Will We Finally See Some Sunshine? - Earnings Preview
March 28 2014 - 11:20AM
Zacks
Will We Finally See Some Sunshine?
The focus this week is on the economy, with a number of top-tier
economic reports dominating the market’s attention. But the
earnings season is slowly gaining attention as well.
We don’t have that many earnings reports this week, but more than a
dozen S&P 500 companies have already reported 2014 Q1 results
(companies with fiscal quarters ending in February get counted as
part of the Q1 tally). The reporting cycle will start ramping up
materially from next week onwards after Alcoa’s
(AA) release. The results thus far from the likes of
Nike (NKE), FedEx (FDX),
Oracle (ORCL) and others have been underwhelming.
But it’s way too early to draw any firm conclusions from what we
have seen thus far.
The economic data coming out this week, particularly Tuesday’s
manufacturing ISM survey and Friday’s non-farm payroll report, is
expected to show that the economy is coming out of the
weather-induced soft patch. The U.S economy did reasonably well in
the second half of 2013, but lost momentum at the start of this
year. Investors resigned themselves to the weather explanation for
the soft data at the start of the year, but expect to see data
showing the economy springing back into action in the coming
days.
The market is looking for evidence that the U.S. economy is on
track to graduate to a higher growth pace this year than has been
the case over the last few years. The first quarter has essentially
been washed out because of weather, but growth is expected to
resume from the second quarter onwards, with GDP growth going above
the +3%-plus pace in the second half and continuing into 2015. This
favorable economic outlook is at the root of strong corporate
earnings estimates as well.
Expectations for 2014 Q1
Estimates for 2014 Q1 started coming down at an accelerated pace as
companies predominantly guided lower on the 2013 Q4 earnings calls,
consistent with the trend we have been seeing for more than a year
now. Total Q1 earnings for companies in the S&P 500 are
currently expected to be down -1.8% from the same period last year,
a material decline from the +2.1% growth expected in early January
2014.
The negative revision trend is widespread, but is particularly
notable for the Retail, Basic Materials, Autos, Consumer Staples,
and the Energy sectors, as the chart below shows.
With roughly two-thirds of S&P 500 companies beating
earnings expectations in any reporting cycle, actual Q1 results
will almost certainly be better than these pre-season expectations.
But Q1 is unlikely to repeat the performance of the last few
quarters where we would witness a new all-time earnings total
record each quarter. Total earnings for the S&P 500 are on
track to reach $269.4 billion in 2013 Q4. This is a new all-time
quarterly record for total earnings, surpassing the previous record
set in 2013 Q3 at $262.7 billion. Current estimates for 2014 Q1
aggregate to a quarterly total of $251.5 billion, but the
expectation is for a strong ramp up from Q2 onwards.
Scorecard for 2013 Q4 (as of Friday, March
28th)
Total earnings for the 500 S&P 500 members were up +9.1% from
the same period last year, with a ‘beat ratio’ of 65.6% and a
median surprise of +2.4%. Total revenues were barely in the
positive column, up only +0.7%, with a revenue ‘beat ratio’ of
57.2% and a median surprise of +0.6%. While the revenue growth rate
in Q4 was held down by tough comparisons in the Finance sector, the
overall earnings growth rate in the quarter was the highest of
2013.
A big contributor to the strong Q4 earnings growth was easy
comparisons for three companies – Bank of America (BAC), Verizon
(VZ), and Travelers (TRV). Exclude these three companies and total
earnings growth for the S&P 500 companies that have reported
drops to +5.5% from the ‘headline’ +9.1%, which is about where
growth has been in recent quarters.
For a detailed look at the earnings picture, please check out
our weekly Earnings Trend Report.
Monday-3/31
- The Chicago PMI coming out after the market opens will give us
a preview of the national manufacturing ISM index coming out on
Tuesday. The Chicago index is expected to be modestly down from
February’s 59.8 level.
Tuesday -4/1
- The manufacturing ISM survey and motor-vehicle sales for March
will be coming out today. The ISM survey is expected to be up from
February’s 53.2 level, while car sales are expected to reach an
annualized pace of 15.8 million from February’s 15.3 million
level.
- Apollo Education Group (APOL), the for-profit
education provider, is the notable company releasing results today
after the close.
