By Wallace Witkowski, MarketWatch
S&P 500 earnings expected to come in 4.6% lower than a year
ago
SAN FRANCISCO (MarketWatch) -- Health care and financial
earnings are looking to be some of the relatively few bright spots
in what promises to be a dreary reporting season.
Stocks are getting hit hard as the first quarter draws to a
close. The Dow Jones Industrial Average (DJI), the S&P 500
Index (SPX), and the Nasdaq Composite Index (RIXF) all finished
down more than 2% last week. On Friday, government data showed the
rise in fourth-quarter GDP unchanged at 2.2% and the first decline
in quarterly profits since 2008
(http://www.marketwatch.com/story/us-stocks-futures-point-to-fifth-day-of-losses-2015-03-27).
What's more, U.S. stocks are starting the year with $44 billion
less in investment capital, the biggest outflow since 2009
(http://www.marketwatch.com/story/investors-flee-us-stock-funds-at-a-rate-last-seen-in-2009-2015-03-27).
Over the first quarter, projected earnings for the S&P 500
went from forecast growth of 4.2% to a decline of 4.6%, in large
part because earnings declines in the energy sector widened
considerably, according to John Butters, senior earnings analyst at
FactSet.
In fact, forecasts over the quarter did not improve for any one
sector, with the tech, consumer staples, and materials sectors all
swinging from projected gains to declines over the quarter.
That leaves health care, financials, consumer discretionary, and
industrials as the only sectors left expected to post earnings
gains this season.
With guidance fairly negative this earnings season, the least
negative guidance is coming out of the health care and financials
sector, according to FactSet. Of financial companies providing
guidance, 33% expect to top the Wall Street consensus, and 20% of
health care companies expect to do the same. In contrast, only 16%
of companies in the S&P 500 have provided a forecast that tops
estimates
(http://www.marketwatch.com/story/profit-warnings-are-piling-up-2015-03-27).
Plus, stocks may be getting headwinds from a pre-earnings pause
in stock buybacks
(http://www.marketwatch.com/story/why-goldman-sees-a-buyback-halt-as-a-big-opportunity-2015-03-24),
which hit a record high quarter in February, following a near
record year in 2014
(http://www.marketwatch.com/story/cash-piles-activists-push-stock-buybacks-to-near-record-levels-2015-03-23).
Sectors that have accounted for more than 50% of all buybacks on
the S&P 500 are tech, consumer discretionary, and
financials.
Plus, the U.S. heath care and financials sectors are fairly well
insulated from the effect the stronger dollar is having on
international sales as the bulk of revenue from most companies in
those sectors comes from domestic sources.
Notable earnings this week
Report date Company/Ticker (FactSet EPS / Revenue estimates)
Mon., March 30 Cal-Maine Foods Inc. US:CALM ($1.18 / $410.7 million)American Realty Capital Properties Inc. US:ARCP (loss of 4c / $379.7 million)
Tues., April 1 Synnex Corp. US:SNX ($1.52 / $3.42 billion)Science Applications International Corp. US:SAIC (71 cents / $935.6 million)Movado Group Inc. US:MOV (20 cents / $134.7 million)
Weds., April 2 Monsanto Co. US:MON ($2.94 / $5.59 billion)Acuity Brands Inc. US:AYI ($1.05 / $628 million)Progress Software Corp. US:PRGS (24 cents / $94.4 million)
Thurs., April 3 Micron Technology Inc. US:MU (75 cents / $4.17 billion)CarMax Inc. US:KMX (60 cents / $3.51 billion)
Fri., April 4 Nothing of note.
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