A Make or Break Week for Q1 Earnings Season - Earnings Preview
April 11 2014 - 2:43AM
Zacks
A Make or Break Week for Q1 Earnings Season
The 2014 Q1 reporting season is underway and we have results from
29 S&P 500 members. The reporting pace accelerates this week,
with 126 companies announcing first-quarter results, including 56
S&P 500 members. While the Finance sector is heavily
represented in this week’s list of companies reporting results, we
have enough bellwethers from other sectors to give us a good
representative of the Q1 earnings season.
The low expectations for the Finance sector were borne out by the
J.P. Morgan (JPM) report and will most likely be
reconfirmed by this week’s Finance-heavy line-up of results. There
is plenty of read through from the J.P. Morgan and Wells
Fargo (WFC) reports, most of it negative, for this week’s
reporters, particularly Bank of America (BAC),
Goldman Sachs (GS) and Citigroup
(C).
The mortgage banking weakness has been well known and no one was
surprised by the sharp declines at both J.P. Morgan and Wells Fargo
on that front. But even J.P. Morgan’s top-notch investment banking
franchise couldn’t shield its results from the persistently weak
capital market flows and volumes, particularly on the fixed income
side. It doesn’t bode well for Goldman Sachs, Bank of America, and
Citigroup, though Morgan Stanley has steadily reduced its reliance
on the capital markets business.
Beyond Finance, we have plenty of leaders from other key sectors on
deck for releasing results this week as well. From
Google (GOOGL), IBM (IBM),
Intel (INTC) and others in the Technology sector
to Coke (KO) and Pepsi (PEP) in
Consumer Staples and Transportation bellwethers like Union
Pacific (UNP) and CSX Corp (CSX) and much
more in between, this week’s reports span the full spectrum of the
economy. As such, it may not be unfair to characterize this as the
make or break week for the Q1 earnings season. The trends
established this week will likely carry through the rest of this
reporting cycle with only minor changes.
Scorecard for 2014 Q1 (as of Friday, April
10th)
Total earnings for the 29 S&P 500 members that have reported
results are up +3.2% from the same period last year, with a ‘beat
ratio’ of 58.6% and a median surprise of +2.5%. Total revenues are
up +2.4%, with a revenue ‘beat ratio’ of 37.9% and a median
surprise of -0.2%. Ex-finance is 12.7%
It’s premature to draw any conclusions from this small sample of
results, but the growth rates and beat ratios for these 29
companies in Q1 are weaker than what we have seen from the same
group of companies in other recent quarters. It has overall been a
fairly uninspiring start to the Q1 earnings season.
The chart below shows how the earnings and revenue growth rates for
Q1 thus far compare to what these same companies reported in 2013
Q4 and the 4-quarter average. Keep in mind, however, that we have a
very small sample size at this stage.
Expectations for 2014 Q1
Total Q1 earnings for companies in the S&P 500 are currently
expected to be down -4.0% from the same period last year, a
material decline from the +2.1% growth expected in early January
2014. Estimates for 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.
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 reached a
new all-time record of $267.4 billion in 2013 Q4.
Current estimates for 2014 Q1 aggregate to a quarterly total of
$247.1 billion, but the expectation is that Q1 will be the low
point for earnings this year, both in terms of earnings totals as
well as the growth rate. Consensus expectations reflect a rebound
in Q2, with the earnings totals in each of the following three
quarters of the year setting new all-time records one after the
other.
The chart below shows the aggregate quarterly earnings for the
S&P 500 as whole.
Given the low Q1 expectations, it wouldn’t take much for companies
to come out ahead of them. Roughly two-thirds of the S&P 500
members beat earnings expectations every quarter any way. So, more
results along those lines would be nothing new and wouldn’t tell us
much about the health of corporate earnings.
What we haven’t seen for a while instead is some evidence of
strength on the revenue front and favorable comments from
management teams about business outlook. Corporate guidance has
been negative for almost two years now, causing estimates to keep
coming down and the long hoped-for earnings growth turnaround
getting pushed forward. Guidance is important in any earnings
season, but it is particularly important this time around given the
relatively elevated expectations for the second half of the year
and beyond.
For a detailed look at the earnings picture, please check out our
weekly Earnings Trends report.
Monday-4/14
- We will get the March Retail Sales numbers in the morning, with
expectations of +0.8% growth following the +0.3% gain the month
before.
- Citigroup and the M&T Banks (MTB) will be
the notable earnings reports today, both in the morning.
