<![CDATA[Zacks Investment Research - Earnings Trends]]> http://www.zacks.com editor@zacks.com (Managing editor) webmaster@zacks.com (Webmaster) en-us 2013-06-20 06:23:35 GMT Sun, 03 Jan 2010 21:43:55 GMT hourly 1 2010-01-01T00:00+00:00 http://www.zacks.com <![CDATA[Zacks Investment Research Services - Earnings Trends]]> http://staticzacks.net/images/zacks/pyramid.png 55 62 <![CDATA[Q1 Earnings Season Coming to an End - Earnings Trends]]> Fri, 24 May 2013 08:51:01 GMT Q1 Earnings Season Coming to an End

The Q1 earnings season is effectively over, though reports from a few companies are still awaited. It’s been an ‘average’ earnings season, with some aspects that fall in the ‘below-average’ category. But overall, the Q1 earnings season has turned out to be not materially different from what we have been seeing over the last few quarters.

As of Friday, May 24th, we have Q1 results from 489 S&P 500 companies. Total earnings for these companies are up +2.8%, with 65.2% of companies beating earnings expectations. Revenues are down -1%, with only 41.9% of the companies coming ahead of top-line expectations. The median surprise is a respectable +2.8% for earnings and a very weak negative -0.4% for revenues.

The Q1 earnings growth rate and ‘beat ratio’ is comparable to the last few quarters. But the revenue growth rate is lower, with the beat ratio particularly weak in the current period. The composite growth rate for Q1, where we combine the results of the 489 companies that are out with the 11 still to come, is for a rise of +2.4% in total earnings on -1.1% lower revenues.

The predominantly negative tone of company guidance has prompted downward adjustments to estimates for the second quarter 2013, though estimates for the second half of the year have held up quite well. Total earnings in the second quarter are now expected to be up +1%, which is down from +4.8% in mid-March. As a result, the expected total earnings growth for this year has come down to +6% from 6.7% at the start of the Q1 earnings season. Consensus expectations reflect total earnings to increase an additional +11.5% in 2014.

Recent economic data from home and abroad will likely prompt a reassessment of these consensus expectations. But the big question is with respect to how the market would react to this expected downward adjustment to earnings expectations. It has essentially shrugged such revisions thus far, banking instead on the continued Fed support to keep the rally in place. With recent developments on the Fed front indicating that the central bank could be moving towards a ‘tapering’ decision in the not-too-distant future, the underwhelming earnings picture may finally start getting more attention.


Key Points

  • Total earnings for the 489 S&P members that have already reported first-quarter 2013  results are up +2.8%, with 65.2% of the companies beating earnings expectations. Total revenues are down -1%, with only 41.9% of the companies coming ahead of revenue expectations.  
  • The earnings growth rate and ‘beat ratio’ for these 489 companies is comparable to what these same companies reported in the last few quarters, though revenue performance is on the weak side.
  • Tech earnings were weak last quarter and they are even weaker this time around. The sector’s earnings weakness is broad based and not solely due to the negative comparisons for Apple AAPL and Intel INTC .
  • The composite growth rate for Q1, combining the 489 reports that have come out with the 11 still to come, is for +2.4% earnings growth on -1.1% lower revenues and modestly higher margins.
  • Total earnings are on track to reach a quarterly record in Q1 at $252.1 billion. Expectations are for a modestly lower total in Q2 and significant ramp up in the second half of the year. Total earnings in Q3 and Q4 are expected to reach $259.2 billion and $275.9 billion.   
  • Net margins are only modestly up in Q1, but start expanding from the third quarter onwards. For the full year 2013, net margins are expected to top the 2006 peak and expand even more in 2014.
  • Total earnings are expected to increase by +6% in 2013 and +11.5% in 2014. In dollar terms, earnings are expected to total $1.02 trillion in 2013 and $1.14 trillion in 2014, up from the 2012 total of $965 billion.
  • The bottom-up ‘EPS’ for the S&P 500 for 2013 and 2014 currently stands at $108.95 and $121.39, respectively. The top-down ‘EPS’ estimates for 2013 and 2014 currently stand at $107.83 and $114.80. It seems that Wall Street strategists are a bit less enthusiastic about the earnings picture than the analysts.  
     
READ THE FULL EARNINGS TRENDS REPORT by clicking here: Q1 Earnings Season Coming to an End
 
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Zacks Investment Research ]]> <![CDATA[Q1 Earnings Season Coming to an End - Earnings Trends]]> Fri, 24 May 2013 08:35:01 GMT Q1 Earnings Season Coming to an End

The Q1 earnings season is effectively over, though reports from a few companies are still awaited. It’s been an ‘average’ earnings season, with some aspects that fall in the ‘below-average’ category. But overall, the Q1 earnings season has turned out to be not materially different from what we have been seeing over the last few quarters.

As of Friday, May 24th, we have Q1 results from 489 S&P 500 companies. Total earnings for these companies are up +2.8%, with 65.2% of companies beating earnings expectations. Revenues are down -1%, with only 41.9% of the companies coming ahead of top-line expectations. The median surprise is a respectable +2.8% for earnings and a very weak negative -0.4% for revenues.

