Earnings Preview – Week of October 15

Earnings Season Into High Gear

The third quarter reporting season is underway and we have results from 35 companies in the S&P 500 already (as of Friday, October 12th). We get into high gear this week, with 200 companies reporting results, including 80 from the S&P 500. We will be in much better shape to comment on this reporting season by the end of the week, as by then we will have seen results from more than one-fifth of the S&P 500 members.

The strong-looking results from J.P. Morgan (JPM) and Wells Fargo (WFC) notwithstanding, the picture emerging from these 35 results doesn’t paint a very inspiring picture. Largely due to the strong growth performance by these two banking leaders, total earnings for the 35 companies that have already reported results are up 7.4% from the same period last year, with 54.3% of the companies beating earnings expectations.

But all of that growth is coming from J.P. Morgan and Wells Fargo. Excluding the contribution from Finance (basically these two banks at this stage), total earnings growth turns negative (down 3.4% from the same period last year).

Performance on the revenue side is surprisingly not that bad for these companies, even after we exclude J.P. Morgan and Wells Fargo, with total (ex-Finance) revenues up 3% from the same period last year and 43.3% of the companies beating revenue expectations.

But the big story on the earnings front is not what have come out already, but rather what’s in store from the 465 companies still to report results in the coming days. We have 80 S&P 500 companies reporting results this week, including such bellwether names as Google (GOOG), IBM (IBM), Coke (KO), Johnson & Johnson (JNJ), Citi (C), Bank of America (BAC) and many others.

Total earnings for these 465 companies are expected to drop 4.3% from the same period last year, with revenues declining 2.3%. Excluding Finance, which is one of only two sectors to produce double-digit earnings growth this quarter (Construction is the other), total earnings growth for the still-to-report companies is a decline of 7.1%.

The actual growth rates will most likely be better than these expectations, given how company managements have refined the art of under-promising and over-delivering quarter after quarter. Just to give you an idea of how good they are at anchoring expectations, roughly two-thirds of the companies in the S&P 500 would typically beat earnings expectations in any given quarter – it was 62% in the second quarter and 65% in the first quarter.

If we do get negative earnings growth this quarter as currently expected, it will be the first decline in quarterly earnings since the earnings recovery got underway after the end of the Great Recession in 2009. The earnings weakness is quite broad-based, with half of the 16 Zacks sectors expected to have negative earnings growth.

As was the case in the second quarter, the Energy and Basic Material sectors are the weakest, with earnings declines of 21.5% and 24.5%, respectively. Energy and Basic Materials earnings were down 15.7% and 16.8%, respectively, in the second quarter, when total earnings for the S&P 500 as a whole were up 4.4%.

For a complete review of the week’s earnings, check out our Earnings Trends feature.

Monday - 10/15

• We will get the September Retail Sales numbers and the October Empire State regional manufacturing survey in the morning, with both measures expected to modestly improve from the preceding month’s level. Retail Sales are expected to increase 1% on a ‘headline’ basis and 0.9% excluding Autos, up from August’s 0.9% and 0.8% gains, respectively.
• On the earnings front, we will get results from Citigroup and Gannett (GCI), the publisher of USA Today and many other dailies. Zacks ESP (“Earnings Surprise Prediction”), our proprietary leading indicator of earnings surprises, is showing Gannett coming out with a 1.9% positive earnings surprise.

Tuesday - 10/16

• We will get the September CPI and Industrial Production numbers in the morning, while the October Home Builder’s Index comes out after the market’s open. The Industrial Production report is expected to reverse August’s 1.2% decline by showing 0.2% increase.
• We have the first really busy day of this reporting season, with a number of major companies reporting results. We will get results from Coca Cola, J&J and Goldman Sachs (GS) before the open, while Intel (INTC), IBM and CSX Corp (CSX) will report after the close.
• Based on Zacks ESP, Goldman, Intel, and IBM are expected to come out with positive earnings surprises of 1.8%, 3.9%, and 2.6%, while CSX is likely to miss expectations.

