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Earnings Preview

Finance Earnings in the Spotlight

The 2014 Q2 reporting season is underway and we have results from 27 S&P 500 members. The reporting pace accelerates this week, with 153 companies announcing second-quarter results, including 60 S&P 500 members. While the Finance sector is heavily represented on this week’s reporting docket, we have enough bellwethers from other sectors to give us a good sense of this earnings season.  

The low expectations for the Finance sector were borne out by the Wells Fargo (WFC - Analyst Report) report and will most likely be reconfirmed by this week’s Finance-heavy line-up of results. One could read through from the Wells Fargo report, particularly on the core banking front, for this week’s reporters. But J.P. Morgan (JPM - Analyst Report), Bank of America (BAC) and Citigroup (C) reporting this week have sizable capital markets operations that will likely dominate their overall results even if their core banking results reflect the trends we saw with Wells.

That said, Wells’ performance with respect to loan and deposit growth and persistent net-interest margin pressures are relevant to the broader industry. With key drivers of core profitability for the group, like net interest income and fee revenues, not expected to show any material improvement in Q2, overall ‘core’ banking earnings will be essentially the same as we have been seeing in recent quarters.

On the capital markets front, improvement in investment banking (M&A announcements, IPOs, etc.) gets offset by continued weakness in trading volumes, particularly with respect to the fixed income, currencies and commodities (FICC) business. J.P. Morgan and Citi had already indicated more on that front and Goldman Sachs (GS - Analyst Report) will likely be no different. Hard to tell whether the persistent FICC weakness of the last few years is a function of cyclical forces or a result of the new more restrictive regulatory landscape, but we are unlikely to see the bottom in Q2.

Beyond Finance, we have plenty of leaders from other key sectors on deck for releasing results this week as well. From Google (GOOGL - Analyst Report) and IBM (IBM - Analyst Report), to Johnson & Johnson (JNJ - Analyst Report), General Electric (GE - Analyst Report) and CSX Corp (CSX), this week’s reports span the full spectrum of the economy. As such, this week’s reports will give us a good sense of what to expect the rest of this reporting cycle.

The chart below shows the number of S&P 500 members reporting results in the coming weeks.


The Scorecard Thus Far (as of Friday, July 11th)

Total earnings for the 27 S&P 500 members that have reported results are up +9.8% from the same period last year, with a ‘beat ratio’ of 55.6% and a median surprise of +3.2%. Total revenues are up +5%, with a revenue ‘beat ratio’ of 70.4% and a median surprise of 1.9%.

It’s premature to draw any conclusions from this small sample of results, but the chart below shows how the earnings and revenue growth rates for Q2 thus far compare to what these same companies reported in 2014 Q1 and the 4-quarter average. Keep in mind, however, that we have a very small sample size at this stage.

Expectations for 2014 Q2

The composite (or blended) growth picture for Q2, combining the actual results for the 27 companies that have reported with estimates for the 473 still-to-come reports, shows total earnings increasing by +3.2% on +1.1% higher revenues and modestly higher net margins. This would follow earnings growth of +0.8% in Q1 on +0.7% higher revenues.

The table below compares what is expected for Q2 with what was actually achieved in Q1.

Estimates for Q2 came down over the last three months, largely in-line with the negative revisions trend that has been in place for quite some time. The current expected growth rate of +3.2% is down from +5.5% at the start of the quarter. The magnitude of negative revisions in Q2, however, was relatively on the lower side relative to other recent quarters, likely indicating the analyst community’s improving growth outlook.

It will be interesting to see if the lower decline in Q2 estimates over the last few months will get repeated for Q3 estimates as well, which will start evolving over the coming days as companies share their business outlook for the current and coming quarters. The economic picture has no doubt improved, particularly for the U.S. economy. Europe remains stable, but appears to have lost some of its growth momentum already. China has been a source of uncertainty for some time and will likely remain so through this earnings season.

