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Focus Shifts to Retail Earnings

The Q1 earnings season is over for most of the major sectors, with the Retail sector as the only one that has a significant number of reports still awaited.

As such, Retail has a heavy presence in this week’s earnings reports, including industry heavyweights like Wal-Mart (WMT), Macy’s (M) and Nordstrom (JWN). But we do have couple of bellwether operators coming out with results this week from other sectors, like Cisco (CSCO) and Deere & Co. (DE). In total, we will get Q1 earnings reports from 127 companies this week, including 11 S&P 500 members.

Total Retail thus far are up +11.2% from the period last year, on 2.6% higher revenues. This includes strong gains at drugstore chains Walgreens (WAG) and momentum in online players in eBay (EBAY) and Priceline (PCLN). The remaining 22 retailers out of the 47 companies in our S&P 500 Retail sector are expected to see total earnings decline by -2.9% on +2.7% higher revenues. This reflects expectations of flat earnings growth for Wal-Mart and earnings decline for Target (TGT) and few others.

Combining the Retail sector earnings for the 25 companies that have come out with the 22 still to come, the sector’s total earnings in Q1 should be up +3.6%. This compares to earnings growth rates of +8.1% and +6.1% in 2012 Q4 and Q3, respectively. April same-store sales data for the sector has generally been on the soft side, with industry players citing colder temperatures in April as a reason for light traffic. But it could very well be that the payroll tax changes in January are finally starting to have an effect
We continue to grade the Q1 earnings season as between ‘average’ and ‘below average’ – it’s definitely neither ‘good’ nor ‘bad,’ not materially different from what we have been seeing over the last few earnings seasons. That said, the overall level of ‘total’ quarterly earnings is at a record level.

The Q1 Earnings Scorecard

Here is the summary scorecard for the 453 S&P 500 companies that have reported Q1 results, as of Friday May 10th, 2013.



Note: ‘Beat Ratio’ is the percentage of companies coming out with positive surprises; ‘Median Surp’ is the median % surprise.

As you can see, the earnings season has come to an end for 9 of the 16 sectors and except for Retail, the other sectors are close to or more than 90% done as well. A couple of things stand out in the Q1 results: the pronounced negative revenue surprises and the weakness in the Technology sector.

The Technology sector’s growth rates and ‘beat ratios’ are weaker than the same for the S&P 500 as well as what the group reported in 2012 Q4. With 88.5% of the sector’s total market capitalization already out with Q1 results, total earnings for the sector are down -4.4%, with 63.2% of the sector companies beating earnings expectations (vs. the S&P 500 average of 65.3%). The revenue side for the sector isn’t that bad (up +5.7%), which goes on to spotlight the sector’s margin problems.

The composite growth rate for Q1, where we combine the results of the 453 companies that have come out with results with the 47 still to come, is for a rise of +2.4% in total earnings on -0.8% lower revenues. In terms of dollar earnings levels, composite earnings in Q1 total $251.6 billion, the highest quarterly total since the current earnings cycle started back in 2009 (is that why the market is at a new all-time high as well?)

For a detailed look at the earnings picture, please check out our weekly Earnings Trends report here.

Expectations for the second quarter have come down, though estimates for second half of the year still represent a material improvement in the earnings picture. Total earnings in 2013 Q2 are now expected to be up +1.4% on -0.8% lower revenues. This is a drop from the +3.9% total earnings growth expected in Q2 on +0.5% higher revenues in early April.

A similar though less pronounced downward adjustment process has gotten underway for the second half of the year as well. Current expectations are total earnings growth of +5.7% (down from +7.6% in early April) in 2013 Q3 and +13.5% (down from +14.3% in early April) in Q4. For full years 2013 and 2014, total earnings are expected to be up +6.1% (down from +6.8%) and +11.3% (down from +11.5%).

The charts below show trends in earnings estimate revisions. Both charts represent the ratio of total number of upward revisions over the preceding four weeks to the total number of revisions (positive and negative). The first chart shows the current state of this ‘revisions ratio’ for 2013, while the second chart plots the ratio’s trajectory over the preceding 24 months.



