For Immediate Release
Chicago, IL – April 29, 2013– Zacks.com releases the list of companies likely to issue earnings surprises. This week’s list includes Pfizer (PFE), Eaton Corp (ETN), Cummins (CMI) and Time Warner (TWX).
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.
Grading the Q1 Earnings Season
We have crossed the halfway mark in the Q1 earnings season, with results from 271 S&P 500 companies already out (as of Friday, April 26th). Please note that these 271 companies are more than just 54.2% of the index’s total membership – they account for 65.9% of the index’s total market capitalization and bring in 67.8% of all Q1 earnings. In other words, while there are still plenty of reports to come, we have seen roughly two-thirds of Q1 earnings already.
This week brings in results from 844 companies, including 129 S&P 500 members. This includes operators like Pfizer (PFE), Eaton Corp (ETN), Cummins (CMI), Time Warner (TWX) and many others. By the end of this week, we will have seen Q1 earnings reports from 80% of the S&P 500 members.
We have seen enough Q1 earnings reports by now to be able to judge it with a fair amount of confidence. So what is the judgment then?
I would grade the Q1 earnings season as between ‘average’ and ‘below average’ – it’s definitely neither ‘good’ nor ‘bad.’ This isn’t materially different from what we have been seeing over the last few earnings seasons. What this means is that about two-thirds of the companies beat earnings expectations, but growth is essentially non-existent. A key difference relative to 2012 Q4 earnings season is the very low level of positive revenue surprises.
The Q1 Earnings Scorecard
Total earnings for the 271 companies that have reported results already are up +2.5%, with 67.9% of the companies beating earnings expectations with a median surprise of +3.2%. Revenues are down -1.45%, with only 38% of the companies coming ahead of top-line expectations, with a median surprise of (negative) -0.4%.
The earnings growth rate and ‘beat ratio’ (% of companies coming out with positive surprises) for these 271 is comparable what these same companies reported in 2012 Q4 and the last few quarters. But the revenue growth rate and ‘beat ratio’ is lower, with the beat ratio particularly weak in the current period.
In addition to the revenue weakness, another notable aspect of the Q1 earnings season has been the soft Technology results. The sector’s growth rates and ‘beat ratios’ are weaker than the same for the S&P 500 as well as the group reported in 2012 Q4. With 80.8% of the sector’s total market capitalization already out with Q1 results, total earnings for the sector are down 3.1%, with 61.9% of the sector companies beating earnings expectations (vs. the S&P 500 average of 67.9%). The revenue side for the sector isn’t that bad, which goes on to spotlight the sector’s margin problems.
The aggregate earnings picture for the 229 S&P 500 reports still to come is for an earnings decline of -1.8%, which compares to +3.8% earnings growth for the same group of companies in the preceding quarter. The composite growth rate for Q1, where we combine the results of the 271 companies that are out with the 229 still to come, is for a rise of +1.4% in total earnings on -0.2% lower revenues.
Earnings will have plenty of competition for the market’s attention as the week is full of top-tier economic reports. The most important report of the week will be the April non-farm payroll report coming out on Friday, but the two ISM report and the March Personal Income & outlays reports will be equally important. Economic data lately has been overwhelmingly disappointing, though it hasn’t really mattered that much with investors given their reliance on the Fed to keep supporting the market.
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: https://twitter.com/zacksresearch
Join us on Facebook: https://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