The chart below shows consensus earnings growth expectations for the coming quarters.


Corporate guidance, which has persistently been on the weak side in recent quarters, will determine whether those expectations will hold or will need to come down.

For a detailed look at the earnings picture, please check out our weekly Earnings Tends report.


  • Not much on the economic and earnings calendars today, with Citigroup (C) as the key earnings report in the morning.
  • Citigroup broke a string of mixed results by surprising on EPS and revenues in Q1 and is expected to earn $1.08 per share on $18.8 billion in revenues, with the Q2 EPS estimate down -8.6% over the past month.

Tuesday -7/15

  • June Retail Sales and Janet Yellen’s Congressional testimony will be the highlights on the economic calendar.
  • A busy day on the earnings calendar, with J.P. Morgan (JPM - Analyst Report) and Goldman Sachs (GS - Analyst Report) reporting in the morning and Intel (INTC - Analyst Report), Yahoo (YHOO - Analyst Report) and CSX Corp (CSX) after the close.
  • Zacks Earnings ESP or Expected Surprise Prediction, our proprietary leading indicator of positive earnings surprises, is showing Intel coming out with an earnings beat. Our research shows that companies with positive ESP and Zacks Rank of 1, 2 or 3 are highly likely to beat earnings estimates. Intel currently has Zacks Rank #1 (Strong Buy) and Earnings ESP of +1.9%.
  • To better understand Zacks Expected Surprise Prediction, please click here.  


  • June Industrial Production, PPI and a second day of the Fed Chairwoman’s Congressional testimony are on the economic calendar.
  • Bank of America (BAC) and Abbot Labs (ABT) are the notable earnings reports in the morning, while eBay (EBAY) and Yum Brands (YUM - Analyst Report) will report after the close.
  • Bank of America is expected to earn $0.29 on $21.6 billion in revenues, with the Q2 EPS estimate down -5.2% over the past month. The company missed estimates in 2014 Q1.

Thursday -7/17

  • The June Housing Starts and the July Philly Fed will be the key economic data in addition to weekly initial Jobless Claims.
  • Google (GOOGL - Analyst Report) and IBM (IBM - Analyst Report) are the key reports after the close today, while Morgan Stanley (MS - Analyst Report) will report before the open.
  • Earnings ESP is showing Google coming out with a positive EPS surprise. The company has a Zacks Rank #3 (Hold) and Earnings ESP of +1.4%.


  • The University of Michigan’s July Consumer Sentiment survey and the June Leading Indicators are the only major economic reports today.
  • GE (GE - Analyst Report), Johnson & Johnson (JNJ - Analyst Report) and Whirlpool (WHR - Analyst Report) are the key reports today, all in the morning.
  • JNJ with a Zacks Rank #2 (Buy) and ESP of +0.7% is expected to beat EPS estimates.

Here is a list of the 153 companies reporting this week, including 60 S&P 500 members.