Source: Zacks Data

The ratio doesn’t tell you the ‘magnitude’ of the revisions, only the direction. The ‘50%’ level is the dividing line between positive and negative trends, with readings above 50% implying more positive than negative revisions. But our analysis shows that readings between 45% and 55% don’t offer material insights into the magnitude of revisions. It is only readings above 55% and below 45% that offer bullish and bearish signals about the magnitude of earnings revisions.

Looked at that way, the aggregate 2013 revisions ratio for the S&P 500 is essentially in neutral territory. But a number of sectors do stand out. The positive revisions trend in Construction and Finance is not that surprising, but Consumer Discretionary sector’s strong showing is notable given all the macro headwinds. The positive trend in Aerospace is no less significant, particularly given the group’s supposed budget sequester exposure. Aerospace reported very strong Q1 results as well, as the ‘Earnings Scorecard’ chart above shows.

The chart below shows how the 2013 revisions ratio has evolved over time. We have featured the Technology (red line) and Construction (blue line) sectors to contrast how the aggregate picture has evolved. As you can see, the aggregate ratio has been below or at the 50% line for quite some time.

Monday - 5/13

  • We will get the April Retail Sales number in the morning, with expectations of -0.4% ‘headline’ decline after an equivalent drop the month before. The ex-Autos number if expected to be up +0.3% after the -0.4% decline in March.

  • A number of companies will be reporting Q1 results, but no major names.

Tuesday - 5/14

  • Nothing major on the economic calendar.

  • Valspar (VAL) is the only notable report in the morning, while Agilent (A) is the key report after the close.

Wednesday - 5/15

  • A busy day on the economic calendar, with April PPI, Industrial Production, and May readings of the Empire State and Homebuilder sentiment index coming out.

  • Deere (DE) and Macy’s (M) are the key reports in the morning, while Cisco (CSCO) reports after the close.

  • The ‘magnitude’ of estimate revisions for CSCO hasn’t been that material, but the direction of revisions has been solely on the negative side. This accounts for the stock’s Zacks Rank # 4 (Sell) at present.

Thursday - 5/16

  • Another busy day on economic data. In addition to weekly Jobless Claims, we will get the April CPI, Housing Starts, and the May Philly Fed surveys.

  • Wal-Mart (WMT) and Kohl’s (KSS) are the key reports in the morning, while J.C. Penney (JCP) and Applied Materials (AMAT) will report after the close.

Friday - 5/10

  • We will get the May Consumer Sentiment survey from the University of Michigan and the Conference Board’s April Leading Indicators reading.

  • No major earnings report.


Here is a list of the 126 companies reporting this week, including 11 S&P 500 members:

