For Immediate Release
Chicago, IL – April 15, 2013– Zacks.com releases the list of companies likely to issue earnings surprises. This week’s list includes Google (GOOG), Intel (INTC), Union Pacific (UNP), CSX Corp (CSX) and AIG (AIG).
To see more earnings analysis, visit http://at.zacks.com/?id=3207.
Every day, Zacks.com makes 4 stock picks available, free of charge. To see them, go to http://at.zacks.com/?id=3567.
Make-or-Break Week for Earnings Season
From Google (GOOG), Intel (INTC) and others in the Technology sector to Transportation bellwethers like Union Pacific (UNP) and CSX Corp (CSX) and much more in between, this week’s reports span the full spectrum of the economy. As such, it wouldn’t be unfair to characterize this as the make-or-break week for Q1 earnings season. The trends established this week will likely carry through the rest of this reporting cycle with only minor changes.
Evaluating the 31 S&P 500 results that we have seen already provides a bit of a mixed picture. Earnings and revenue growth for these 31 companies are a bit weaker than what these same companies achieved in 2012 Q4. But the beat ratios (% of companies coming out with positive surprises) are modestly better on the earnings side and bit lower on the revenue side. It is hard to see a trend from these reports, but with 94% of the reports still to come, the more important story on the earnings front pertains to expectations from the coming reports.
J.P. Morgan and Wells Fargo achieved earnings growth of 25% and 16%, respectively. But total earnings for the rest of the Finance sector are expected to be down -6.4% from the same period last year, with tough comparisons at Bank of America and AIG (AIG)
J.P. Morgan’s strong investment banking results are a good omen for Goldman Sachs and Morgan Stanley, which has partly been showing up in upward earnings estimate revisions for Goldman. The composite picture for the Finance sector, combining the results that have come out with those still to come, is for earnings decline of -1.6% from the same period last year, an improvement from what was expected before the JPM/WFC results (-3.8%).
The aggregate earnings picture for the 471 S&P 500 reports still to come is for earnings decline of -3.5%, which compares to +1.1% earnings growth for the same group of companies in the preceding quarter. The composite view is showing total earnings decline of -1.6% on -0.5% drop in revenues. This compares to +2% total earnings growth in 2012 Q4 on roughly equivalent revenue gains.
My sense is that if this earnings season turns out to be along the lines of what we saw in the last two reporting seasons, then it wouldn’t change the market’s recent trajectory. But how were the last couple of earnings seasons? They were ‘OK’ -- neither good nor bad.
The recent ‘norm’ has been that about two-thirds of the companies would beat expectations, earnings and revenue growth would be essentially non-existent and the overall tone of guidance would be on the weak side. If we see a repeat performance, then estimates for Q2 (currently for up +3.5%) will come down, but estimates for Q3 (currently at +7.5%) and Q4 (currently at +14.5%) will hold up.
Zacks "Profit from the Pros" e-mail newsletter offers continuous coverage of the industries and the stocks poised to outperform the market. Subscribe to this free newsletter today by visiting http://at.zacks.com/?id=4988.
Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Len Zacks. As a PhD from MIT Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros by going to http://at.zacks.com/?id=3568.
Follow us on Twitter: http://twitter.com/zacksresearch
Join us on Facebook: http://www.facebook.com/ZacksInvestmentResearch
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.
Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.
Contact: Sheraz Mian
More From Zacks.com