Wednesday-4/2
- The March ADP jobs report will give us a preview of the
government jobs report coming out on Friday. Last month, the ADP
job tally of 139K had come short of BLS tally of 175K.
- February Factory Orders will be the other notable economic
release today
- Monsanto (MON) will report in the morning,
while oilfield services player Mitcham Industries
(MIND) will report after the close.
Thursday -4/3
- In addition to weekly Jobless Claims, we will get the service
sector ISM reading.
- Schnitzer Steel (SCHN) will report in the
morning, while Micron Technology (MU) and
Global Payments (GPN) will report after the
close.
Friday-4/4
- Today is jobs day and the spotlight will justifiably be on the
March non-farm payroll report, which is expected to show headline
gains of 192K vs February’s 175K. Weather was the villain the last
couple of months and the hope is that we get out of its grip going
forward.
- CarMax (KMX) is the only notable earning
release today.
- Earnings ESP or Expected Surprise Prediction, our proprietary
leading indicator of positive earnings surprises is showing CarMax
coming out with an earning beat.
- To better understand of Zacks Expected Surprise Prediction,
please click here.
- Our research shows that companies with Zacks Rank of 1, 2 or 3
and positive Earnings ESP are highly likely to beat EPS estimates.
CarMax has Zacks Rank #3 (Hold) and Earnings ESP of +1.9%.
Here is a list of the 56 companies reporting this week,
including 3 S&P 500 members.
Company |
Ticker |
Current Qtr |
Year-Ago Qtr |
Last EPS Surprise % |
Report Day |
Time |
AROTECH CORP |
ARTX |
0.02 |
0.01 |
150 |
Monday |
AMC |
AUXILIO INC |
AUXO |
0.03 |
0 |
300 |
Monday |
AMC |
BLUE CALYPSO |
BCYP |
-0.01 |
N/A |
0 |
Monday |
AMC |
CHINA AUTO SYS |
CAAS |
0.22 |
0.18 |
18.75 |
Monday |
BTO |
CONCORD MED-ADR |
CCM |
N/A |
0.11 |
N/A |
Monday |
AMC |
CLEAN DIESEL |
CDTI |
-0.04 |
-0.31 |
40 |
Monday |
BTO |
CELLADON CORP |
CLDN |
-0.47 |
N/A |
N/A |
Monday |
AMC |
CYTOMEDIX INC |
CMXI |
-0.04 |
-0.04 |
-25 |
Monday |
AMC |
CENTURY CASINOS |
CNTY |
0.04 |
0.03 |
150 |
Monday |
N/A |
CYTOSORBENTS CP |
CTSO |
-0.01 |
-0.01 |
0 |
Monday |
AMC |
CUI GLOBAL INC |
CUI |
0.01 |
-0.03 |
-80 |
Monday |
AMC |
DECISIONPOINT |
DPSI |
-0.05 |
-0.05 |
-12.5 |
Monday |
BTO |
GAS NATURAL INC |
EGAS |
0.3 |
0.22 |
47.06 |
Monday |
AMC |
FLEXIBLE SOLTNS |
FSI |
-0.01 |
-0.03 |
-400 |
Monday |
AMC |
GREENHUNTER EGY |
GRH |
-0.05 |
N/A |
16.67 |
Monday |
BTO |
HARVEST CAP CRD |
HCAP |
0.31 |
N/A |
-11.11 |
Monday |
BTO |
INTEROIL CORP |
IOC |
-0.04 |
0.23 |
-85.71 |
Monday |
BTO |
JGWPT HOLDINGS |
JGW |
0.25 |
N/A |
N/A |
Monday |
AMC |
LIFEWAY FOODS |
LWAY |
0.07 |
0.07 |
11.11 |
Monday |
AMC |
RMG NETWORKS |
