4 Stocks To Watch On Thursday

By Billy Fisher | September 21, 2011 AAA

The Q3 earnings season is still a few weeks away, but there will be several notable companies reporting results this week. Most of these companies are expected to post better results than this time last year, but it will be their outlook for the future that should and will be closely scrutinized. Here are four stocks for investors to watch on Thursday.

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Express Service
Prior to the opening bell on Thursday, FedEx (NYSE:FDX) is slated to announce its fiscal Q1 results. Analysts are calling for the company to check in with a 23.3% improvement in EPS on a 9.4% improvement in total revenue when compared to the year-ago quarter. (For related reading, see How To Evaluate The Quality Of EPS.)

In order for this upbeat trend to continue, FedEx and rival United Parcel Service (NYSE:UPS) may need to battle a backdrop of slowing global economic growth that could weigh on volumes in the coming quarters. It already appears that such pessimism has been priced in, so any unexpected positive developments could give this stock a major lift. FDX shares have fallen 18% on the year.

Also reporting on Thursday morning will be Discover Financial Services (NYSE:DFS). Wall Street is predicting that the company's Q3 EPS will nearly double when compared to the same quarter last year. Total revenue is expected to rise by 3.4% on a year-over-year basis. DFS shares have rallied 40.5% year-to-date.

Doctor's Orders
The drug store chain Rite Aid (NYSE:RAD) will announce its fiscal Q2 reports on Thursday. Analysts are expecting the company to report a net loss of 17 cents per share versus a loss of 23 cents per share in the prior year quarter. Total sales are expected to experience a slight uptick of close to 1%.

Both Rite Aid and competitor Walgreen (NYSE:WAG) posted improvements in their same-store sales figures for the month of August when compared to a year ago. Both companies will be facing pressure on margins in the coming quarters as more generic prescriptions make their way to market. RAD shares have surged 24.4% on the year. (Take a deeper look at a company's profitability with the help of profit margin ratios. For more, see A Look At Corporate Profit Margins.)

One other stock for investors to keep an eye on heading into Thursday is the athletic apparel maker Nike (NYSE:NKE). The consensus among analysts is that the company will report a 6.1% improvement in EPS and an 11% gain in sales when compared to the prior year period. Shares of Nike have risen 4.3% since the beginning of the year.

The Bottom Line
The corporate earnings front has been relatively quiet, but it will begin to heat up this week. The companies mentioned here that are set to report on Thursday could give investors a sneak preview of what can be expected when the unofficial Q3 earnings season gets underway next month. With investor confidence at a crossroads, these companies need to hit the mark in order to keep their stock prices from taking a big hit.

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