As reported in the Fairfax Press on Monday, the S&P/ASX 200 Index (ASX: XJO) trades on a price-earnings (PE) ratio of 16x (or 19x for industrials, ex financials) going into the upcoming earnings season. The relatively high market PE indicates investors don’t think companies will miss guidance when reporting in August. However, as UBS strategist David Cassidy notes, “slight misses or . . . underwhelming outlook statements could see some shares pull back”.

Accordingly, here are three stocks which I believe could see downside pressure if they miss expectations this earnings season.

Australia & New Zealand Banking Group (ASX: ANZ)

ANZ bank is slated to report third quarter earnings on August 9. Being the first of the big four to report, bank investors will keenly watch ANZ’s trading update for signs of an increase in bad debts, slowing growth or margin contraction which could be endemic to the wider industry.

Any such signs of industry-wide headwinds will see peers Commonwealth Bank of Australia (ASX: CBA), National Australia Bank Ltd (ASX: NAB) and Westpac Banking Corp (ASX: WBC) come under pressure as well. However, ANZ’s exposure to slowing growth in Asia and its share of losses from the collapse of Dick Smith and Arrium Ltd could see its shares hard hit if market conditions remain stable compared to prior periods.

BHP Billiton Limited (ASX: BHP)

BHP’s shares have rallied since reporting in February as spot prices of crude oil, iron ore and copper all rebounded strongly in the first half of the year. Although the market expects the mining giant to report a statutory loss for the year ended 30 June 2016 due to one-off items like its Samarco mine remediation costs, its shares could come under pressure if management disappoints with its final dividend payout amount.

In line with Rio Tinto Limited (ASX: RIO), BHP abandoned its progressive dividend policy in February this year and rebased it to a minimum 50% payout ratio of underlying attributable profit. Whilst the rebound in commodities and numerous cost-out measures bodes well for long-term profitability, any further cut to dividends could see investors head for the exit this reporting season.

CSL Limited (ASX: CSL)

CSL’s management faces a problem most corporate boards would envy; consistent, record-breaking growth. Whilst I don’t mean to offend by sounding sarcastic, CSL is the victim of its own success because investors flock to this healthcare stalwart on the promise of higher earnings.

Even though CSL’s defensive characteristics allows it to maintain market share and organically grow earnings, this year’s results will be closely watched as the company’s management seeks to justify its nosebleed valuations. Any slight miss in expected earnings could see shares being sold off at current prices.

Foolish takeaway

Although it’s possible for these three blue-chips to surprise on the upside, I wouldn’t bet the house on it. Whilst each of ANZ, BHP and CSL remain high quality stocks, I believe there are better buys in the lead up to earnings season.

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Motley Fool contributor Rachit Dudhwala has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.