Wednesday - 10/17

• We will get the September Housing Starts, with expectations at 773K vs. 750K in August.
• Bank of America, PepsiCo (PEP) and Halliburton (HAL) will report in the morning, while American Express (AXP) and eBay (EBAY) will report after the close.
• Zacks ESP shows that Halliburton and American Express will come short of earnings expectations.

Thursday - 10/18

• Weekly Jobless Claims will be coming out this morning. It will be interesting to see if we get a reversal of the sharp drop in claims last week, which reportedly was caused by missing data from one state.
• We will get Morgan Stanley (MS), Verizon (VZ) and Travelers (TRV) as the major reports in the morning, while Google and Microsoft (MSFT) will be reporting after the close.
• The Zacks ESP for Travelers is showing a positive 8.6% surprise, while Google, Verizon and Microsoft are expected to miss expectations.

Friday - 10/19

• We will get the September Existing Home Sales numbers after the market opens, with expectations of little change from the preceding month’s 4.8 million level.
• General Electric (GE), McDonalds (MCD) and Baker Hughes (BHI) are among the major earnings reports this morning.

Here is a list of the 200 companies reporting this week, including 80 S&P 500 members:

Company	Ticker	Current Qtr	Year-Ago Qtr	Last EPS Surprise %	Report Day	Time
CITIGROUP INC	C	0.97	1.23	7.95	Monday	BTO
GANNETT INC	GCI	0.54	0.44	5.66	Monday	BTO
ICU MEDICAL INC	ICUI	0.69	0.65	5	Monday	AMC
JOES JEANS INC	JOEZ	0	-0.01	100	Monday	AMC
PACKAGING CORP	PKG	0.56	0.43	6.52	Monday	AMC
SCHWAB(CHAS)	SCHW	0.17	0.18	11.11	Monday	BTO
WD 40 CO	WDFC	0.7	0.61	-6.56	Monday	AMC
APOLLO GROUP	APOL	0.49	1.02	25	Tuesday	AMC
BANCO LATINOAME	BLX	0.59	0.44	8.93	Tuesday	AMC
CATHAY GENL BCP	CATY	0.33	0.28	3.13	Tuesday	AMC
COCA COLA CO	KO	0.5	0.51	2.52	Tuesday	BTO
COMMERCE BANCSH	CBSH	0.77	0.76	16.67	Tuesday	BTO
CREE INC	CREE	0.18	0.17	23.08	Tuesday	AMC
CSX CORP	CSX	0.43	0.43	4.26	Tuesday	AMC
DOMINOS PIZZA	DPZ	0.41	0.35	2.17	Tuesday	BTO
FOREST LABS A	FRX	0.02	0.91	-16	Tuesday	BTO
FORTINET INC	FTNT	0.11	0.11	-20	Tuesday	AMC