Tuesday -4/15
- We will get the March CPI and the April Empire State
manufacturing survey and the homebuilder sentiment index in the
morning.
- Johnson & Johnson (JNJ) and Coca
Cola (KO) will be the key reports in the morning, while
Intel (INTC), Yahoo (YHOO) and
CSX Corp (CSX) will report after the close.
- Zacks Earnings ESP or Expected Surprise Prediction, our
proprietary leading indicator of positive earnings surprises, is
showing Intel coming out with a positive earnings surprise.
- Our research shows that companies with Zacks Rank of 1, 2 or 3
and positive Earnings ESP are highly likely of beating EPS
estimates. Intel currently has Zacks Rank #3 (Hold) and Earnings
ESP of +2.7%.
- To get a better understanding of Zacks Earnings ESP, please
click here.
Wednesday-4/16
- We will get the March Housing Starts and Industrial Production
reports, with expectations of strong gains on the Starts
front.
- Bank of America and Abbot Labs (ABT) will
report in the morning, while Google (GOOGL),
IBM (IBM) and American Express
(AXP).
Thursday -4/17
- In addition to Jobless Claims, we will get the April Philly Fed
manufacturing survey.
- A very busy day on the earnings with a host of bellwethers
reporting results today. The notable names include
DuPont (DD), General Electric
(GE), Goldman Sachs (GS), Pepsi
(PEP), Morgan Stanley (MS),
Schlumberger (SLB) and Baker
Hughes (BHI).
Friday-4/18
- Good Friday, Markets Closed.
Here is a list of the 126 companies reporting this week,
including 56 S&P 500 members.
| Company |
Ticker |
Current Qtr |
Year-Ago Qtr |
Last EPS Surprise % |
Report Day |
Time |
| CITIGROUP INC |
C |
1.18 |
1.29 |
-19.15 |
Monday |
BTO |
| M&T BANK CORP |
MTB |
1.61 |
2.06 |
-6.28 |
Monday |
BTO |
| INFOSYS LTD |
INFY |
0.79 |
0.78 |
8 |
Monday |
AMC |
| HUNT (JB) TRANS |
JBHT |
0.63 |
0.61 |
-2.53 |
Monday |
BTO |
| SEMILEDS CORP |
LEDS |
-0.21 |
-0.22 |
14.81 |
Monday |
AMC |
| BANK OZARKS |
OZRK |
0.65 |
0.56 |
3.13 |
Monday |
AMC |
| PEP BOYS M M &J |
PBY |
0.06 |
-0.05 |
-61.54 |
Monday |
AMC |
| PINNACLE FIN PT |
PNFP |
0.45 |
0.39 |
2.33 |
Monday |
AMC |
| TRIANGLE PETROL |
TPLM |
0.1 |
-0.2 |
-25 |
Monday |
AMC |
| COMERICA INC |
CMA |
0.72 |
0.7 |
4.05 |
Tuesday |
BTO |
| CSX CORP |
CSX |
0.38 |
0.45 |
-2.33 |
Tuesday |
AMC |
| INTEL CORP |
INTC |
0.37 |
0.4 |
-1.92 |
Tuesday |
AMC |
| JOHNSON & JOHNS |
JNJ |
1.48 |
1.44 |
3.33 |
Tuesday |
BTO |
| COCA COLA CO |
KO |
0.44 |
0.46 |
0 |
Tuesday |
BTO |
| LINEAR TEC CORP |
LLTC |
0.46 |
0.47 |
4.55 |
Tuesday |
AMC |
| NORTHERN TRUST |
NTRS |
0.78 |
0.71 |
-1.32 |
Tuesday |
BTO |
| SCHWAB(CHAS) |
SCHW |
0.22 |
0.15 |