RMGN |
-0.2 |
N/A |
N/A |
Monday |
BTO |
ROSETTA GENOMIC |
ROSG |
N/A |
N/A |
N/A |
Monday |
AMC |
SANUWAVE HEALTH |
SNWV |
-0.06 |
-0.07 |
25 |
Monday |
AMC |
SORL AUTO PARTS |
SORL |
0.19 |
0.21 |
-10.53 |
Monday |
BTO |
SYNTHETIC BIOLG |
SYN |
-0.07 |
N/A |
-33.33 |
Monday |
BTO |
TELKONET INC |
TKOI |
N/A |
0 |
N/A |
Monday |
AMC |
TORCHLIGHT EGY |
TRCH |
-0.08 |
-0.06 |
-66.67 |
Monday |
AMC |
UNITEK GLOBAL |
UNTK |
-0.16 |
-0.5 |
114.67 |
Monday |
AMC |
UTI WORLDWIDE |
UTIW |
-0.04 |
-0.13 |
0 |
Monday |
BTO |
VERINT SYSTEMS |
VRNT |
0.73 |
0.77 |
21.57 |
Monday |
AMC |
WIDEPOINT CORP |
WYY |
0 |
0.01 |
-100 |
Monday |
AMC |
WORLD ENERGY SL |
XWES |
-0.04 |
0 |
16.67 |
Monday |
BTO |
YOU ON DEMAND |
YOD |
N/A |
-0.34 |
N/A |
Monday |
AMC |
APOLLO GROUP |
APOL |
0.18 |
0.34 |
15.56 |
Tuesday |
AMC |
TITAN PHARMA |
TTNP |
0 |
0 |
0 |
Tuesday |
BTO |
ULURU INC |
ULUR |
-0.04 |
-0.1 |
16.67 |
Tuesday |
BTO |
MONSANTO CO-NEW |
MON |
3.1 |
2.73 |
6.35 |
Wednesday |
BTO |
ACUITY BRANDS |
AYI |
0.83 |
0.62 |
12.94 |
Wednesday |
BTO |
DOMINION DIAMND |
DDC |
N/A |
0.14 |
8.33 |
Wednesday |
AMC |
MITCHAM INDS |
MIND |
N/A |
0.26 |
-1300 |
Wednesday |
AMC |
NATL AMER UNIV |
NAUH |
0.05 |
0.06 |
25 |
Wednesday |
AMC |
OMNOVA SOLUTION |
OMN |
0.05 |
0.03 |
0 |
Wednesday |
BTO |
RESOURCES CNCTN |
RECN |
0.05 |
0.11 |
20 |
Wednesday |
AMC |
TEXAS INDS |
TXI |
-0.63 |
-0.3 |
-59.09 |
Wednesday |
AMC |
UNIFIRST CORP |
UNF |
1.39 |
1.33 |
5.56 |
Wednesday |
BTO |
MICRON TECH |
MU |
0.6 |
-0.24 |
79.07 |
Thursday |
AMC |
FRANKLIN COVEY |
FC |
0.12 |
0.08 |
-28.57 |
Thursday |
AMC |
GREENBRIER COS |
GBX |
0.6 |
0.45 |
-5.56 |
Thursday |
BTO |
GLOBAL PAYMENTS |
GPN |
0.95 |
0.87 |
4.9 |
Thursday |
AMC |
PERRY ELLIS INT |
PERY |
0.03 |
0.5 |
6.25 |
Thursday |
BTO |
RPM INTL INC |
RPM |
0.09 |
0.07 |
4.35 |
Thursday |
BTO |
SCHNITZER STEEL |
SCHN |
0.14 |
0.36 |
-157.14 |
Thursday |
BTO |
SEACHANGE INTL |
SEAC |
0.05 |
0.21 |
25 |
Thursday |
AMC |
SYNNEX CORP |
SNX |
0.94 |
0.88 |
2.56 |
Thursday |
AMC |
CARMAX GP (CC) |
KMX |
0.53 |
0.46 |
-2.08 |
Friday |
BTO |
CHINA SUNERGY |
CSUN |
-1.11 |
-5.27 |
28.13 |
Friday |
BTO |
SYNERGY RES CP |
SYRG |
0.09 |
0.05 |
0 |
Friday |
N/A |
ALCOA INC (AA): Free Stock Analysis Report
APOLLO GROUP (APOL): Free Stock Analysis Report
FEDEX CORP (FDX): Free Stock Analysis Report
GLOBAL PAYMENTS (GPN): Free Stock Analysis Report
CARMAX GP (CC) (KMX): Free Stock Analysis Report
MONSANTO CO-NEW (MON): Free Stock Analysis Report
MICRON TECH (MU): Free Stock Analysis Report
NIKE INC-B (NKE): Free Stock Analysis Report
ORACLE CORP (ORCL): Free Stock Analysis Report
SCHNITZER STEEL (SCHN): Free Stock Analysis Report
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