The Q1 earnings growth rate and ‘beat ratio’ is comparable to the last few quarters. But the revenue growth rate is lower, with the beat ratio particularly weak in the current period. The composite growth rate for Q1, where we combine the results of the 489 companies that are out with the 11 still to come, is for a rise of +2.4% in total earnings on -1.1% lower revenues.

The predominantly negative tone of company guidance has prompted downward adjustments to estimates for the second quarter 2013, though estimates for the second half of the year have held up quite well. Total earnings in the second quarter are now expected to be up +1%, which is down from +4.8% in mid-March. As a result, the expected total earnings growth for this year has come down to +6% from 6.7% at the start of the Q1 earnings season. Consensus expectations reflect total earnings to increase an additional +11.5% in 2014.

Recent economic data from home and abroad will likely prompt a reassessment of these consensus expectations. But the big question is with respect to how the market would react to this expected downward adjustment to earnings expectations. It has essentially shrugged such revisions thus far, banking instead on the continued Fed support to keep the rally in place. With recent developments on the Fed front indicating that the central bank could be moving towards a ‘tapering’ decision in the not-too-distant future, the underwhelming earnings picture may finally start getting more attention.


Key Points

  • Total earnings for the 489 S&P members that have already reported first-quarter 2013  results are up +2.8%, with 65.2% of the companies beating earnings expectations. Total revenues are down -1%, with only 41.9% of the companies coming ahead of revenue expectations.  
  • The earnings growth rate and ‘beat ratio’ for these 489 companies is comparable to what these same companies reported in the last few quarters, though revenue performance is on the weak side.
  • Tech earnings were weak last quarter and they are even weaker this time around. The sector’s earnings weakness is broad based and not solely due to the negative comparisons for Apple AAPL and Intel INTC .
  • The composite growth rate for Q1, combining the 489 reports that have come out with the 11 still to come, is for +2.4% earnings growth on -1.1% lower revenues and modestly higher margins.
  • Total earnings are on track to reach a quarterly record in Q1 at $252.1 billion. Expectations are for a modestly lower total in Q2 and significant ramp up in the second half of the year. Total earnings in Q3 and Q4 are expected to reach $259.2 billion and $275.9 billion.   
  • Net margins are only modestly up in Q1, but start expanding from the third quarter onwards. For the full year 2013, net margins are expected to top the 2006 peak and expand even more in 2014.
  • Total earnings are expected to increase by +6% in 2013 and +11.5% in 2014. In dollar terms, earnings are expected to total $1.02 trillion in 2013 and $1.14 trillion in 2014, up from the 2012 total of $965 billion.
  • The bottom-up ‘EPS’ for the S&P 500 for 2013 and 2014 currently stands at $108.95 and $121.39, respectively. The top-down ‘EPS’ estimates for 2013 and 2014 currently stand at $107.83 and $114.80. It seems that Wall Street strategists are a bit less enthusiastic about the earnings picture than the analysts.  
     
READ THE FULL EARNINGS TRENDS REPORT by clicking here: Q1 Earnings Season Coming to an End
 
APPLE INC (AAPL): Free Stock Analysis Report
 
AMER INTL GRP (AIG): Free Stock Analysis Report
 
INTEL CORP (INTC): Free Stock Analysis Report
 
MICROSOFT CORP (MSFT): Free Stock Analysis Report
 
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Zacks Investment Research ]]> <![CDATA[Q1 Earnings Season Winding Down - Earnings Trends]]> Fri, 10 May 2013 05:58:01 GMT Q1 Earnings Season Winding Down

With more than 90% of the market capitalization of the S&P 500 already out with Q1 earnings results, the reporting season is getting into its final stretch. In fact, the earnings season has ended for 9 of the 16 Zacks sectors, including Finance, Energy, Basic Materials and others. As is typically the case each earnings season, most of the remaining companies are in the Retail sector.   

It’s been an ‘average’ earnings season, with some aspects that fall in the ‘below-average’ category. But overall, the Q1 earnings season has turned out to be not materially different from what we have been seeing over the last few earnings seasons.

Including the earnings releases after the market close on Thursday, May 9th, we have Q1 results from 453 S&P 500 companies. Total earnings for these 453 companies that have reported results already are up +3.3%, with 65.3% of the companies beating earnings expectations. Revenues are down -0.9%, with only 41.1% of the companies coming ahead of top-line expectations. The median surprise is a respectable +3.2% for earnings and negative -0.4% for revenues.

The earnings growth rate and ‘beat ratio’ (% of companies coming out with positive surprises) for these 453 companies is comparable what these same companies reported in 2012 Q4 and the last few quarters. But the revenue growth rate is lower, with the beat ratio particularly weak in the current period.

The composite growth rate for Q1, where we combine the results of the 453 companies that are out with the 47 still to come, is for a rise of +2.4% in total earnings on -0.8% lower revenues. This is better performance than what was expected ahead of the earnings season when total earnings growth was expected to be in the negative.

The predominantly negative tone of company guidance has prompted downward adjustments to estimates for the second quarter 2013, but estimates for the second half of the year have held up quite well. Total earnings in the second quarter are now expected to be up +1.4%, which is down from +4.8% in mid-March. As such, consensus expectations are for first half 2013 total earnings growth of +1.9% to be followed by +9.6% growth in total earnings in the back half, which flows through into 2014 (+11.4%).    