Company

Ticker

Current Qtr

Year-Ago Qtr

Last EPS Surprise %

Report Day

Time

7 DAYS GRP-ADR

SVN

0.11

0.06

16.67

Monday

AMC

AIRMEDIA GP-ADR

AMCN

-0.13

-0.11

0

Monday

AMC

ANTHERA PHARMA

ANTH

-0.08

-0.51

31.25

Monday

AMC

ATLAS FINL HLDG

AFH

0.13

0.06

N/A

Monday

AMC

AUGME TECH INC

AUGT

-0.04

-0.1

-16.67

Monday

AMC

CHEMOCENTRYX

CCXI

-0.27

-0.28

3.45

Monday

AMC

CHINA GREEN AGR

CGA

0.45

0.46

-3.23

Monday

BTO

CONSOLTD WATER

CWCO

0.15

0.16

19.05

Monday

BTO

COPA HLDGS SA-A

CPA

2.31

2.04

-9.87

Monday

BTO

CTI INDUSTRIES

CTIB

0.01

0.12

-450

Monday

BTO

ELONG INC-ADR

LONG

0

0.09

-70

Monday

BTO

ENGILITY HLDGS

EGL

0.89

0.84

18.46

Monday

N/A

AMC

GOL LINHAS-ADR

GOL

-0.01

-0.09

-109.09

Monday

N/A

BTO

HOME INNS&HOTEL

HMIN

-0.18

-0.15

333.33

Monday

N/A

BTO

IFM INVEST-ADS

CTC

0.02

-0.49

102

Monday

N/A

AMC

INFORMATION SVC

III

0

0.01

300

Monday

AMC

BTO

INTEROIL CORP

IOC

-0.13

0.19

264.29

Monday

AMC

AMC

MERRIMACK PHAR

MACK

-0.28

-2.14

0

Monday

AMC

AMC

NORDIC AMERICAN

NAT

-0.37

-0.18

0

Monday

AMC

AMC

OTC MARKETS GRP

OTCM

0.13

0.12

190

Monday

AMC

BTO

PDI INC

PDII

-0.11

-0.02

57.14

Monday

AMC

AMC

PERION NETWORK

PERI

0.35

0.18

-9.09

Monday

AMC

AMC

PLANET PAYMENT

PLPM

0

0.01

N/A

Monday

AMC

BTO

POST HOLDINGS

POST

0.27

0.39

30.43

Monday

AMC

BTO

PRIMUS TELECOMM

PTGI

0.08

-0.49

-9.09

Monday

AMC

AMC

RENREN INC-ADR

RENN

-0.07

-0.03

14.29

Monday

AMC

BTO

S&W SEED CO

SANW

-0.04

-0.2

-66.67

Monday

AMC

AMC

SARATOGA RESRCS

SARA

0.02

0.02

-157.14

Monday

AMC

AMC

SCIENTIFIC LRNG

SCIL

-0.07

-0.26

16.67

Monday

AMC

SKY-MOBI LTD

MOBI

-0.08

0.06

100

Monday

AMC

BTO

STEREOTAXIS INC

STXS

-0.5

-1.1

27.5

Monday

AMC

BTO

STRATASYS LTD

SSYS

-0.16

0.27

-7.41

Monday

AMC

AMC

SUMMER INFANT

SUMR

0.02

0.07

-550

Monday

AMC

AMC

SUPERNUS PHARMA

SUPN

-0.63

-6.05

30.14

Monday

AMC

AMC

SUTOR TECH GRP

SUTR

0.05

0.03

100

Monday

AMC

AMC

TAKE-TWO INTER

TTWO

0.16

-0.72

18

Monday

AMC

AMC

TEARLAB CORP

TEAR

-0.12

-0.12

-9.09

Monday

AMC

AMC

TURQUOISE HILL

TRQ

-0.04

-0.11

-350

Monday

AMC

AMC

US ENERGY CP-WY

USEG

0.01

-0.01

-200

Monday

AMC

AMC

VELTI PLC

VELT

-0.44

-0.13

-49.02

Monday

AMC

AMC

VERSAR INC

VSR

0.11

0.13

0

Monday

AMC

BTO

WUXI PHARMATECH

WX

0.27

0.28

32

Monday

AMC

AMC

AGILENT TECH

A

0.67

0.78

-5.97

Tuesday

AMC

AMC

ALEXZA PHARMACT

ALXA

-0.53

-0.5

-41.3

Tuesday

AMC

BTO

ATHERSYS INC

ATHX

-0.1

-0.17

25

Tuesday

AMC

BTO

AUTONAVI HL-ADR

AMAP

0.14

0.18

-14.29