FULTON FINL	FULT	0.2	0.2	0	Tuesday	AMC
GOLDMAN SACHS	GS	2.22	-0.84	56.14	Tuesday	BTO
GRAINGER W W	GWW	2.91	2.51	0	Tuesday	BTO
INTEL CORP	INTC	0.5	0.65	7.69	Tuesday	AMC
INTERACTIVE BRK	IBKR	0.33	0.5	-22.73	Tuesday	AMC
INTL BUS MACH	IBM	3.61	3.28	2.63	Tuesday	AMC
INTUITIVE SURG	ISRG	3.48	3.05	6.23	Tuesday	AMC
IRONWOOD PHARMA	IRWD	0.15	-0.21	-18.75	Tuesday	BTO
JOHNSON & JOHNS	JNJ	1.21	1.24	0.78	Tuesday	BTO
LINEAR TEC CORP	LLTC	0.46	0.48	-4.35	Tuesday	AMC
MANHATTAN ASOC	MANH	0.61	0.59	22.81	Tuesday	AMC
MARTEN TRANS	MRTN	0.3	0.29	3.03	Tuesday	AMC
MATTEL INC	MAT	0.99	0.86	33.33	Tuesday	BTO
MERCANTILE BANK	MBWM	0.34	0.3	33.33	Tuesday	BTO
OMNICOM GRP	OMC	0.73	0.72	0.99	Tuesday	BTO
PINNACLE FIN PT	PNFP	0.3	0.21	9.52	Tuesday	AMC
PNC FINL SVC CP	PNC	1.61	1.55	14.55	Tuesday	BTO
RENASANT CORP	RNST	0.26	0.25	8.7	Tuesday	AMC
SONIC CORP	SONC	0.24	0.2	9.09	Tuesday	AMC
STANLEY FURN CO	STLY	-0.06	-0.12	-25	Tuesday	AMC
STATE ST CORP	STT	0.96	0.96	2.02	Tuesday	BTO
UNITEDHEALTH GP	UNH	1.3	1.17	6.72	Tuesday	BTO
UTD RENTALS INC	URI	1.11	0.92	8.2	Tuesday	AMC
WINTRUST FINL	WTFC	0.56	0.65	10.64	Tuesday	AMC
WOLVERINE WORLD	WWW	0.72	0.82	-6.82	Tuesday	BTO
ABBOTT LABS	ABT	1.28	1.18	0.82	Wednesday	BTO
ALBEMARLE CORP	ALB	1.09	1.28	0.81	Wednesday	AMC
ALIGN TECH INC	ALGN	0.29	0.27	21.43	Wednesday	AMC
AMER EXPRESS CO	AXP	1.09	1.03	4.55	Wednesday	AMC
AMPHENOL CORP-A	APH	0.89	0.81	2.38	Wednesday	BTO
ASML HOLDING NV	ASML	0.86	1.14	0	Wednesday	BTO
ASTORIA FINL CP	AF	0.13	0.12	0	Wednesday	AMC
BADGER METER	BMI	0.47	0.46	-3.7	Wednesday	BTO
BANK OF AMER CP	BAC	0	0.28	26.67	Wednesday	BTO
BANK OF NY MELL	BK	0.54	0.53	14	Wednesday	BTO
BLACKROCK INC	BLK	3.28	2.83	2.31	Wednesday	BTO
BOSTON PRIV FIN	BPFH	0.17	0.13	0	Wednesday	AMC
CHECK PT SOFTW	CHKP	0.73	0.68	-1.39	Wednesday	BTO
COMERICA INC	CMA	0.65	0.62	22.58	Wednesday	BTO
CORE LABS NV	CLB	1.1	0.89	-0.87	Wednesday	AMC
COVANTA HOLDING	CVA	0.25	0.24	25	Wednesday	AMC
CROWN HLDGS INC	CCK	1	1.01	0	Wednesday	AMC
CVB FINL	CVBF	0.16	0.21	9.52	Wednesday	AMC
DOVER CORP	DOV	1.28	1.2	0.88	Wednesday	BTO
EAST WEST BC	EWBC	0.47	0.41	2.17	Wednesday	AMC
EBAY INC	EBAY	0.46	0.42	8.33	Wednesday	AMC