Recent economic data from home and abroad will likely prompt a reassessment of these consensus expectations. But the big question is with respect to how the market would react to this expected downward adjustment to earnings expectations. It has essentially shrugged such revisions thus far, but we will have to wait and see what happens in the coming days.

Key Points

  • Total earnings for the 453 S&P members that have already reported first-quarter 2013  results are up +3.3%, with 65.3% of the companies beating earnings expectations. Total revenues are down -0.9%, with only 41.1% of the companies coming ahead of revenue expectations.
  • The earnings growth rate and ‘beat ratio’ for these 453 companies is comparable to what these same companies reported in the last few quarters, though revenue performance is on the weak side.
  • Tech earnings were weak last quarter and they are even weaker this time around. The sector’s earnings weakness is broad based and not solely due to the negative comparisons for Apple ((AAPL)) and Intel ((INTC)).
  • The composite growth rate for Q1, combining the 453 reports that have come out with the 47 still to come, is for +2.4% earnings growth on -0.8% lower revenues and modestly higher margins. (see Table 1)
  • Unlike the last many quarters, Finance is a drag on growth this quarter, with tough comparisons at Bank of America ((BAC)) and AIG ((AIG)) accounting for most of the sector’s earnings weakness.
  • There hasn’t been much earnings growth in recent quarters, but the absolute level of quarterly earnings is expected to have bottomed in 2012 Q4 and start going up from 2013 Q1 onwards.  
  • Net margins are expected to be essentially flat in Q1, but start expanding from the second quarter onwards. For the full year 2013, net margins are expected to top the 2006 peak and expand even more in 2014.
  • Total earnings are expected to increase by +6.2% in 2013 and +11.4% in 2014. In dollar terms, earnings are expected to total $1.03 trillion in 2013 and $1.14 trillion in 2014, up from the 2012 total of $965 billion.
  • The bottom-up ‘EPS’ for the S&P 500 for 2013 and 2014 currently stands at $109.07 and $121.51, respectively. The top-down ‘EPS’ estimates for 2013 and 2014 currently stand at $107.83 and $114.80. It seems that Wall Street strategists are a bit less enthusiastic about the earnings picture than the analysts.
READ THE FULL EARNINGS TRENDS REPORT by clicking here: Q1 Earnings Season Winding Down
 
APPLE INC (AAPL): Free Stock Analysis Report
 
AMER INTL GRP (AIG): Free Stock Analysis Report
 
BANK OF AMER CP (BAC): Free Stock Analysis Report
 
INTEL CORP (INTC): Free Stock Analysis Report
 
MICROSOFT CORP (MSFT): Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research ]]> <![CDATA[Q1 Earnings Season Winding Down - Earnings Trends]]> Thu, 09 May 2013 09:48:01 GMT Q1 Earnings Season Winding Down

With more than 90% of the market capitalization of the S&P 500 already out with Q1 earnings results, the reporting season is getting into its final stretch. In fact, the earnings season has ended for 9 of the 16 Zacks sectors, including Finance, Energy, Basic Materials and others. As is typically the case each earnings season, most of the remaining companies are in the Retail sector.   

It’s been an ‘average’ earnings season, with some aspects that fall in the ‘below-average’ category. But overall, the Q1 earnings season has turned out to be not materially different from what we have been seeing over the last few earnings seasons.

Including the earnings releases after the market close on Thursday, May 9th, we have Q1 results from 453 S&P 500 companies. Total earnings for these 316 companies that have reported results already are up +3.3%, with 65.3% of the companies beating earnings expectations. Revenues are down -0.9%, with only 41.1% of the companies coming ahead of top-line expectations. The median surprise is a respectable +3.2% for earnings and negative -0.4% for revenues.

The earnings growth rate and ‘beat ratio’ (% of companies coming out with positive surprises) for these 453 companies is comparable what these same companies reported in 2012 Q4 and the last few quarters. But the revenue growth rate is lower, with the beat ratio particularly weak in the current period.

The composite growth rate for Q1, where we combine the results of the 453 companies that are out with the 47 still to come, is for a rise of +2.4% in total earnings on -0.8% lower revenues. This is better performance than what was expected ahead of the earnings season when total earnings growth was expected to be in the negative.

The predominantly negative tone of company guidance has prompted downward adjustments to estimates for the second quarter 2013, but estimates for the second half of the year have held up quite well. Total earnings in the second quarter are now expected to be up +1.4%, which is down from +4.8% in mid-March. As such, consensus expectations are for first half 2013 total earnings growth of +1.9% to be followed by +9.6% growth in total earnings in the back half, which flows through into 2014 (+11.4%).    

Recent economic data from home and abroad will likely prompt a reassessment of these consensus expectations. But the big question is with respect to how the market would react to this expected downward adjustment to earnings expectations. It has essentially shrugged such revisions thus far, but we will have to wait and see what happens in the coming days.

