Back to top

Earnings Preview

We are about a week away from the end of the June quarter and about another week after that when the June quarter earnings reports will start coming out. From our perspective, however the 2014 Q2 earnings season has already gotten underway as we count companies with fiscal quarters ending in May as part of our Q2 tally.

Looked at that way, the Micron Technology (MU - Analyst Report) earnings report after the close on Monday is part of our 2014 Q2 tally. Including Micron, we have seen Q2 earnings reports from 10 S&P 500 members already and another 10 will be coming out with results this week. The list of companies that have reported results already include such industry leaders as FedEx (FDX - Analyst Report), Oracle (ORCL - Analyst Report) and Costco (COST - Analyst Report). Notable companies reporting results this week include Walgreens (WAG - Analyst Report), General Mills (GIS - Analyst Report), Nike (NKE - Analyst Report) and ConAgra (CON).

Hard to draw any firm conclusions from the report thus far, as the table below shows.


Estimates for 2014 Q2 came down as the quarter unfolded, a trend that we have been seeing repeatedly for almost two years now. The chart below shows the Q2 estimates have evolved over the last three months.



Despite the material negative revision, the +3% total earnings growth for the S&P 500 in Q2 is still more than double the growth pace we saw in Q1. The U.S. economy went through some unusual times in Q1, with GDP growth turning negative and corporate earnings growth barely remaining in the positive territory.

The table below compares what is expected for Q2 with what was actually achieved in Q1. Overall, total earnings for the S&P 500 are expected to be up +3% in Q2, on +1.3% higher revenues and modestly higher margins. This compares to +1.3% total earnings growth on +2.7% higher revenues in 2014 Q1.


Three sectors – Utilities, Consumer Discretionary, and Construction – will have double-digit earnings growth rates, while four will see earnings decline from the same period last year. The decliners list includes Finance, the largest earnings contributor in the S&P 500 index accounting for almost one-fifth of the index’s total earnings. Earnings for the sector were down last quarter and are expected to be no better this quarter either.

Looking at the constituent industries in the Finance sector, it is obvious that the growth challenge is particularly notable for the large banks. With persistently low interest rates keeping net interest margins under pressure and the mortgage business well past its prime, these operators are finding it difficult to deal with weakness in both the corporate as well as capital markets businesses. The resumption in M&A activity is a net positive, but isn’t enough by itself to move the needle for these huge entities.

Beyond Q2, the growth picture is expected to materially improve, with total earnings reaching double-digit rates towards the end of the year.


 
Here is a list of the 36 companies reporting this week, including 11 S&P 500 members.
 

Company Ticker Current Qtr Year-Ago Qtr Last EPS Surprise % Report Day Time
MICRON TECH MU 0.71 0.04 39.34 Monday AMC
SONIC CORP SONC 0.29 0.26 16.67 Monday AMC
CARNIVAL CORP CCL 0.02 0.09 100 Tuesday BTO
WALGREEN CO WAG 0.94 0.85 -2.15 Tuesday BTO
APOGEE ENTRPRS APOG 0.23 0.14 -12.9 Tuesday AMC
CARNIVAL PLC CUK 0.02 0.09 6.98 Tuesday BTO
BED BATH&BEYOND BBBY 0.95 0.92 0 Wednesday AMC
GENL MILLS GIS 0.71 0.53 -1.59 Wednesday BTO
MONSANTO CO-NEW MON 1.55 1.66 1.94 Wednesday BTO
AMER SOFTWARE A AMSWA 0.09 0.11 -10 Wednesday AMC
APOLLO GROUP APOL 0.65 1.05 55.56 Wednesday BTO
BARNES & NOBLE BKS -0.63 -0.43 72 Wednesday BTO
CINEDIGM CORP CIDM 0 -0.1 37.5 Wednesday AMC
CASELLA WASTE CWST -0.16 -0.22 -47.06 Wednesday AMC
EXFO INC EXFO 0.02 -0.01 100 Wednesday AMC
FULLER(HB) CO FUL 0.79 0.67 -3.92 Wednesday AMC
LINDSAY CORP LNN 1.39 2.01 -7.96 Wednesday BTO
HERMAN MILLER MLHR 0.46 0.43 0 Wednesday AMC
OMNOVA SOLUTION OMN 0.19 0.16 0 Wednesday BTO
ACCENTURE PLC ACN 1.21 1.14 -0.96 Thursday BTO
CONAGRA FOODS CAG 0.57 0.6 3.33 Thursday BTO
LENNAR CORP -A LEN 0.51 0.43 25 Thursday BTO
MCCORMICK & CO MKC 0.62 0.61 6.9 Thursday BTO
NIKE INC-B NKE 0.76 0.76 4.11 Thursday AMC
ITERIS INC ITI 0.01 0 0 Thursday AMC
METHODE ELECT-A MEI 0.54 0.24 -2.56 Thursday BTO
PROGRESS SOFTWA PRGS 0.25 0.21 -12.5 Thursday AMC
SCHNITZER STEEL SCHN 0.07 0.09 0 Thursday BTO
STEELCASE INC SCS 0.15 0.13 5.88 Thursday BTO
SHAW COMMS-CL B SJR 0.45 0.5 13.51 Thursday BTO
WINNEBAGO WGO 0.41 0.27 12.9 Thursday BTO
WORTHINGTON IND WOR 0.66 0.62 -3.33 Thursday BTO
AZZ INC AZZ 0.54 0.56 -4.55 Friday BTO
COMMERCIAL METL CMC 0.31 0.16 20 Friday BTO
FINISH LINE-CLA FINL 0.21 0.2 2.35 Friday BTO
KB HOME KBH 0.21 -0.04 12.5 Friday BTO

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
RPC INC RES 24.91 +8.35%
LITHIA MOTO… LAD 94.59 +4.60%
DELTA AIR L… DAL 39.15 +3.90%
FLAMEL TECH… FLML 14.51 +3.50%
SOUTHWEST A… LUV 28.87 +2.92%