Tuesday

AMC

AMC

BRIGUS GOLD CP

BRD

0.03

0.03

-50

Tuesday

AMC

AMC

CORGENIX MEDICL

CONX

0

0

N/A

Tuesday

AMC

AMC

CRUMBS BAKE SHP

CRMB

-0.35

-0.09

-220

Tuesday

AMC

AMC

DIGITAL CINEMA

DCIN

-0.06

-0.27

-5

Tuesday

AMC

AMC

EAGLE MATERIALS

EXP

0.4

0.2

0

Tuesday

AMC

AMC

EXONE CO/THE

XONE

-0.09

-0.18

157.14

Tuesday

AMC

BTO

GENERAL FINANCE

GFN

0.11

0.05

N/A

Tuesday

AMC

AMC

GLOBAL SRCS-LTD

GSOL

0.17

0.09

59.09

Tuesday

AMC

BTO

HESKA CORP

HSKA

0.12

0.11

0

Tuesday

AMC

AMC

NETLIST INC

NLST

-0.14

-0.04

-88.89

Tuesday

AMC

NUPATHE INC

PATH

-0.16

-0.43

-245.16

Tuesday

AMC

AMC

OXYSURE SYSTEMS

OXYS

-0.01

-0.02

N/A

Tuesday

AMC

BTO

PALATIN TECH

PTN

-0.05

-0.17

-300

Tuesday

AMC

AMC

PAN AMER SILVER

PAAS

0.25

0.58

2.78

Tuesday

AMC

BTO

PHOENIX NEW MED

FENG

0.05

0.06

100

Tuesday

AMC

AMC

PHOTRONICS INC

PLAB

0.09

0.14

100

Tuesday

AMC

PLUG POWER INC

PLUG

-0.14

-0.31

-37.5

Tuesday

AMC

AMC

PRIMO WATER CP

PRMW

-0.1

-0.14

37.5

Tuesday

AMC

AMC

QUALSTAR CORP

QBAK

-0.1

-0.05

0

Tuesday

AMC

BTO

RESPONSE GENETC

RGDX

-0.04

-0.14

83.33

Tuesday

AMC

BTO

SYPRIS SOLUTION

SYPR

0.03

0.17

100

Tuesday

AMC

AMC

TRANSWITCH CORP

TXCC

-0.05

-0.2

-20

Tuesday

AMC

BTO

TREE.COM INC

TREE

0.12

-0.29

-150

Tuesday

AMC

BTO

VALSPAR CORP

VAL

0.89

0.84

-9.09

Tuesday

AMC

AMC

VIPSHOP HOLDNGS

VIPS

0

-0.33

1100

Tuesday

AMC

AMC

VOXX INTL CP

VOXX

0.19

0.49

30.77

Tuesday

AMC

AMC

ZAIS FINANCIAL

ZFC

0.39

2.06

N/A

Tuesday

AMC

BTO

CISCO SYSTEMS

CSCO

0.45

0.42

9.3

Wednesday

AMC

COMP SCIENCE

CSC

0.97

-0.14

22.22

Wednesday

AMC

AMC

DEERE & CO

DE

2.74

2.61

17.02

Wednesday

AMC

AMC

MACYS INC

M

0.53

0.43

3.54

Wednesday

AMC

BTO

AEGEAN MARINE

ANW

0.14

0.13

0

Wednesday

AMC

AMC

ARCTIC CAT INC

ACAT

-0.4

-0.49

-2.26

Wednesday

AMC

AMC

ARES COMMERCIAL

ACRE

0.17

-0.12

-38.1

Wednesday

AMC

AMC

AUXILIO INC

AUXO

0.01

-0.07

82

Wednesday

AMC

AMC

BRIDGELINE SFWR

BLIN

-0.03

0.01

-50

Wednesday

AMC

BTO

CONSOL GRAPHICS

CGX

0.51

0.23

44.92

Wednesday

AMC

COPEL-ADR PR B

ELP

0.72

0.59

18.75

Wednesday

AMC

AMC

E-HOUSE CHINA

EJ

-0.19

-0.29

160

Wednesday

AMC

BTO

FIRST MAJESTIC

AG

0.32

0.26

-10.34

Wednesday

AMC

AMC

GASLOG LTD

GLOG

0.06

0.06

-20

Wednesday

AMC

AMC

JACK IN THE BOX

JACK

0.31

0.48

38.46

Wednesday

BTO

JINPAN INTL LTD

JST

0.04

0.24

21.05

Wednesday

BTO

AMC

LIFEWAY FOODS

LWAY

0.08

0.07

16.67

Wednesday

BTO

AMC

NATUS MEDICAL

BABY

0.12

0.07

11.54

Wednesday

BTO

BTO

NETEASE INC

NTES

1.17

1.14