Key Points

  • Total earnings for the 453 S&P members that have already reported first-quarter 2013  results are up +3.3%, with 65.3% of the companies beating earnings expectations. Total revenues are down -0.9%, with only 41.1% of the companies coming ahead of revenue expectations.
  • The earnings growth rate and ‘beat ratio’ for these 453 companies is comparable to what these same companies reported in the last few quarters, though revenue performance is on the weak side.
  • Tech earnings were weak last quarter and they are even weaker this time around. The sector’s earnings weakness is broad based and not solely due to the negative comparisons for Apple ((AAPL)) and Intel ((INTC)).
  • The composite growth rate for Q1, combining the 453 reports that have come out with the 47 still to come, is for +2.4% earnings growth on -0.8% lower revenues and modestly higher margins. (see Table 1)
  • Unlike the last many quarters, Finance is a drag on growth this quarter, with tough comparisons at Bank of America ((BAC)) and AIG ((AIG)) accounting for most of the sector’s earnings weakness.
  • There hasn’t been much earnings growth in recent quarters, but the absolute level of quarterly earnings is expected to have bottomed in 2012 Q4 and start going up from 2013 Q1 onwards.  
  • Net margins are expected to be essentially flat in Q1, but start expanding from the second quarter onwards. For the full year 2013, net margins are expected to top the 2006 peak and expand even more in 2014.
  • Total earnings are expected to increase by +6.2% in 2013 and +11.4% in 2014. In dollar terms, earnings are expected to total $1.03 trillion in 2013 and $1.14 trillion in 2014, up from the 2012 total of $965 billion.
  • The bottom-up ‘EPS’ for the S&P 500 for 2013 and 2014 currently stands at $109.07 and $121.51, respectively. The top-down ‘EPS’ estimates for 2013 and 2014 currently stand at $107.83 and $114.80. It seems that Wall Street strategists are a bit less enthusiastic about the earnings picture than the analysts.
READ THE FULL EARNINGS TRENDS REPORT by clicking here: Q1 Earnings Season Winding Down
 
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Zacks Investment Research ]]> <![CDATA[Market Shrugs Underwhelming Earnings Season - Earnings Trends]]> Tue, 30 Apr 2013 10:36:01 GMT Market Shrugs Underwhelming Earnings Season

With more than 70% of the market capitalization of the S&P 500 already out with Q1 earnings results, we have a fairly representative sample from which to draw conclusions about this earnings season. It’s been an ‘average’ earnings season, with some aspects that fall in the ‘below-average’ category. But overall, the Q1 earnings season has turned out to be not materially different from what we have been seeing over the last few earnings seasons.

Including the earnings releases after the market close on Tuesday, April 30th, we have Q1 from 316 S&P 500 companies. Total earnings for these 316 companies that have reported results already are up +2.6%, with 66.8% of the companies beating earnings expectations. Revenues are down -2.1%, with only 36.1% of the companies coming ahead of top-line expectations. The median surprise is a respectable +3.2% for earnings and negative -0.4% for revenues.

The earnings growth rate and ‘beat ratio’ (% of companies coming out with positive surprises) for these 316 companies 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.

The composite growth rate for Q1, where we combine the results of the 316 companies that are out with the 184 still to come, is for a rise of +1.6% in total earnings on -0.9% lower revenues. This compares to the earnings growth rate of +2% on +3.7% higher revenues.

The predominantly negative tone of company guidance has prompted downward adjustments to estimates for the second quarter 2013, but estimates for the second half of the year have held up quite well. Total earnings in the second quarter are now expected to be up +1.4%, which is down from +2.2% a week ago and +3.6% two weeks back. As such, consensus expectations are for first half 2013 total earnings growth of +1.5% to be followed by +10% growth in total earnings in the back half, which flows through into 2014 (+11.3%).    

Recent economic data from home and abroad will likely prompt a reassessment of these consensus expectations. But the big question is with respect to how the market would react to this expected downward adjustment to earnings expectations. It has essentially shrugged such revisions thus far, but we will have to wait and see what happens in the coming days.

Key Points

  • Total earnings for the 316 S&P members that have already reported first-quarter 2013  results are up +2.6%, with 66.8% of the companies beating earnings expectations. Total revenues are down -2.1%, with only 36.1% of the companies coming ahead of revenue expectations.  
  • The earnings growth rate and ‘beat ratio’ for these 314 companies is comparable to what these same companies reported in the last few quarters, though revenue performance is on the weak side.
  • Tech earnings were weak last quarter and they are even weaker this time around. The sector’s earnings weakness is broad based and not solely due to the negative comparisons for Apple (AAPL) and Intel (INTC).
  • The composite growth rate for Q1, combining the 314 reports that have come out with the 186 still to come, is for +1.6% earnings growth on -0.9% lower revenues and modestly higher margins.
  • Tough comparisons account for the weak earnings growth picture. Total earnings reached their highest quarterly total in the first quarter of 2012 and have yet to get back to that level.
  • Unlike the last many quarters, Finance is a drag on growth this quarter, with tough comparisons at Bank of America (BAC) and AIG (AIG) accounting for most of the sector’s earnings weakness.
  • There hasn’t been much earnings growth in recent quarters, but the absolute level of quarterly earnings is expected to have bottomed in 2012 Q4 and start going up from 2013 Q2 onwards.  
  • Net margins are expected to be essentially flat in Q1, but start expanding from the second quarter onwards. For the full year 2013, net margins are expected to top the 2006 peak and expand even more in 2014.
  • Total earnings are expected to increase by +6.2% in 2013 and +11.3% in 2014. In dollar terms, earnings are expected to total $1.03 trillion in 2013 and $1.14 trillion in 2014, up from the 2012 total of $965 billion.
  • The bottom-up ‘EPS’ for the S&P 500 for 2013 and 2014 currently stands at $109.19 and $121.53, respectively. The top-down ‘EPS’ estimates for 2013 and 2014 currently stand at $107.83 and $114.80. It seems that Wall Street strategists are a bit less enthusiastic about the earnings picture than the analysts.  
     
