Content Provided by Zacks.com
Estimates Sliding Away
Highlighted stocks include Apple (AAPL - Analyst Report), National City (NCC), Norfolk Sothern (NSC - Snapshot Report), Schering Plough (SGP) and Yahoo (YHOO - Analyst Report)
Apple posted EPS of $1.26 versus expectations of $1.11. EPS was 24.8% above last year.
Scorecard and Median EPS Growth Rates
- 144 or 28.8% of S&P Companies have reported through Tuesday, Oct 21
- Surprise ratio at 1.74, median surprise at 2.21% - both somewhat below normal
- Median EPS growth at 7.1% is surprisingly good given the economic environment
- Health Care (16 firms, up 19%) and Energy (5 firms, up 18.8%) doing best in early results
- Financials (32 firms, down 58.8%) doing the worst
- Expected growth of 9.5% for those left to report
- Health Care and Materials leading on surprise front, Financials disappointing
- Significant positive surprises: Norfolk Sothern (NSC - Snapshot Report), Schering Plough (SGP), Apple (AAPL - Analyst Report)
- Significant negative surprises: National City (NCC), Yahoo (YHOO - Analyst Report)
Positives
Norfolk Southern posted EPS of $1.37 versus an expected $1.21. Profits were 34.3% above last year.
Schering Plough posted EPS of $0.39 versus an expected $0.31. Earnings were 39.3% above last year.
Negatives
Yahoo posted EPS of $0.04 versus expectations of $0.09. Profits were down 63.6% from a year ago.
National City posted a loss of $0.85 per share versus an expected loss of $0.47. NCC was profitable a year ago.
Share repurchases were still very significant in the fourth quarter of last year and the first quarter of this year (the data is not out yet for the second quarter) and the reduction in share count also boosts EPS growth.
Currency translation gains will be less of a factor this quarter due to the rebound in the dollar. However, the strong overseas demand that the previously very weak dollar stimulated will still prove to be a boost to the earnings of many firms. The delay is because in the third quarter, they will be shipping goods ordered previously.
Given both the rebound in the dollar and the very significant economic slowdown abroad, look for the export boom to fade in the fourth quarter and into 2009.
| Sector | Q3 08 Median Growth Rep. | Q4 08 Median Proj. Growth. | 2007 Median Rep. Growth | 2008 Median Proj. Growth | % Reported | Median % Surprise | # Pos Surprise | # Neg Surprise | # Match |
| Healthcare | 18.96% | 10.19% | 19.86% | 16.16% | 30.19% | 4.70% | 12 | 2 | 2 |
| Energy | 18.75% | 19.82% | 23.15% | 14.46% | 12.50% | 2.38% | 4 | 0 | 1 |
| Tech | 18.30% | 1.25% | 3.15% | 11.76% | 35.14% | 3.01% | 15 | 8 | 3 |
| Industrial | 10.08% | 8.04% | 10.91% | 9.77% | 40.35% | 1.05% | 14 | 7 | 2 |
| Cons. Disc. | 8.20% | -1.19% | 11.83% | 1.93% | 25.93% | 0.00% | 10 | 6 | 5 |
| Cons. Stap. | 7.07% | 4.72% | 11.80% | 9.86% | 29.27% | 2.15% | 7 | 4 | 1 |
| Materials | 0.00% | 6.67% | 14.93% | 2.17% | 30.00% | 6.45% | 6 | 3 | 0 |
| Telecom | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 0 | 0 | 0 |
| Utilities | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 0 | 0 | 0 |
| Financial | -58.77% | 13.76% | -14.83% | -16.00% | 38.10% | -3.63% | 14 | 17 | 1 |
| S&P 500 | 7.07% | 5.71% | 10.19% | 7.73% | 28.80% | 2.21% | 82 | 47 | 15 |
| Sector | Q3 08 Proj. Growth | Q4 08 Proj. Growth | 2007 Rep. Growth | 2008 Proj. Growth | 2009 Proj. Growth |
||
| Energy | 27.37% | 27.87% | 12.83% | 27.49% | 15.64% | ||
| Tech | 15.79% | 7.47% | 21.37% | 11.24% | 14.77% | ||
| Telecom | 15.52% | 0.00% | -2.94% | 6.11% | 13.19% | ||
| Industrial | 14.59% | 13.25% | 20.06% | 13.51% | 8.43% | ||
| Healthcare | 13.76% | 14.52% | 16.55% | 12.34% | 10.79% | ||
| Cons. Stap. | 10.53% | 9.09% | 11.11% | 10.10% | 10.79% | ||
| Utilities | 8.14% | 9.23% | 9.09% | 5.69% | 10.79% | ||
| Materials | 6.58% | 3.30% | 10.85% | 3.55% | 10.79% | ||
| Financial | -4.86% | 5.77% | 14.09% | -5.49% | 10.79% | ||
| Cons. Disc. | -7.23% | -1.85% | 7.14% | 1.93% | 10.79% | ||
| S&P 500 | 9.54% | 9.16% | 13.39% | 8.40% | 10.79% | ||
Total Net Income Growth
- Total net income of those that have reported down 18.8% from last year
- Total reported net income so far $58.7 billion versus $72.3 billion for same firms last year
- Firms that have reported earned $60.8 billion in the second quarter
- Combining results with expectations, net income is now expected to be down 9.0% year-over-year, which seems very optimistic
- Financials are down 77.1% so far, a decline of 73.8% expected when all is said and done
- Excluding Financials, net income is up 7.43% so far
6 sectors expected to post lower total earnings than a year ago - Energy is the only sector expected to post robust growth, up 46.2%; Staples is next best up 5.8%
- Tech and Consumer Discretionary are doing well in early results, but expected to fade
- Expectations for the 4th quarter have dropped to +21.8% from +23.8% on Thursday, but still look very optimistic to me.
