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Having seen more than half of the third quarter earnings reports already, we probably don't any need any more evidence to pass a definitive judgment on this earnings season. And what is that verdict? Weak, disappointing, or better still: disappointingly weak.
We have a ton of earnings reports still to come. In fact, [url=http://www.jeremyparendt.com/Barbour-Paris.php]barbour france paris[/url] we have 716 companies coming out with results this week, including 106 S&P 500 companies. This means that by [url=http://www.ktbruce.co.uk/barbourjackets.php]barbour.co.uk[/url] the end of this week we will have seen 75% of third quarter earnings results. The aggregate metrics will change over the coming days as more and more companies release results.
But it is unlikely [url=http://www.rtnagel.com/airjordan.php]jordan pas cher[/url] that we will have toned down the 'disappointingly weak' description for this reporting season. When even companies like Apple (AAPL), Google (GOOG), Amazon (AMZN), Caterpillar (CAT) and DuPont (DD) come short of expectations, then you know that the earnings picture can't be good.
Here is the current status of the 270 S&P 500 companies that have reported third quarter results as of Friday, October 25th. Total earnings for these companies are down 2.8% from the same period last year and only 61% of the companies are beating earnings expectations. Total revenues are down 2.3%, but only 30.7% of the companies are able to beat revenue expectations.
In a typical quarter, roughly two-thirds [url=http://www.jeremyparendt.com/Barbour-Paris.php]barbour pas cher soldes[/url] of the companies would beat earnings expectations, and close to 60% would come ahead of revenue expectations. In the second quarter of 2012 -- which by no means was a strong earnings season -- we had 68.3% of the companies that have already reported Q3 results beat earnings expectations.
On the revenue side, the 'beat ratio' was 39.3% in the second quarter. The average earnings [url=http://team-highmoove.mtxserv.fr/index.php?file=Guestbook]woolrich sito ufficiale Play Guitar Like A Pro - written[/url] and revenue 'beat ratios' over the last four quarters for this same cohort of 270 companies is 69% and 58.2%, respectively.
We always whine that there isn't the much surprise in an 'earnings surprise' since management teams have fine-tuned expectations by under-promising and over-delivering. The third quarter earnings season thus far runs counter to this narrative, as the surprise this time around has predominantly been on the negative side. May be the redeeming feature of this earnings season is that the underperformance this time around restores our confidence in the earnings surprise all over again.
Total earnings for the 241 S&P 500 companies still to report results are expected to up 1.2% from the same period last year. The composite growth rate for third quarter total earnings -- where we combine results for the 270 companies [url=http://www.ktbruce.co.uk/barbourjackets.php]barbour jackets[/url] that have reported results with what is expected for the 241 companies - is for a decline of 1.1% and revenue decline of 2.5%.
Modestly down Tech sector earnings (down 0.3%) add to seven other sectors that have negative year-over-year comparisons. The predominantly negative tone of company guidance has started showing up in estimate revisions, but overall estimates for the fourth quarter and beyond remain elevated at present.
Total earnings are expected to grow 6.1% in the fourth quarter and in excess of 11% of in 2013. These growth expectations have come down from a few months back, but they still have more room to fall.
While earnings [url=http://www.sandvikfw.net/shopuk.php]hollister sale[/url] may no longer have much "newsy" value, we do have a bunch of market-moving economic reports on deck as well. The most important economic report coming out this week is the October non-farm payroll report coming out on Friday, but we also [url=http://www.tagverts.com/barbour.php]barbour deutschland[/url] have the manufacturing ISM report and other key reports.
Monday - 10/29
We have the September Personal Income & outlays report coming in the morning, with both the income and spending components expected to show improvement from the previous month's level.
On the earnings front, we will get results from Plum Creek Timber (PCL), Burger King (BKW - Snapshot Report) and Jones Lang LaSalle (JLL) in the morning. Zacks ESP, or Earnings Surprise Prediction -- our proprietary leading indicator of earnings surprises -- is showing [url=http://www.rtnagel.com/louboutin.php]louboutin[/url] PCL coming out with a significant positive earnings surprise.
Tuesday - 10/30
We have the August Case-Shiller home price index and October Consumer Confidence coming out in the morning.
We have Pfizer (TPFE), Archer Daniels Midland (ADM), Avon Products (AVP), AGCO Corp (AGCO), Seagate Technology (STX) and Valero Energy (VLO) reporting results today.
Based on Zacks ESP, AGCO and [url=http://www.teatrodeoro.com/hollisterde.php]hollister[/url] Seagate are expected to miss earnings expectations, while Avon and Valero are expected to come ahead.
Wednesday - 10/31
We will get the Chicago PMI report after the market opens. The [url=http://www.osterblade.com]moncler outlet[/url] Chicago PMI, more than any other regional manufacturing survey, has a very strong correlation with the national manufacturing ISM report coming out on Thursday.
We have Allstate (ALL), Eaton (ETN), [url=http://www.rtnagel.com/louboutin.php]louboutin pas cher[/url] Master Card (MA), Visa (V) and Ralph Lauren (RL) reporting results today.
Zacks ESP is indicating that Allstate will have a positive surprise, while Master Card, Visa, Ralph Lauren and Eaton will all come short of earnings expectations.
Thursday - 11/1
This is a very busy day on the economic calendar, with weekly Jobless Claims, monthly ADP employment, monthly Construction Spending and the monthly manufacturing ISM report coming out.
On the earnings front, we will get reports from ExxonMobil (XOM), Estee Lauder (EL), Kellogg (K) and Boston Beer (SAM - Snapshot Report) in the morning.
The Zacks ESP is showing Estee Lauder miss earnings expectations.
Friday - 11/2
We have the October non-farm payroll report coming out in the morning, with expectations of 120K job gains, compared to the 114K gains in the previous month. The unemployment rate is expected to remain unchanged at 7.8%. Given the politically charged backdrop in which this report will be coming out, let's hope that we don't have more Jack Welch moments this time around.
We have Chevron (CVX) and Washington [url=http://www.thehygienerevolution.com/hollister.php]hollister france[/url] Post (WPO) [url=http://www.fuchu.or.jp/~sachiko3/cgi/aska.cgi]moncler sito ufficiale Face P[/url] among the major earnings reports this morning.
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Sheraz Mian is the Director of Research at Zacks, in which capacity he leads the 60-analyst equity research team covering over 1,000 stocks, including the entire S&P 500. He oversees the creation of all content on the Zacks home page as well as the various subscription services. He also manages the Zacks Focus List and Top 10 portfolios.
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Q3 Earnings: Disappointingly WeakArticle Summary: Having seen more than half of the third quarter earnings reports [url=http://www.958tuan.com/xinxi/forum.php?mod=viewthread&tid=49009]hollister france Pregnant How to Improve Your Chances of Getting - written by So[/url] already, we probably don't any need any more evidence to pass a definitive judgment on this earnings season.
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