READ THE FULL EARNINGS TRENDS REPORT by clicking here: Market Shrugs Underwhelming Earnings Season
 
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Zacks Investment Research ]]> <![CDATA[Q1 Earnings Season: Another Average Reporting Period - Earnings Trends]]> Tue, 23 Apr 2013 10:18:01 GMT Q1 Earnings Season: Another Average Reporting Period

We are in the thick of the 2013 Q1 earnings season, with results from 148 S&P 500 companies already out. A lot of earnings reports are still to come, but these 148 companies account for 42.5% of the index’s total market capitalization and together account for 45.5% of the index’s total Q1 earnings. As such, we have a fairly representative sample of reports in front of us from which to pass judgment on the Q1 earnings season.  

Investors seem to be having a hard time judging this earnings season, alternating between bouts of optimism and hand-wringing. But from out vantage point, the issue isn’t that complicated. We have no hesitation in stating that Q1 results are not that different from what we have been seeing in the last few quarters.

There are no doubt pockets of weakness – most companies are missing revenue expectations and positive surprises in the Tech sector are on the light side. But the overall level of growth (or lack thereof), surprises, and guidance is not materially weaker than what we saw from these companies in 2012 Q4 and the quarter before.
 
As such, the earnings question swirling around in the market at present is not so much about the Q1 earnings season, but rather what these results tell us about the appropriateness of expectations for the coming periods, particularly the second half of 2013 and next year.

Consensus expectations for the first half of 2013 aren’t looking for much earnings growth (up only +1.4% year over year), but estimates for the back half of the year represent a significant ramp up (up +10.8%) in growth, which then continues into 2014 (up +11.6%).

Recent economic data from home and abroad will likely prompt a reassessment of these consensus expectations. But the big question is with respect to how the market would react to this expected downward adjustment to earnings expectations. It has essentially shrugged such revisions thus far, but we will have to wait and see what happens in the coming days.

Key Points

  • Total earnings for the 148 S&P members that have already reported first-quarter 2013  results are up +1.8%, with 67.6% of the companies beating earnings expectations. Total revenues are up +3.8%, with only 32.4% of the companies coming ahead of revenue expectations.  
  • Overall results are comparable to what these same 148 companies reported in 2012 Q4, though revenue surprises have overwhelmingly been on the negative side.
  • Tech earnings were weak last quarter and they are even weaker this time around. The sector’s earnings weakness is broad based and not solely due to the negative comparisons for Apple (AAPL) and Intel (INTC).
  • The composite earnings growth rate for Q1, combining the 148 reports that have come out with the 352 still to come, is +0.1% on +0.3% higher revenues and essentially flat revenues.
  • Tough comparisons account for the weak earnings growth picture. Total earnings reached their highest quarterly total in the first quarter of 2012 and have yet to get back to that level.
  • Unlike the last many quarters, Finance is a drag on growth this quarter, with tough comparisons at Bank of America (BAC) and AIG (AIG) accounting for most of the sector’s earnings weakness.
  • There hasn’t been much earnings growth in recent quarters, but the absolute level of quarterly earnings is expected to have bottomed in 2012 Q4 and start going up from 2013 Q2 onwards.  
  • Net margins are expected to be essentially flat in Q1, but start expanding from the second quarter onwards. For the full year 2013, net margins are expected to top the 2006 peak and expand even more in 2014.
  • Total earnings are expected to increase by +6.5% in 2013 and +11.6% in 2014. In dollar terms, earnings are expected to total $1.03 trillion in 2013 and $1.15 trillion in 2014, up from the 2012 total of $965 billion.
  • The bottom-up ‘EPS’ for the S&P 500 for 2013 and 2014 currently stands at $109.49 and $122.17, respectively. The top-down ‘EPS’ estimates for 2013 and 2014 currently stand at $107.83 and $114.80. It seems that Wall Street strategists are a bit less enthusiastic about the earnings picture than the analysts.  


 

READ THE FULL EARNINGS TRENDS REPORT by clicking here: Q1 Earnings Season: Another Average Reporting Period
 
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Zacks Investment Research ]]> <![CDATA[Q1 Earnings Season Ramps Up - Earnings Trends]]> Mon, 15 Apr 2013 09:07:01 GMT Q1 Earnings Season Ramps Up

It is still early going for the 2013 Q1 earnings season, with results from only 34 S&P 500 members thus far. No clear trends have emerged yet, but we will have seen results from 1/5th of the index’s total membership by the end of this week and should be in in a better position to evaluate this earnings season.