ETHAN ALLEN INT	ETH	0.29	0.25	-6.9	Wednesday	AMC
EXPONENT INC	EXPO	0.64	0.6	20	Wednesday	AMC
FIRST CASH FINL	FCFS	0.68	0.59	0	Wednesday	BTO
FIRST REP BK SF	FRC	0.71	0.66	-1.64	Wednesday	BTO
HALLIBURTON CO	HAL	0.68	0.94	6.67	Wednesday	BTO
HERITAGE-CRYSTL	HCCI	0.12	0.03	-22.22	Wednesday	AMC
HNI CORP	HNI	0.55	0.55	0	Wednesday	AMC
HOME BANCSHARES	HOMB	0.56	0.48	5.56	Wednesday	AMC
K12 INC	LRN	0.17	0.18	225	Wednesday	BTO
KINDER MORG ENG	KMP	0.58	0.44	-21.28	Wednesday	AMC
KNIGHT CAP GP	KCG	-2	0.48	100	Wednesday	BTO
KNOLL INC	KNL	0.3	0.39	16.67	Wednesday	BTO
LAM RESEARCH	LRCX	0.41	0.63	-4.76	Wednesday	AMC
LASALLE HTL PRP	LHO	0.7	0.5	-2.7	Wednesday	AMC
LINDSAY CORP	LNN	0.75	0.46	8.09	Wednesday	BTO
M&T BANK CORP	MTB	1.84	1.53	3.57	Wednesday	BTO
MELLANOX TECH	MLNX	0.92	0.2	43.64	Wednesday	AMC
NOBLE CORP	NE	0.51	0.49	3.51	Wednesday	AMC
NORTHERN TRUST	NTRS	0.74	0.72	-1.33	Wednesday	BTO
NVE CORP	NVEC	0.62	0.52	7.81	Wednesday	AMC
PACIFIC CONTL	PCBK	0.16	0.14	21.43	Wednesday	AMC
PEPSICO INC	PEP	1.16	1.31	2.75	Wednesday	BTO
PIPER JAFFRAY	PJC	0.32	-0.23	34.78	Wednesday	BTO
PLATINUM UNDRWT	PTP	0.77	-1.63	3.33	Wednesday	AMC
PREFERRED BANK	PFBC	0.17	0.15	0	Wednesday	AMC
QUEST DIAGNOSTC	DGX	1.18	1.18	-0.85	Wednesday	BTO
RLI CORP	RLI	0.91	1.23	1.74	Wednesday	AMC
SELECT COMFORT	SCSS	0.4	0.31	11.11	Wednesday	AMC
SLM CORP	SLM	0.54	0.36	-9.26	Wednesday	AMC
SMITH (AO) CORP	AOS	0.68	0.39	11.94	Wednesday	BTO
ST JUDE MEDICAL	STJ	0.8	0.78	1.15	Wednesday	BTO
STANLEY B&D INC	SWK	1.45	1.34	-13.16	Wednesday	BTO
STEEL DYNAMICS	STLD	0.12	0.19	5.26	Wednesday	AMC
STRYKER CORP	SYK	0.98	0.91	0	Wednesday	AMC
TAYLOR CAP GRP	TAYC	0.33	0.27	70.83	Wednesday	BTO
TEXTRON INC	TXT	0.51	0.45	31.82	Wednesday	BTO
UMPQUA HLDGS CP	UMPQ	0.22	0.19	0	Wednesday	AMC
UNIFIRST CORP	UNF	1.01	0.9	17.17	Wednesday	BTO
UNIVL FST PRODS	UFPI	0.38	0.29	-5.63	Wednesday	AMC
US BANCORP	USB	0.74	0.64	2.9	Wednesday	BTO
WESTAMER BANCP	WABC	0.73	0.79	0	Wednesday
WNS HLDGS-ADR	WNS	0.21	0.26	17.65	Wednesday	BTO
XILINX INC	XLNX	0.41	0.47	4.44	Wednesday	AMC
ACACIA RES-TECH	ACTG	0.22	0.34	-4.76	Thursday	AMC
ADV MICRO DEV	AMD	0.01	0.15	-14.29	Thursday	AMC
