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Zacks Earnings Preview: Wal-Mart, Nordstrom, Abercrombie & Fitch, Safeway and Toll Brothers

Zacks Equity Research

For Immediate Release

Chicago, IL – February 19, 2013– Zacks.com releases the list of companies likely to issue earnings surprises. This week’s list includes Wal-Mart (WMT), Nordstrom (JWN), Abercrombie & Fitch (ANF), Safeway (SWY) and Toll Brothers (TOL).

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Earnings Enter the Final Stretch

We still have plenty of Q4 earnings reports to come, but the bulk of the earnings season is now behind us, with results from 395 S&P 500 companies already out, as of Friday, February 15. Please note that while these 395 companies account for 86.4% of the index’s total market capitalization and bring in 86.8% of all Q4 earnings.

This holiday-shortened week is the last major reporting week of the Q4 earnings season, with results from 362 companies, including 48 S&P 500 members. This includes industry leaders like Wal-Mart (WMT), Nordstrom (JWN), Abercrombie & Fitch (ANF), Safeway (SWY), Toll Brothers (TOL) and many others. By the end of this week, we will have Q4 earnings reports from 443 S&P 500 companies. The Retail sector will be the only group by the end of the week that will have more than half of its Q4 results still awaited (retailers typically have fiscal Q4 period ends in January).

The reality of the Q4 earnings season is that it has turned out to be not as bad as many of us suspected. Leaving aside anemic earnings growth, on most other metrics the fourth quarter reporting season is quite good. Not only are the ratio and magnitude of surprises better than the previous quarter and comparable to the last many, but the tone of management guidance has also been less worrisome than was the case in the third quarter reporting season.

Total earnings for the 395 S&P 500 companies that have come out with Q4 results are up 2.8% from the same period last year, with 66.6% beating expectations with a median surprise of +3.4%. Total revenues are up 1.3%, with 63% of the companies beating revenue expectations, with a median revenue surprise of +0.8%.

Excluding the Finance sector, total earnings are barely in the positive column (up 0.1%), while total revenues are up 0.3%. The composite growth rate for Q4, where we combine the reports that have come out with those still to come, is +2.2% for total earnings and up +0.6% excluding Finance.

Expectations for the coming quarters have started coming down, but they still represent a meaningful improvement from what we saw in 2012. Total earnings are expected to be down 3.2% in the first quarter, up 4% in the second quarter, +7.2% in the third quarter and +14.1% in the fourth quarter of 2013. For full years, total earnings are expected to be up +6.9% in 2013 and 11.7% in 2014.

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Read the analyst report on WMT

Read the analyst report on JWN

Read the analyst report on ANF

Read the analyst report on SWY

Read the analyst report on TOL

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