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Consumer names to make or break earnings season: FactSet's Butters


Earnings season only started last week but according to John Butters of FactSet much of the suspense is already ruined, at least in terms of what we expect to hear from particular sectors. In the attached clip, Butters says that the ten major sectors will be split evenly between winners and losers but the spread between the have and have nots will be huge.

“Your top performers are going to be the telecom services sector with growth of about 24.5% and the utility sector with growth of about 6.7%. They’re really the two standouts when it comes to growth this quarter.”

Bringing up the rear will be the energy sector with a 7.5% decline, led by giants Exxon Mobil (XOM) and Chevron (CVX). If you’ve been paying attention to the lack of growth reported by JPMorgan (JPM) and Citigroup (C) you probably already figured out the financial sector was going to be dragging down the growth rate for corporate America overall. Butters says that’s largely a function of the regulatory adjustments and tweaks the industry has had to deal with for much of the last 5 years.

Not that all the suspense has been ruined. The battleground for this earnings season is in the consumer discretionary sector. No space saw estimates take a bigger hit over the first quarter as expected earnings growth started over 12% and were reduced by two-thirds. Already in the last two weeks Family Dollar (FDO) and Gap (GPS) have issued disappointing results.

As usual it’s less about the number than it is the guidance. With so many analysts expecting huge pick-ups in activity over the last nine months of the year, there could be some fireworks if they don’t reiterate those targets later this month.

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