9.52 |
Tuesday |
BTO |
| YAHOO! INC |
YHOO |
0.29 |
0.34 |
30 |
Tuesday |
AMC |
| BOSTON PRIV FIN |
BPFH |
0.2 |
0.13 |
5.26 |
Tuesday |
AMC |
| COMVERSE INC |
CNSI |
N/A |
0.49 |
277.27 |
Tuesday |
BTO |
| INTERACTIVE BRK |
IBKR |
0.29 |
0.14 |
-53.33 |
Tuesday |
AMC |
| MARTEN TRANS |
MRTN |
0.17 |
0.21 |
-12 |
Tuesday |
AMC |
| SKF AB |
SKFRY |
N/A |
0.27 |
N/A |
Tuesday |
BTO |
| SENSIENT TECH |
SXT |
0.66 |
0.62 |
1.61 |
Tuesday |
BTO |
| WESTAMER BANCP |
WABC |
0.58 |
0.64 |
-4.76 |
Tuesday |
N/A |
| WINTRUST FINL |
WTFC |
0.66 |
0.65 |
0 |
Tuesday |
AMC |
| ABBOTT LABS |
ABT |
0.35 |
0.42 |
0 |
Wednesday |
BTO |
| AMER EXPRESS CO |
AXP |
1.3 |
1.15 |
-0.79 |
Wednesday |
AMC |
| BANK OF AMER CP |
BAC |
0.05 |
0.2 |
11.54 |
Wednesday |
BTO |
| CAPITAL ONE FIN |
COF |
1.68 |
1.92 |
-3.9 |
Wednesday |
AMC |
| GOOGLE INC-CL A |
GOOGL |
5.37 |
10 |
-4.06 |
Wednesday |
AMC |
| GRAINGER W W |
GWW |
2.97 |
2.94 |
-1.52 |
Wednesday |
BTO |
| HUNTINGTON BANC |
HBAN |
0.17 |
0.17 |
11.76 |
Wednesday |
BTO |
| INTL BUS MACH |
IBM |
2.54 |
3 |
2 |
Wednesday |
AMC |
| KANSAS CITY SOU |
KSU |
0.98 |
0.89 |
-6.36 |
Wednesday |
AMC |
| NOBLE CORP PLC |
NE |
0.69 |
0.59 |
-1.2 |
Wednesday |
AMC |
| PEOPLES UTD FIN |
PBCT |
0.2 |
0.18 |
0 |
Wednesday |
AMC |
| PNC FINL SVC CP |
PNC |
1.66 |
1.76 |
3.05 |
Wednesday |
BTO |
| SLM CORP |
SLM |
0.56 |
0.61 |
-11.59 |
Wednesday |
AMC |
| SANDISK CORP |
SNDK |
1.17 |
0.79 |
8.84 |
Wednesday |
AMC |
| ST JUDE MEDICAL |
STJ |
0.95 |
0.92 |
3.13 |
Wednesday |
BTO |
| US BANCORP |
USB |
0.73 |
0.73 |
1.33 |
Wednesday |
BTO |
| ADTRAN INC |
ADTN |
0.16 |
0.14 |
50 |
Wednesday |
BTO |
| ASTORIA FINL CP |
AF |
0.15 |
0.14 |
20 |
Wednesday |
AMC |
| ALBEMARLE CORP |
ALB |
0.95 |
0.93 |
3.85 |
Wednesday |
AMC |
| ASML HOLDING NV |
ASML |
0.81 |
0.49 |
15.87 |
Wednesday |
BTO |
| B&G FOODS CL-A |
BGS |
0.39 |
0.37 |
-12.5 |
Wednesday |
AMC |
| BADGER METER |
BMI |
0.44 |
0.2 |
4.76 |
Wednesday |
AMC |
| CATHAY GENL BCP |
CATY |
0.39 |
0.3 |
0 |
Wednesday |
AMC |
| CROWN HLDGS INC |
CCK |
0.51 |
0.5 |
-4 |
Wednesday |
AMC |
| COHEN&STRS INC |
CNS |
0.4 |
0.44 |
4.88 |
Wednesday |
AMC |
| CREDIT SUISSE |
CS |
N/A |
0.8 |
N/A |
Wednesday |
N/A |
| ELECTRN IMAGING |
EFII |
0.23 |
0.25 |
-16.67 |
Wednesday |
AMC |
| EASTGROUP PPTYS |
EGP |
0.82 |
0.76 |
0 |
Wednesday |
AMC |
| EAST WEST BC |
EWBC |
0.51 |
0.5 |
0 |
Wednesday |
AMC |
| FIRST REP BK SF |
FRC |
0.64 |
0.72 |
0 |
Wednesday |
BTO |
| HANCOCK HLDG CO |
HBHC |
0.57 |
0.56 |
-1.79 |
Wednesday |
AMC |
| HNI CORP |
HNI |
0.09 |
0.03 |
11.11 |
Wednesday |
AMC |
| HOOKER FURNITUR |
HOFT |
0.23 |
0.34 |