Company Ticker Current Qtr Year-Ago Qtr Last EPS Surprise % Report Day Time
CITIGROUP INC C 1.08 1.25 10.17 Monday BTO
SEMILEDS CORP LEDS -0.25 -0.26 -9.52 Monday AMC
MILLER ENERGY MILL -0.1 -0.33 56.67 Monday AMC
BANK OZARKS OZRK 0.33 0.28 4.62 Monday AMC
PEREGRINE PHARM PPHM -0.08 -0.06 14.29 Monday AMC
SARATOGA INVEST SAR 0.36 0.52 -38.64 Monday AMC
WINTRUST FINL WTFC 0.72 0.69 3.03 Monday AMC
COMERICA INC CMA 0.76 0.76 1.39 Tuesday BTO
CSX CORP CSX 0.52 0.52 5.26 Tuesday AMC
CINTAS CORP CTAS 0.75 0.69 -1.43 Tuesday AMC
GOLDMAN SACHS GS 3.07 3.7 17.2 Tuesday BTO
INTEL CORP INTC 0.52 0.39 2.7 Tuesday AMC
JOHNSON & JOHNS JNJ 1.54 1.48 4.05 Tuesday BTO
JPMORGAN CHASE JPM 1.3 1.6 -9.22 Tuesday BTO
YAHOO! INC YHOO 0.3 0.3 3.45 Tuesday AMC
ADTRAN INC ADTN 0.25 0.18 12.5 Tuesday AMC
AAR CORP AIR 0.41 0.5 -20 Tuesday AMC
BOSTON PRIV FIN BPFH 0.2 0.18 0 Tuesday AMC
COMMERCE BANCSH CBSH 0.68 0.69 -1.47 Tuesday BTO
INTERACTIVE BRK IBKR 0.29 0.21 17.24 Tuesday AMC
HUNT (JB) TRANS JBHT 0.79 0.73 -7.94 Tuesday BTO
LORUS THERAPEUT LRUSF -0.02 -0.03 33.33 Tuesday AMC
PINNACLE FIN PT PNFP 0.48 0.42 4.44 Tuesday AMC
RENASANT CORP RNST 0.44 0.33 10.26 Tuesday AMC
SKF AB SKFRY N/A 0.35 N/A Tuesday N/A
WOLVERINE WORLD WWW 0.27 0.23 26.67 Tuesday BTO
ABBOTT LABS ABT 0.51 0.46 17.14 Wednesday BTO
BANK OF AMER CP BAC 0.29 0.32 -200 Wednesday BTO
BLACKROCK INC BLK 4.47 4.15 8.05 Wednesday BTO
EBAY INC EBAY 0.58 0.54 1.75 Wednesday AMC
KINDER MORGAN KMI 0.28 0.27 -15.15 Wednesday AMC
M&T BANK MTB 1.9 2.1 3.11 Wednesday BTO
NORTHERN TRUST NTRS 0.84 0.78 -3.85 Wednesday BTO
PNC FINL SVC CP PNC 1.77 1.99 9.64 Wednesday BTO
SCHWAB(CHAS) SCHW 0.22 0.18 9.09 Wednesday BTO
SANDISK CORP SNDK 1.28 1.14 12.82 Wednesday AMC
ST JUDE MEDICAL STJ 1 0.96 1.05 Wednesday BTO
TEXTRON INC TXT 0.47 0.4 -10 Wednesday BTO
US BANCORP USB 0.77 0.76 0 Wednesday BTO
YUM! BRANDS INC YUM 0.73 0.56 3.57 Wednesday AMC
ASML HOLDING NV ASML 1.04 0.67 -23.46 Wednesday BTO
ATLAS COP-ADR A ATLKY 0.37 0.39 2.94 Wednesday N/A
COHEN&STRS INC CNS 0.44 0.34 7.5 Wednesday AMC
EL PASO PIPELIN EPB 0.37 0.43 5.88 Wednesday AMC
EAST WEST BC EWBC 0.58 0.52 13.73 Wednesday AMC
FBR & CO FBRC 0.62 3.35 15 Wednesday BTO
FIRST REP BK SF FRC 0.76 0.64 4.69 Wednesday BTO
BLACKHAWK NETWK HAWK 0.03 0.15 -33.33 Wednesday AMC
