92 Billion consensus, barely missing expectations.

Michael Balmuth, ROST CEO and Vice Chairman stated, “We faced extremely tough comparisons in the second half of the year as same store sales grew 9% and earnings per share rose 67% in the back half of 2009. As a result while we hope to do better, we believe it is prudent to maintain a somewhat cautious outlook concerning our sales and earnings targets for the second half of 2010.” He also said, “We remain on track to complete during 2010 approximately $375 million of our current two year $750 million stock repurchase program.”

Comment: Shares of ROST are trading down 2.7% following the company’s earnings release August 19th before-the-bell, trading at $49.58 share, mainly due in part to the overall market sell-off though.

In the chart above, ROST shares are trading slightly below the 200-day and well below the 50-day moving averages. On a technical basis, it is evident the current support level around $49 per share is a potential area of consolidation relative to last year’s peak prices in September and October. ROST shares experienced a strong run in the first quarter of 2010 and have pulled back since late April, not fully finding support quite yet. ROST pays a 1.3% annual dividend and has plenty of cash in the coffers, $775 million in cash versus $150 million in debt. With $62+ revenue per share, cost-cutting measure in place and a stock buyback program that is meeting its intended goals, Ross Stores Inc (ROST) may very well be building a base of support in the current price range as consumer still seek out discounts now more than ever.

Earnings: Q2 profits of $0.30 vs. consensus $0.23 and $0.22 in Q2 last year.

Revenue: Up 22% to $158.2 million vs. estimates of $143 million.

According to CEO Jason Jiang, the Chinese ad market grew 17% YoY during 1H10.  He added that Focus Media (NASDAQ: FMCN) “managed to expand [its] core business 24% during the same period, indicating [that] it continues to gain market share.”

Comment: FMCN, a China-based digital advertising company, continued to benefit from a broad-based ad market recovery in China as the company’s Q2 profits came in well ahead of estimates.  After tacking on nearly 2.5% during regular trading, Focus added another 2.5% for good measure after-hours, last changing hands at $19.01.  Shares are now up 17% on the year.

In addition to the beat on EPS and revenue, sales of LCD display ads grew 34% YoY and Internet ads grew 41%, both ahead of prior guidance.  Gross margins expanded modestly to 51.6% from 51.4%.

Guidance was strong as well, with management forecasting Q3 profits of $48-$49 million on cumulative revenue (LCD, movie theater, in-store and poster frame) of $121.5 million, good for 37% YoY growth.  Billboard revenue is expected to come in at $20-$23 million.

There isn’t much to complain about concerning FMCN’s Q, and from a technical perspective they’re looking pretty good too.  As you can see on the weekly chart below, FMCN began forming a nice, fairly tight cup-with-handle pattern in mid-April, and it seems poised to break out.  The current buy-point stands at $19.36, or $0.10 above the high-point in the handle.  If it can get through there on solid volume, a move towards $21, and then $24, may be in order.

Disclosure: No holdings in FMCN.

Lately, everyone is questioning the consumer and the consumer’s ability to spend at retail. Yet, this earnings season has proved even the smallest uptick in top-line growth is serving better results than consumer confidence. The reality of the numbers has one step up on recent turbulent sentiment surveys. Here’s a look at Gap Inc. latest earnings breakdown (GPS):

Earnings: Q2 profits of $.36 vs. $.35 consensus and a gain of $.33 in Q2 last year, an 9% rise in profits Year-over Year.

Revenue: Increased 2% Year-over-Year from $3.24 Billion last year t0 $3.32 Billion this year, versus $3.31 Billion consensus, slightly passing expectations.

Gap Inc. CEO Glenn Murphy sees potential international growth, “By the end of the month, we’re going to open up our first store in Australia…Everything is on target for China. We’re going to open up at the end of October in Shanghai and we’re going to have four stores by the end of the year in Shanghai and Beijing…And Italy, which was the other big country we announced a few months ago, we’re going to be opening up in late November in Milan with both Banana Republic and Gap stores.”

Comment: Shares of Gap Inc (GPS) are trading down 2.3% following the company’s earnings release on Thursday, August 18th, after-the-bell, trading at $17.30 per share.

In the chart above, Gap Inc. (GPS) shares are trading at 52-week lows well below the 50-day and 200-day moving averages. An upside announcement for shares came from Gap’s board authorizing a new $750 million share repurchase program, on top of the $1 billion already authorized for 2010, bringing the total to $1.75 billion. In general, share buybacks reduce the supply of shares to the public in an effort to preserve share price and potentially increase it down the road if positive earnings can be delivered consistently in the future. Meanwhile, the Old Navy brand accounted for 37% of Gap Inc. revenues in the 2nd quarter. I increasingly hear that Banana Republic has been fashionably out-of-favor and in dire need of a turnaround to kickstart better sales again. As Gap Inc. (GPS) grows its presence abroad, the question remains whether their retail brand will be embraced and accepted. We’ll be waiting to see whether Gap Inc (GPS) performs in new emerging markets, first, before thinking twice about investing in their shares with confidence.

Among the Hurd drama, the uncertainty for H-P’s leadership and a recent 15% decline for HP’s stock price, the real numbers proved two things, higher expenses hurt H-P’s bottom line, but top-line growth is still in tact for the 300,000 plus employee Palo Alto, CA-based computer company. Here’s the breakdown on Hewlett-Packard (HPQ):

Earnings: Q3 profits of $.75 vs. $1.08 consensus and a gain of $.69 in Q2 last year, an 8.6% rise in profits Year-over Year. Excluding items, H-P would have earned $1.08 per share, which was in-line with analyst expectations.

Revenue: Increased 11% Year-over-Year from 27.6 Billion last year t0 $30.7 Billion this year, versus $30.43 Billion consensus, passing expectations.

Cathie Lesjak, H-P CFO and interim CEO stated, “We raised our full-year outlook and are continuing to build momentum in driving out costs, investing for profitable growth and capitalizing on HP’s competitive advantages in the marketplace.”

Comment: Shares of HPQ are trading down slightly .64% following the company’s earnings release after-the-bell, trading at $40.50 per share, compared to the closing price of $40.76.

In the chart above, HPQ shares are trading at 52-week lows well below the 50-day and 200-day moving averages. Following the Hurd debacle, the stock has dropped 15+%. Most analysts have been pegging HPQ shares in the $45-48 range, above the current share price. A bright note in today’s solid HPQ earnings report was the evident growth in emerging markets. According to the company’s earnings report, “revenue from outside of the United States in the third quarter accounted for 63% of total HP revenue, with revenue in the BRIC countries (Brazil, Russia, India and China) increasing 21% while accounting for 11% of total HP revenue.” With a double-digit top-line growth number issued today amidst the negative press beating down Mark Hurd for his actions, buying opportunities are coming into play for investors who see the strength beyond the shadow in HPQ shares. The company is still rock solid. The only question remaining is who will be the next captain of the HPQ ship?

Disclosure: No positions held in the companies mentioned.