-20 |
Wednesday |
N/A |
| NEUSTAR INC -A |
NSR |
0.78 |
0.72 |
-2.6 |
Wednesday |
AMC |
| PACIFIC CONTL |
PCBK |
0.21 |
0.19 |
-9.09 |
Wednesday |
AMC |
| PLEXUS CORP |
PLXS |
0.6 |
0.52 |
0 |
Wednesday |
AMC |
| PLATINUM UNDRWT |
PTP |
1.24 |
2.24 |
40.65 |
Wednesday |
AMC |
| RLI CORP |
RLI |
0.54 |
0.52 |
28.57 |
Wednesday |
AMC |
| STEEL DYNAMICS |
STLD |
0.16 |
0.21 |
-4 |
Wednesday |
AMC |
| UNIVL FST PRODS |
UFPI |
0.47 |
0.26 |
105.56 |
Wednesday |
AMC |
| UTD RENTALS INC |
URI |
0.7 |
0.58 |
9.66 |
Wednesday |
AMC |
| ALLIANCE DATA |
ADS |
2.59 |
2.36 |
2.29 |
Thursday |
BTO |
| AUTONATION INC |
AN |
0.75 |
0.68 |
7.79 |
Thursday |
BTO |
| BAXTER INTL |
BAX |
1.11 |
1.05 |
0.8 |
Thursday |
BTO |
| BB&T CORP |
BBT |
0.71 |
0.69 |
0 |
Thursday |
BTO |
| BAKER-HUGHES |
BHI |
0.8 |
0.65 |
1.64 |
Thursday |
BTO |
| BLACKROCK INC |
BLK |
4.11 |
3.65 |
12.33 |
Thursday |
BTO |
| CHIPOTLE MEXICN |
CMG |
2.82 |
2.35 |
0.4 |
Thursday |
BTO |
| ROCKWELL COLLIN |
COL |
1.06 |
1.17 |
1.05 |
Thursday |
BTO |
| DU PONT (EI) DE |
DD |
1.6 |
1.56 |
7.27 |
Thursday |
BTO |
| DANAHER CORP |
DHR |
0.8 |
0.75 |
1.05 |
Thursday |
BTO |
| DOVER CORP |
DOV |
1.02 |
1.1 |
0 |
Thursday |
BTO |
| FIFTH THIRD BK |
FITB |
0.41 |
0.44 |
0 |
Thursday |
BTO |
| GENL ELECTRIC |
GE |
0.32 |
0.39 |
0 |
Thursday |
BTO |
| GOLDMAN SACHS |
GS |
3.43 |
4.29 |
11.11 |
Thursday |
BTO |
| HONEYWELL INTL |
HON |
1.26 |
1.21 |
1.64 |
Thursday |
BTO |
| KEYCORP NEW |
KEY |
0.24 |
0.21 |
8.33 |
Thursday |
BTO |
| MATTEL INC |
MAT |
0.08 |
0.11 |
-10.83 |
Thursday |
BTO |
| MORGAN STANLEY |
MS |
0.6 |
0.61 |
13.64 |
Thursday |
BTO |
| PEPSICO INC |
PEP |
0.75 |
0.77 |
3.96 |
Thursday |
BTO |
| PHILIP MORRIS |
PM |
1.17 |
1.29 |
0 |
Thursday |
BTO |
| PPG INDS INC |
PPG |
1.98 |
1.58 |
4.62 |
Thursday |
BTO |
| SHERWIN WILLIAM |
SHW |
1.08 |
1.11 |
1.57 |
Thursday |
BTO |
| SCHLUMBERGER LT |
SLB |
1.2 |
1.01 |
2.27 |
Thursday |
BTO |
| SNAP-ON INC |
SNA |
1.55 |
1.4 |
3.23 |
Thursday |
BTO |
| UNITEDHEALTH GP |
UNH |
1.09 |
1.16 |
0.71 |
Thursday |
BTO |
| UNION PAC CORP |
UNP |
2.37 |
2.03 |
2.41 |
Thursday |
BTO |
| ACACIA RESEARCH |
ACTG |
0.06 |
0.37 |
-428.57 |
Thursday |
AMC |
| ACTELION LTD |
ALIOF |
1.12 |
0.98 |
101.43 |
Thursday |
N/A |
| ALLISON TRANSMN |
ALSN |
0.24 |
0.41 |
112.5 |
Thursday |
BTO |
| ADV MICRO DEV |
AMD |
0 |
-0.13 |
0 |
Thursday |
AMC |
| AMER RIVER BSH |
AMRB |
0.09 |
0.07 |
0 |
Thursday |
AMC |
| ASSOC BANC CORP |
ASBC |
0.26 |
0.27 |
0 |
Thursday |
AMC |
| ATHENAHEALTH IN |
ATHN |
-0.01 |
0.16 |
53.57 |
Thursday |
AMC |
| BLACKSTONE GRP |
BX |
0.56 |
0.55 |
38.27 |
Thursday |