16.04

Wednesday

BTO

NETQIN MOBILE

NQ

0.06

0.04

800

Wednesday

BTO

AMC

OVERLAND STORAG

OVRL

-0.14

-0.16

-7.14

Wednesday

BTO

BTO

OXFORD RES PTNR

OXF

-0.25

-0.32

-208.33

Wednesday

BTO

AMC

RADIANT LOGIST

RLGT

0.02

0.01

50

Wednesday

BTO

AMC

SAFE BULKERS

SB

0.21

0.32

-10

Wednesday

BTO

TUCOWS INC

TCX

0.01

0.03

-66.67

Wednesday

BTO

AMC

WIDEPOINT CORP

WYY

0

0

N/A

Wednesday

BTO

AMC

YOUKU.COM- ADR

YOKU

-0.22

-0.2

9.09

Wednesday

BTO

AMC

APPLD MATLS INC

AMAT

0.13

0.27

100

Thursday

BTO

AMC

AUTODESK INC

ADSK

0.35

0.37

2.63

Thursday

BTO

AMC

KOHLS CORP

KSS

0.59

0.63

1.84

Thursday

BTO

AMC

NORDSTROM INC

JWN

0.76

0.7

4.48

Thursday

BTO

AMC

PENNEY (:JC) INC

JCP

-1.13

-0.25

-926.32

Thursday

BTO

AMC

WAL-MART STORES

WMT

1.15

1.09

6.37

Thursday

BTO

AMC

21VIANET GP-ADR

VNET

0.06

0.1

-44.44

Thursday

BTO

AMC

ARUBA NETWORKS

ARUN

0.01

0.06

-16.67

Thursday

BTO

AMC

BONA FILM-ADR

BONA

0

0.04

-400

Thursday

BTO

BTO

BRADY CORP CL A

BRC

0.62

0.57

-22.45

Thursday

BTO

BROCADE COMM SY

BRCD

0.12

0.12

30.77

Thursday

BTO

BTO

CAE INC

CAE

0.19

0.21

12.5

Thursday

BTO

AMC

CHIPMOS TEC LTD

IMOS

0.13

-0.21

0

Thursday

BTO

COMMTOUCH SOFTW

CTCH

0.03

0.05

-100

Thursday

BTO

AMC

DERMA SCIENCES

DSCI

-0.37

-0.24

12.9

Thursday

BTO

BTO

FLOWERS FOODS

FLO

0.41

0.28

12

Thursday

BTO

AMC

HOLLYSYS AUTOMT

HOLI

0.2

0.21

-17.86

Thursday

BTO

AMC

ITERIS INC

ITI

0.01

0.01

-150

Thursday

AMC

BTO

PRESTIGE BRANDS

PBH

0.34

0.25

8.82

Thursday

AMC

AMC

RENESOLA LT-ADR

SOL

-0.39

-0.47

2.7

Thursday

AMC

AMC

SINA CORP

SINA

-0.11

-0.27

400

Thursday

AMC

AMC

SMART TECHNOL-A

SMT

-0.04

0

N/A

Thursday

AMC

BTO

XUEDA EDUC-ADR

XUE

0.04

0.01

7.69

Thursday

AMC

AMC

DONALDSON CO

DCI

0.48

0.46

-10.53

Friday

AMC

ISOFTSTONE LTD

ISS

0.04

0.08

15.38

Friday

AMC

AMC

STAGE STORES

SSI

0.08

0.05

-5.93

Friday

AMC

AMC

AGILENT TECH (A): Free Stock Analysis Report

APPLD MATLS INC (AMAT): Free Stock Analysis Report

CISCO SYSTEMS (CSCO): Free Stock Analysis Report

DEERE & CO (DE): Free Stock Analysis Report

TARGET CORP (TGT): Free Stock Analysis Report

EBAY INC (EBAY): Free Stock Analysis Report

MACYS INC (M): Free Stock Analysis Report

PENNEY (:JC) INC (JCP): Free Stock Analysis Report

KOHLS CORP (KSS): Free Stock Analysis Report

NORDSTROM INC (JWN): Free Stock Analysis Report

VALSPAR CORP (VAL): Free Stock Analysis Report

WALGREEN CO (WAG): Free Stock Analysis Report

WAL-MART STORES (WMT): Free Stock Analysis Report

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