Total earnings for these 34 companies are up +16% from the same period last year, with 64.7% of them beating earnings expectations. Total revenues for these companies are up +5.5% and 41.2% of them have come out with positive top-line surprises. This is better than pre-season expectations, but is weaker than what these same companies reported in the preceding quarter.   

Earnings at the three universal banks – J.P. Morgan (JPM), Wells Fargo (WFC), and Citigroup (C) - came in better than expected Growth. But they were less than ‘pure’ given the outsized contributions from reserve releases, particularly at J.P. Morgan and Wells Fargo.  The deceleration in the mortgage business, continued net interest margins pressures and weak loan demand provide a less than inspiring read through for the rest of the banking group. On the positive side, momentum in the capital markets business bodes well for investment banks, particularly Goldman Sachs (GS). Total Finance sector earnings in Q1 after including the results from the three universal banks are now for growth of +0.8%, which is an improvement from where expectations stood last week.

Total earnings for the S&P 500 as a whole are expected to down -1.8% from the same period last year, reflecting -0.6% decline in revenues and modest contraction in margins. The mediocre growth picture is a reflection of tough comparisons and underwhelming management guidance – the first quarter of 2012 remains the high point of total quarterly earnings since the current earnings cycle got underway in 2009.

But lack of growth in the first quarter is not much of a concern for the market, as investors are looking ahead to period of robust growth later in the year, particularly in the back half of 2013 and all of 2014. The expectation is that the +0.9% earnings growth in the first half of 2013 will be followed by double-digit earnings growth in the second half of the year and into next year. Driving these optimistic growth expectations are strong revenue gains and further expansion in margins which are already in record territory.   

Revenue growth is a function of economic growth. And while GDP growth has been fairly erratic in recent quarters, the expectation is for a sustained period of growth starting in the second half of the year. Hard to tell how reasonable the revenue growth expectations are since they are so closely tied to the uncertain economic backdrop.

But margins are a different story. Expecting margins to continue expanding after they have crossed the prior cyclical peak does not seem reasonable or plausible.

Key Points

  • The first-quarter 2013  reporting season has gotten underway. The 34 companies that have reported results present a mixed picture, with a few high-profile negative surprises.
  • Total Q1 earnings  are expected to be down -1.8% from the same period last year, which reflects -0.6% drop in revenues and a modest contraction in margins.
  • Tough comparisons and weak management guidance account for the weak earnings growth picture. Total earnings reached their highest quarterly total in the first quarter of 2012 and have yet to get back to that level.
  • Unlike the last many quarters, Finance is a drag on growth this quarter, with tough comparisons at Bank of America (BAC) and AIG (AIG) accounting for most of the sector’s earnings weakness.
  • Tech earnings were weak last quarter and they are expected to be even weaker this time around. The sector’s earnings weakness is broad based and not solely due to the negative comparisons for Apple (AAPL) and Intel (INTC).
  • There hasn’t been much earnings growth in recent quarters, but the absolute level of quarterly earnings is expected to have bottomed in 2012 Q4 and start going up from 2013 Q2 onwards.  
  • Total earnings in the first half of 2013 are expected to increase by +0.9%, but ramp up to a +10.8% growth pace in the back half of the year and a further +11.6% in 2014. A combination of revenue gains and margin expansion reflect the positive outlook for the back half of the year.
  • Net margins modestly contract in the first quarter, but start expanding from the second quarter onwards. For the full year 2013, net margins are expected to top the 2006 peak and expand even more in 2014.
  • Total earnings are expected to increase by +6.7% in 2013 and +11.6% in 2014. In dollar terms, earnings are expected to total $1.03 trillion in 2013 and $1.15 trillion in 2014, up from the 2012 total of $965 billion.
  • The bottom-up ‘EPS’ for the S&P 500 for 2013 and 2014 currently stands at $109.71 and $122.44, respectively. The top-down ‘EPS’ estimates for 2013 and 2014 currently stand at $107.83 and $114.80. It seems that Wall Street strategists are a bit less enthusiastic about the earnings picture than the analysts. 
     

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Zacks Investment Research ]]> <![CDATA[Q1 Earnings Season Takes the Spotlight - Earnings Trends]]> Tue, 09 Apr 2013 15:34:01 GMT
It has been mixed bag thus far, with negative surprises from the likes of Oracle (ORCL) and FedEx (FDX). But it would be premature to extrapolate the performance of the 22 Q1 results onto the entire earnings season.

Growth expectations remain weak, a reflection of touch comparisons and underwhelming management guidance – the first quarter of 2012 remains the high point of total quarterly earnings since the current earnings cycle got underway in 2009. These tough comparisons are particularly pronounced in the Finance sector, which is expected to experience an earnings decline after many quarters of double-digit growth. The outlook for Tech is even weaker and fairly widespread, which comes after the sector’s underwhelming performance in the previous quarter.

But lack of growth in the first quarter is not much of a concern for the market, as investors are looking ahead to period of robust growth later in the year, particularly in the back half of 2013 and all of 2014. The expectation is that the +0.7% earnings growth in the first half of 2013 will be followed by double-digit earnings growth in the second half of the year and into next year. Driving these optimistic growth expectations are strong revenue gains and further expansion in margins which are already in record territory.   