BTO |
| CAPITAL BNK FIN |
CBF |
0.24 |
0.26 |
14.29 |
Thursday |
AMC |
| CEPHEID INC |
CPHD |
-0.19 |
0.02 |
30 |
Thursday |
AMC |
| CYPRESS SEMICON |
CY |
-0.04 |
-0.05 |
-300 |
Thursday |
BTO |
| FIRST CASH FINL |
FCFS |
0.67 |
0.68 |
-10.11 |
Thursday |
BTO |
| FAIRCHILD SEMI |
FCS |
0.03 |
-0.04 |
22.22 |
Thursday |
BTO |
| FIRST HRZN NATL |
FHN |
0.15 |
0.17 |
23.53 |
Thursday |
BTO |
| HOME LOAN SERVC |
HLSS |
0.53 |
0.44 |
12 |
Thursday |
BTO |
| HOME BANCSHARES |
HOMB |
0.42 |
0.31 |
-43.24 |
Thursday |
BTO |
| HUB GROUP INC-A |
HUBG |
0.37 |
0.42 |
4.17 |
Thursday |
AMC |
| INDEP BK MASS |
INDB |
0.55 |
0.58 |
-1.61 |
Thursday |
AMC |
| INVESTORS BANCP |
ISBC |
0.24 |
0.25 |
0 |
Thursday |
AMC |
| KNOLL INC |
KNL |
0.12 |
0.13 |
-8.7 |
Thursday |
BTO |
| NATL PENN BCSHS |
NPBC |
0.17 |
0.16 |
0 |
Thursday |
BTO |
| POOL CORP |
POOL |
0.11 |
0.07 |
0 |
Thursday |
BTO |
| PRIVATEBANCORP |
PVTB |
0.41 |
0.35 |
4.88 |
Thursday |
BTO |
| SAP AG ADR |
SAP |
0.62 |
0.75 |
1.89 |
Thursday |
BTO |
| SANDY SPRING |
SASR |
0.38 |
0.42 |
-9.52 |
Thursday |
BTO |
| SELECT COMFORT |
SCSS |
0.31 |
0.42 |
-20 |
Thursday |
AMC |
| SIMMONS FIRST A |
SFNC |
0.48 |
0.37 |
-4 |
Thursday |
BTO |
| SONOCO PRODUCTS |
SON |
0.52 |
0.5 |
0 |
Thursday |
BTO |
| TAIWAN SEMI-ADR |
TSM |
N/A |
0.26 |
3.57 |
Thursday |
BTO |
| WEBSTER FINL CP |
WBS |
0.49 |
0.44 |
4 |
Thursday |
BTO |
| WIPRO LTD-ADR |
WIT |
0.13 |
0.12 |
8.33 |
Thursday |
BTO |
| WATSCO INC |
WSO |
0.47 |
0.39 |
2.04 |
Thursday |
BTO |
| CHINA ZENIX AUT |
ZX |
0.29 |
0.13 |
N/A |
Thursday |
BTO |
ABBOTT LABS (ABT): Free Stock Analysis Report
AMER EXPRESS CO (AXP): Free Stock Analysis Report
BANK OF AMER CP (BAC): Free Stock Analysis Report
BAKER-HUGHES (BHI): Free Stock Analysis Report
CITIGROUP INC (C): Free Stock Analysis Report
CSX CORP (CSX): Free Stock Analysis Report
DU PONT (EI) DE (DD): Free Stock Analysis Report
GENL ELECTRIC (GE): Free Stock Analysis Report
GOLDMAN SACHS (GS): Free Stock Analysis Report
INTL BUS MACH (IBM): Free Stock Analysis Report
INTEL CORP (INTC): Free Stock Analysis Report
JOHNSON & JOHNS (JNJ): Free Stock Analysis Report
JPMORGAN CHASE (JPM): Free Stock Analysis Report
COCA COLA CO (KO): Free Stock Analysis Report
MORGAN STANLEY (MS): Free Stock Analysis Report
M&T BANK CORP (MTB): Free Stock Analysis Report
PEPSICO INC (PEP): Free Stock Analysis Report
SCHLUMBERGER LT (SLB): Free Stock Analysis Report
UNION PAC CORP (UNP): Free Stock Analysis Report
WELLS FARGO-NEW (WFC): Free Stock Analysis Report
YAHOO! INC (YHOO): Free Stock Analysis Report
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