ALLIANCE DATA	ADS	2.13	2.16	3.37	Thursday	BTO
ASSOC BANC CORP	ASBC	0.25	0.2	0	Thursday	AMC
ATHENAHEALTH IN	ATHN	0.17	0.15	-25	Thursday	AMC
B&G FOODS CL-A	BGS	0.32	0.25	10	Thursday	AMC
BANCORPSOUTH	BXS	0.22	0.14	10	Thursday	AMC
BAXTER INTL	BAX	1.14	1.09	0.9	Thursday	BTO
BB&T CORP	BBT	0.7	0.52	4.35	Thursday	BTO
BLACKSTONE GRP	BX	0.42	-0.31	46.15	Thursday	BTO
BOSTON SCIENTIF	BSX	0.11	0.15	54.55	Thursday	BTO
BRIGGS & STRATT	BGG	-0.18	-0.11	-21.43	Thursday	BTO
BUILDERS FIRSTS	BLDR	-0.06	-0.07	-40	Thursday	AMC
CAPITAL ONE FIN	COF	1.74	1.88	-75.56	Thursday	AMC
CEPHEID INC	CPHD	-0.05	0.03	50	Thursday	AMC
CHIPOTLE MEXICN	CMG	2.3	1.9	11.79	Thursday	AMC
CITY NATIONAL	CYN	0.92	0.77	14.77	Thursday	AMC
COBIZ FINL INC	COBZ	0.13	0.05	27.27	Thursday	AMC
CYPRESS SEMICON	CY	0.05	0.23	100	Thursday	BTO
CYS INVESTMENTS	CYS	0.42	0.41	4.26	Thursday	BTO
DANAHER CORP	DHR	0.78	0.73	1.25	Thursday	BTO
DIAMOND OFFSHOR	DO	1	1.85	21.11	Thursday	BTO
E TRADE FINL CP	ETFC	0.08	0.24	18.18	Thursday	AMC
EASTGROUP PPTYS	EGP	0.77	0.75	0	Thursday	AMC
FAIRCHILD SEMI	FCS	0.17	0.34	-12.5	Thursday	BTO
FIFTH THIRD BK	FITB	0.39	0.4	2.86	Thursday	BTO
FLEXTRONIC INTL	FLEX	0.22	0.19	5	Thursday	AMC
FORWARD AIR CRP	FWRD	0.4	0.44	4.35	Thursday	AMC
GATX CORP	GMT	0.66	0.67	31.15	Thursday	BTO
GENUINE PARTS	GPC	1.12	0.97	0	Thursday	BTO
GOOGLE INC-CL A	GOOG	8.65	8.33	0.69	Thursday	AMC
HANMI FINL CP	HAFC	0.42	0.24	-76.32	Thursday	BTO
HEALTHWAYS INC	HWAY	0.13	0.28	114.29	Thursday	AMC
HUBBELL INC -B	HUB.B	1.44	1.37	4.88	Thursday	BTO
HUNTINGTON BANC	HBAN	0.17	0.16	13.33	Thursday	BTO
INDEP BK MASS	INDB	0.56	0.56	-17.31	Thursday	AMC
INSTEEL INDS	IIIN	0.1	0.04	-58.33	Thursday	BTO
ITERIS INC	ITI	0.02	0.03	-50	Thursday	AMC
KEYCORP NEW	KEY	0.21	0.24	27.78	Thursday	BTO
LABORATORY CP	LH	1.74	1.61	-0.56	Thursday	BTO
LATTICE SEMICON	LSCC	-0.01	0.12	88.89	Thursday	AMC
LIFE TIME FITNS	LTM	0.77	0.66	1.39	Thursday	BTO
MICROSOFT CORP	MSFT	0.58	0.68	15.87	Thursday	AMC
MORGAN STANLEY	MS	0.25	1.14	-62.79	Thursday	BTO
MYERS INDS	MYE	0.2	0.14	0	Thursday	BTO
NCR CORP-NEW	NCR	0.59	0.53	10.17	Thursday	AMC
NETSCOUT SYSTMS	NTCT	0.23	0.22	14.29	Thursday	BTO