Revenue growth is a function of economic growth. And while GDP growth has been fairly erratic in recent quarters, the expectation is for a sustained period of growth starting in the second half of the year. Hard to tell how reasonable the revenue growth expectations are since they are so closely tied to the uncertain economic backdrop.

But margins are a different story. Expecting margins to continue expanding after they have crossed the prior cyclical peak does not seem reasonable or plausible.

Key Points:

  • The first-quarter 2013  reporting season has gotten underway. The 22 companies that have reported results present a mixed picture, with a few high-profile negative surprises.
  • Total Q1 earnings  are expected to be down -2.6% from the same period last year, which reflects -0.9% drop in revenues and a modest contraction in margins.
  • Tough comparisons and weak management guidance account for the weak earnings growth picture. Total earnings reached their highest quarterly total in the first quarter of 2012 and have yet to get back to that level.
  • Unlike the last many quarters, Finance will be a drag on growth this quarter. Tough comparisons for Bank of America (BAC) and AIG (AIG) account for most of the earnings weakness.
  • Tech earnings were weak last quarter and they are expected to be even weaker this time around. The sector’s earnings weakness is broad-based and not solely due to the negative comparisons for Apple (AAPL) and Intel (INTC).
  • There hasn’t been much earnings growth in recent quarters, but the absolute level of quarterly earnings is expected to have bottomed in 2012 Q4 and start going up from 2013 Q2 onwards.  
  • Total earnings in the first half of 2013 are expected to increase by +0.7%, but ramp up to a +10.9% growth pace in the back half of the year and a further +11.7% in 2014. A combination of revenue gains and margin expansion reflect the positive outlook for the back half of the year.
  • Net margins modestly contract in the first quarter, but start expanding from the second quarter onwards. For the full year 2013, net margins are expected to top the 2006 peak and expand even more in 2014.
  • Total earnings are expected to increase by +6.8% in 2013 and +11.7% in 2014. In dollar terms, earnings are expected to total $1.03 trillion in 2013 and $1.15 trillion in 2014, up from the 2012 total of $965 billion.
  • The bottom-up ‘EPS’ for the S&P 500 for 2013 and 2014 currently stands at $109.75 and $122.60, respectively. The top-down ‘EPS’ estimates for 2013 and 2014 currently stand at $107.83 and $114.80. It seems that Wall Street strategists are a bit less enthusiastic about the earnings picture than the analysts.
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Zacks Investment Research ]]> <![CDATA[Earnings Season Winding Down at Par - Earnings Trends]]> Fri, 08 Feb 2013 10:04:01 GMT
Earnings are not great and offer nothing to be excited about, but they are not bad either. Perhaps expectations had fallen enough in the run up to the reporting season that the actual results looked better in comparison. Please recall that as recently as early October, fourth quarter earnings were expected to be up +7%, which dropped to +0.5% by early January. We don’t have much growth to speak of, but that wasn’t unexpected.

The improved level of positive surprises aside, management guidance has not been that bad either. Management guidance is not ‘positive’ in the sense that they are guiding higher – they are not. But barring a few exceptions, they are not overwhelmingly guiding lower either, as was the case in the third quarter. We have started seeing downward adjustments to estimates for the coming quarters, particularly the first half of the year, but not at the pace that we experienced with the fourth quarter estimates.

Total earnings for the 333 S&P 500 companies (76.6% of the index’s total market cap) that have reported results are up +2.7% from the same period last year, with 67.3% of the companies beating expectations and a median surprise of +3.2%. Revenues are up +0.5%, with 62.5% of the companies beating top-line expectations and a median revenue surprise of +0.9%.

Combining the reports that have come out with the ones still to come, the composite fourth quarter earnings growth rate is +1.7%, which compares to a flat reading in the third quarter, but lower than what we have been seeing the quarters prior to that. But the expectation is for earnings growth to resume from the second quarter of 2013 and increase materially in the back half of the year. We have started expectations for 2013 come down a bit, but there is likely much more room to go.