HNI CORP HNI 0.34 0.28 33.33 Wednesday AMC
IGATE CORP IGTE 0.44 0.36 10.81 Wednesday BTO
KINDER MORG ENG KMP 0.57 0.49 4.29 Wednesday AMC
LAS VEGAS SANDS LVS 0.89 0.72 4.3 Wednesday AMC
MILLICOM INTL MIICF N/A 0.66 -42.99 Wednesday BTO
MGIC INVSTMT CP MTG 0.13 0.03 66.67 Wednesday BTO
NEPTUNE TEC&BIO NEPT -0.08 -0.07 12.5 Wednesday N/A
PLEXUS CORP PLXS 0.72 0.68 0 Wednesday AMC
PLATINUM UNDRWT PTP 1.38 1.23 80.16 Wednesday AMC
RLI CORP RLI 0.66 0.63 5.56 Wednesday AMC
SELECT COMFORT SCSS 0.14 0.18 0 Wednesday AMC
TAIWAN SEMI-ADR TSM 0.37 0.33 3.57 Wednesday BTO
UNIVL FST PRODS UFPI 1.32 0.79 -14.29 Wednesday AMC
UTD RENTALS INC URI 1.44 1.12 28.57 Wednesday AMC
ALLIANCE DATA ADS 2.57 2.27 2.7 Thursday BTO
AUTONATION INC AN 0.87 0.73 0 Thursday BTO
BAXTER INTL BAX 1.21 1.16 8.18 Thursday BTO
BAKER-HUGHES BHI 0.89 0.61 6.33 Thursday BTO
CAPITAL ONE FIN COF 1.78 2.07 14.37 Thursday AMC
DANAHER CORP DHR 0.94 0.87 1.25 Thursday BTO
DOVER CORP DOV 1.28 1.36 -0.98 Thursday BTO
FIFTH THIRD BK FITB 0.45 0.43 -12.2 Thursday BTO
GOOGLE INC-CL A GOOGL 5.16 3.88 -0.93 Thursday AMC
GRAINGER W W GWW 3.11 3.03 3.37 Thursday BTO
INTL BUS MACH IBM 4.31 3.91 0 Thursday AMC
KEYCORP NEW KEY 0.25 0.21 8.33 Thursday BTO
MATTEL INC MAT 0.19 0.21 -137.5 Thursday BTO
MORGAN STANLEY MS 0.55 0.45 13.33 Thursday BTO
OMNICOM OMC 1.17 1.09 1.27 Thursday BTO
PEOPLES UTD FIN PBCT 0.2 0.2 -5 Thursday AMC
PHILIP MORRIS PM 1.24 1.3 1.71 Thursday BTO
PPG INDS INC PPG 2.79 2.45 5.32 Thursday BTO
SHERWIN WILLIAM SHW 2.9 2.54 5.56 Thursday BTO
SCHLUMBERGER LT SLB 1.36 1.15 0.83 Thursday AMC
SNAP-ON INC SNA 1.68 1.52 4.52 Thursday BTO
SEAGATE TECH STX 1.09 1.2 6.35 Thursday AMC
SAFEWAY SWY 0.25 0.5 -68.42 Thursday N/A
STRYKER CORP SYK 1.1 1 -2.75 Thursday AMC
UNITEDHEALTH GP UNH 1.25 1.4 0.92 Thursday BTO
ADV MICRO DEV AMD 0.02 -0.09 0 Thursday AMC
AMER RIVER BSH AMRB 0.11 0.07 33.33 Thursday AMC
ASSOC BANC CORP ASBC 0.28 0.28 8 Thursday AMC
ATHENAHEALTH IN ATHN 0.02 -0.26 -700 Thursday AMC
B&G FOODS CL-A BGS 0.39 0.33 -12.82 Thursday AMC
BLACKSTONE GRP BX 0.65 0.62 25 Thursday BTO
CELANESE CP-A CE 1.23 1.12 9.92 Thursday AMC
COBIZ FINL INC COBZ 0.17 0.18 -18.75 Thursday AMC
CDN PAC RLWY CP 1.98 1.39 -5.07 Thursday BTO
CEPHEID INC CPHD -0.13 -0.08 31.58 Thursday AMC
CYPRESS SEMICON CY 0.03 0.06 125 Thursday BTO