NOKIA CP-ADR A	NOK	-0.12	0.04	9.09	Thursday	BTO
NUCOR CORP	NUE	0.43	0.57	-4.26	Thursday	BTO
OCEANFIRST FINL	OCFC	0.29	0.28	3.45	Thursday	AMC
PENN NATL GAMNG	PENN	0.57	0.62	0	Thursday	BTO
PEOPLES UTD FIN	PBCT	0.19	0.19	0	Thursday	AMC
PHILIP MORRIS	PM	1.39	1.37	1.49	Thursday	BTO
PIXELWORKS INC	PXLW	0	-0.06	37.5	Thursday	AMC
POLARIS INDUS	PII	1.2	0.95	5.38	Thursday	BTO
POOL CORP	POOL	0.56	0.5	-0.74	Thursday	BTO
PPG INDS INC	PPG	2.21	1.96	0	Thursday	BTO
PREMIERE GLOBAL	PGI	0.15	0.14	-5.88	Thursday	AMC
RIVERBED TECH	RVBD	0.14	0.12	-10	Thursday	AMC
SANDISK CORP	SNDK	0.3	1.14	-11.76	Thursday	AMC
SANDY SPRING	SASR	0.36	0.47	9.09	Thursday	BTO
SNAP-ON INC	SNA	1.23	1.16	8.33	Thursday	BTO
SONOCO PRODUCTS	SON	0.52	0.66	0	Thursday	BTO
SOUTHWEST AIR	LUV	0.14	0.15	9.09	Thursday	BTO
TRAVELERS COS	TRV	1.52	0.79	-8.03	Thursday	BTO
TRINITY BIOTECH	TRIB	0.2	0.18	0	Thursday
ULTRATECH STEP	UTEK	0.42	0.39	5.13	Thursday	BTO
UNION PAC CORP	UNP	2.19	1.85	7.14	Thursday	BTO
USG CORP	USG	-0.1	-0.67	-25	Thursday	BTO
VASCULAR SOLUTN	VASC	0.15	0.1	15.38	Thursday	AMC
VERIZON COMM	VZ	0.65	0.56	0	Thursday	BTO
WESCO INTL INC	WCC	1.25	1.13	-4.96	Thursday	BTO
WESTERN ALLIANC	WAL	0.17	0.06	23.08	Thursday	AMC
AIR PRODS & CHE	APD	1.44	1.51	-1.5	Friday	BTO
BAKER-HUGHES	BHI	0.84	1.18	28.21	Friday	BTO
COOPER INDS PLC	CBE	1.14	0.98	0.89	Friday	BTO
EDWARDS LIFESCI	EW	0.56	0.38	3.08	Friday	AMC
FIRST HRZN NATL	FHN	0.18	0.12	0	Friday	BTO
FIRST NIAGARA	FNFG	0.18	0.25	-5.56	Friday	BTO
GENL ELECTRIC	GE	0.37	0.31	2.7	Friday	BTO
HONEYWELL INTL	HON	1.13	1.1	2.7	Friday	BTO
IDEXX LABS INC	IDXX	0.73	0.66	1.11	Friday	BTO
INGERSOLL RAND	IR	0.99	0.81	26.37	Friday	BTO
KANSAS CITY SOU	KSU	0.86	0.78	1.19	Friday	BTO
MANPOWER INC WI	MAN	0.68	0.97	5.56	Friday	BTO
MCDONALDS CORP	MCD	1.47	1.45	-4.35	Friday	BTO
METROCORP BANCS	MCBI	0.13	0.13	60	Friday	AMC
PARKER HANNIFIN	PH	1.74	1.91	2.62	Friday	BTO
POPULAR INC	BPOP	0.5	0.3	53.66	Friday	BTO
ROBBINS & MYERS	RBN	0.97	0.79	2.22	Friday	BTO
SCHLUMBERGER LT	SLB	1.06	0.98	5	Friday	BTO
SENSIENT TECH	SXT	0.66	0.64	0	Friday	BTO
TCF FINL CORP	TCB	0.18	0.2	11.11	Friday	BTO
VALMONT INDS	VMI	2.06	1.59	3.7	Friday	BTO