Key Points

  • The bulk of the fourth quarter reporting season is now behind us, with results from 333 S&P 500 companies already out. These 333 companies account for 76.6% of the index’s total market cap and contribute 78.1% of the index’s total Q4 earnings.  
  • Total earnings  for these 333 companies are up +2.7%, a beat ratio of 67.3%, and median surprise of +3.2%. Total revenues are up +0.5%, beat ratio of 62.5%, and median surprise of +0.9%.  
  • Finance is the key driver of growth, with total Finance sector earnings up +18.8% from the same period last year. Excluding Finance, total earnings would be down -0.3%.
  • Tech has been a laggard, with earnings growth almost non-existent and many of the industry leaders including Apple (AAPL), Google (GOOG) and  Microsoft (MSFT) coming short of revenue expectations. Total Tech sector earnings are up +2.4%.
  • Industrial Products is particularly weak, both in terms of growth as well as negative surprises. The weak comparisons are not limited to Caterpillar (CAT), the issue is quite widespread, with the fourth quarter on track to be the weakest earnings season for the group in the last 8 quarters.   
  • Combining the results that have come out with those still to come, the composite earnings growth rate for the fourth quarter is +1.7%, which compares to flat growth in the third quarter. Excluding Finance, the composite fourth quarter earnings growth rate drops to 0% (down -0.04%), compared to the decline of -4.1% for the ex-Finance group in the third quarter.
  • The Basic Materials sector is expected to have +11.5% higher earnings this quarter after back-to-back negative earnings growth in the last four quarters. The growth improvement in this economically sensitive sector is primarily due to easy comparisons as the overall backdrop remains challenging.   
  • The low earnings growth trend is expected to carry over into the first quarter of 2013, but expectations are for significant improvement thereafter, particularly in the second half of 2013.
  • Net margins are essentially flat from the year-earlier period and down sequentially. Seven of the 16 Zacks sectors are expected to see margins contract in the quarter, including Tech. But margins are expected to improve back up in the first quarter.
  • For the full-year 2013, total earnings are expected to increase by +6.9% after the +3.9% gain in 2012. Total earnings are expected to be up +11.8% in 2014.
  • In dollar terms, fourth quarter bottom-up composite earnings total $240.2 billion, up from $236.1 billion in the fourth quarter of 2011.
  • For full-year 2013, total bottom-up earnings are expected to reach $1.03 trillion, up from the 2012 total of $0.96 trillion. The bottom-up ‘EPS’ for the S&P 500 for 2013 and 2014 currently stands at $109.35 and $122.28, respectively.

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Zacks Investment Research ]]> <![CDATA[A Good-Enough Earnings Season - Earnings Trends]]> Thu, 31 Jan 2013 09:49:01 GMT
Not only are positive surprises at levels better than the previous quarter and comparable to the last many, but we are not getting much negative guidance from management teams either. One could discount the positive surprises as largely a function of lowered expectation, which had sharply come down in the run-up to the start of the earnings season. But the absence of negative guidance has to count as a net positive in an otherwise no-growth earnings environment.   

Total earnings for the 235 S&P 500 companies that have already reported results, as of Thursday, January 31th, are up +1.9% from the same period last year, with 67.2% of the companies beating expectations with a median surprise of +3.2%. Revenues are up +0.9%, with 54.9% of the companies beating top-line expectations and a median revenue surprise of +0.9%.

Combining the reports that have come out with the ones still to come, the composite fourth quarter earnings growth rate is +1.5%. The actual dollar amount of fourth quarter earnings is the lowest quarterly total in 2012 (see Table 5). But the expectation is for earnings growth to resume from the second quarter of 2013 and increase materially in the back half of the year. We have started expectations for 2013 come down a bit, but there is likely much more room to go.

Key Points

  • We are past the half-way mark in fourth quarter reporting season, with the 235 S&P 500 companies that have reported results already accounting for 57.8% of the index’s total market cap and contributing 60.2% of the index’s total Q4 earnings.  
  • Total earnings for the 235 S&P 500 companies that have already reported results are up +1.9%, a beat ratio of 67.2%, and median surprise of +3.2%. Total revenues are up +0.3%, beat ratio of 54.9%, and median surprise of +0.9%. The beat ratios and median surprises are better than the third quarter, but remain roughly in-line with historical levels.  
  • Finance is the key driver of earnings growth, with total Finance sector earnings that have come out up +26.1% from the same period last year. Excluding Finance, total earnings growth for the reports that have come out would be down -2.8%.
  • Tech has been a laggard, with earnings growth almost non-existent and many of the industry leaders including Apple (AAPL), Google (GOOG) and  Microsoft (MSFT) coming short of revenue expectations. Total Tech sector earnings are up +2.4%.  
  • Total earnings for the 265 S&P 500 companies that have still to report results are expected to be down -1.4%, with the remaining Finance and Tech companies accounting for most of the weakness.
  • Combining the results that have come out with those still to come, the composite earnings growth rate for the fourth quarter is +1.5%, which compares to the -0.1% decline in the third quarter. Excluding Finance, the composite fourth quarter earnings growth rate drops to a decline of -0.4%, compared to the decline of -4.1% for the ex-Finance group in the third quarter.
  • The Basic Materials sector is expected to have +11.5% higher earnings this quarter after back-to-back negative earnings growth in the last four quarters. The growth improvement in this economically sensitive sector is primarily due to easy comparisons as the overall backdrop remains challenging.   
  • The low earnings growth trend is expected to carry over into the first quarter of 2013, but expectations are for significant improvement thereafter, particularly in the second half of 2013.
  • Net margins are essentially flat from the year-earlier period and down sequentially. Seven of the 16 Zacks sectors are expected to see margins contract in the quarter, including Tech. But margins are expected to improve back up in the first quarter.
  • For the full-year 2013, total earnings are expected to increase by +7.3% after the +3.7% gain in 2012. Total earnings are expected to be up +11.4% in 2014.
  • In dollar terms, fourth quarter composite earnings total $235.5 billion, up from $232 billion in the fourth quarter of 2011. For full-year 2013, total earnings are expected to reach $1.03 trillion, up from the 2012 total of $0.96 trillion.

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