CYTEC INDS INC CYT 1.51 1.51 5.97 Thursday AMC
ELECTRN IMAGING EFII 0.22 0.3 30.43 Thursday AMC
EASTGROUP PPTYS EGP 0.85 0.8 1.23 Thursday AMC
FIRST CASH FINL FCFS 0.54 0.57 10.45 Thursday BTO
FAIRCHILD SEMI FCS 0.11 0.01 33.33 Thursday BTO
GLIMCHER REALTY GRT 0.17 0.18 -5.88 Thursday AMC
HOME LOAN SERVC HLSS 0.55 0.48 3.77 Thursday BTO
HOME BANCSHARES HOMB 0.44 0.31 2.38 Thursday BTO
HUB GROUP INC-A HUBG 0.5 0.5 -8.33 Thursday AMC
INDEP BK MASS INDB 0.63 0.58 -7.27 Thursday AMC
MATTHEWS INTL-A MATW 0.8 0.72 3.51 Thursday AMC
NEOGENOMICS INC NEO 0.01 0.01 0 Thursday BTO
NETSCOUT SYSTMS NTCT 0.22 0.17 7.32 Thursday BTO
NOVARTIS AG-ADR NVS 1.36 1.3 -1.5 Thursday BTO
ORBITAL SCIENCE ORB 0.31 0.27 -8 Thursday BTO
PREMIERE GLOBAL PGI 0.16 0.18 35.71 Thursday AMC
POOL CORP POOL 1.62 1.39 -10 Thursday BTO
PRIVATEBANCORP PVTB 0.44 0.37 7.32 Thursday BTO
RESOURCES CNCTN RECN 0.18 0.16 20 Thursday AMC
SAP AG ADR SAP 0.88 0.93 24.19 Thursday BTO
SANDY SPRING SASR 0.38 0.49 13.16 Thursday BTO
SIMMONS FIRST A SFNC 0.54 0.39 -4.17 Thursday BTO
SONOCO PRODUCTS SON 0.66 0.59 1.96 Thursday BTO
SKYWORKS SOLUTN SWKS 0.71 0.45 0 Thursday AMC
TELIASONERA-ADR TLSNY N/A 0.28 -12.5 Thursday N/A
ULTRATECH STEP UTEK -0.08 0.03 -19.05 Thursday BTO
VALMONT INDS VMI 2.38 3.17 2.33 Thursday AMC
WESTERN ALLIANC WAL 0.37 0.31 0 Thursday AMC
WEBSTER FINL CP WBS 0.51 0.48 2.04 Thursday BTO
WNS HLDGS-ADR WNS 0.3 0.25 5.71 Thursday BTO
WATSCO INC WSO 1.7 1.48 2.13 Thursday BTO
ZHONE TECH INC ZHNE 0.01 0.03 0 Thursday AMC
BANK OF NY MELL BK 0.56 0.62 11.11 Friday BTO
GENL ELECTRIC GE 0.39 0.35 3.13 Friday BTO
HONEYWELL INTL HON 1.35 1.28 1.59 Friday BTO
INTERPUBLIC GRP IPG 0.25 0.18 44.44 Friday BTO
JOHNSON CONTROL JCI 0.82 0.78 -1.54 Friday BTO
KANSAS CITY SOU KSU 1.17 0.96 7.14 Friday BTO
LABORATORY CP LH 1.77 1.8 -5.63 Friday BTO
V F CORP VFC 0.35 0.32 4.69 Friday BTO
WHIRLPOOL WHR 2.94 2.4 -4.35 Friday BTO
AUTOLIV INC ALV 1.54 1.44 0.7 Friday BTO
BADGER METER BMI 0.59 0.44 -27.27 Friday AMC
CEMEX SA ADR CX 0.01 -0.04 -50 Friday N/A
ERICSSON LM ADR ERIC 0.14 0.14 -6.67 Friday BTO
FIRST HRZN NATL FHN 0.16 0.17 26.67 Friday BTO
KNOLL INC KNL 0.22 0.17 50 Friday BTO
SVENSKA CELLULS SVCBY N/A 0.25 -26.67 Friday N/A
YARA INTL-ADR YARIY 1.06 1.37 18 Friday N/A

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