- Full year net income in 2009 expected to be 16.0% above 2007 levels.
- Count me as extremely skeptical, earnings in 2009 will likely be lower than in 2008
| Sector | Q1 08 Rep. Growth | Q2 08 Rep. Growth | Q3 08 Rep. Growth | Q4 08 Proj. Growth | 2007 Rep. Growth | 2008 Proj. Growth | 2009 Proj. Growth |
|
| Energy | 7.56% | 18.47% | 30.08% | 15.67% | 20.31% | 18.76% | 23.24% | |
| Technology | 24.83% | 27.93% | 16.91% | -13.15% | 15.70% | 17.29% | 13.41% | |
| Cons. Disc. | -16.35% | -14.43% | 16.29% | -6.69% | -7.27% | 4.17% | 15.41% | |
| Cons. Stap. | 12.36% | -18.31% | 7.56% | 2.92% | 15.71% | 9.75% | 7.64% | |
| Health Care | 2.90% | 11.86% | 6.25% | -1515.20% | 18.68% | 10.51% | 7.36% | |
| Industrials | 6.64% | 5.99% | -1.59% | -7.92% | 12.15% | 1.37% | 1.68% | |
| Materials | 23.90% | 3.91% | -8.50% | 1.50% | 25.05% | 1.37% | 8.70% | |
| Financials | -76.04% | -77.44% | -77.14% | -204.08% | -32.02% | -77.27% | 284.02% | |
| S&P | -27.10% | -27.27% | -18.76% | 64.42% | -5.88% | -18.53% | 33.00% | |
| Sector | Q3 08 Income | Q3 07 Income | Q2 08 Income | Q2 07 Income |
||
| Industrial | $13,228 | 1344200.00% | $14,677 | 1384700.00% | ||
| Health Care | $13,009 | 1224300.00% | $12,580 | 1124600.00% | ||
| Technology | $11,377 | 973200.00% | $11,187 | 874400.00% | ||
| Cons. Stap. | $5,815 | 540600.00% | $4,460 | 546000.00% | ||
| Financials | $5,120 | 2239300.00% | $7,735 | 3428500.00% | ||
| Cons. Disc. | $4,292 | 369100.00% | $2,793 | 326500.00% | ||
| Energy | $3,240 | 249100.00% | $2,807 | 237000.00% | ||
| Materials | $2,664 | 291200.00% | $4,572 | 440000.00% | ||
| S&P | $58,744 | 7230900.00% | $60,810 | 8361600.00% | ||
| Sector | Q1 08 Rep. Growth | Q2 08 Rep. Growth | Q3 08 Proj. Growth | Q4 08 Proj. Growth | 2007 Rep. Growth | 2008 Proj. Growth | 2009 Proj. Growth |
|
| Energy | 27.66% | 17.50% | 47.62% | 15.54% | 4.81% | 34.57% | 4.28% | |
| Cons. Stap. | 11.85% | 11.38% | 5.11% | 11.73% | 10.74% | 13.49% | 8.67% | |
| Materials | 7.72% | 5.82% | 4.10% | 5.37% | 2.84% | 9.75% | 5.86% | |
| Health Care | 4.54% | 5.28% | 3.29% | 5.85% | 19.26% | 8.50% | 11.75% | |
| Industrials | 4.76% | 6.48% | 0.52% | 4.15% | 11.27% | 8.93% | 13.08% | |
| Utilities | 8.90% | 3.79% | -1.85% | 3.25% | 10.39% | 6.23% | 9.16% | |
| Technology | 4.38% | 5.34% | -3.92% | 1.36% | 27.45% | 10.50% | 14.50% | |
| Telecom | 1.41% | -1.11% | -10.29% | -9.33% | 17.66% | -1.26% | 5.61% | |
| Cons. Disc. | -21.86% | -65.76% | -37.70% | -26.52% | -5.88% | -25.05% | 41.53% | |
| Financials | -65.70% | -61.73% | -70.10% | 70.36% | 2.09% | -49.32% | 59.46% | |
| S&P | -3.91% | -9.92% | -3.63% | 8.09% | 8.87% | 2.56% | 14.55% | |
| Sector | Q1 08 Rep. Growth | Q2 08 Rep. Growth | Q3 08 Proj. Growth | Q4 08 Proj. Growth | 2007 Rep. Growth | 2008 Proj. Growth | 2009 Proj. Growth |
|
| Energy | 26.00% | 17.56% | 46.17% | 15.55% | 5.89% | 33.32% | 5.62% | |
| Cons. Stap. | 11.98% | 3.20% | 5.75% | 9.64% | 11.99% | 12.52% | 8.41% | |
| Health Care | 3.70% | 8.44% | 4.78% | 5.42% | 18.98% | 9.49% | 9.56% | |
| Technology | 11.29% | 13.87% | 3.97% | -4.96% | 22.56% | 13.16% | 14.05% | |
| Industrials | 5.84% | 6.18% | -0.73% | -3.38% | 11.80% | 4.36% | 6.38% | |
| Materials | 16.43% | 4.78% | -1.48% | 3.75% | 13.25% | 5.42% | 7.27% | |
| Utilities | 8.90% | 3.79% | -1.85% | 3.25% | 10.39% | 6.23% | 9.16% | |
| Telecom | 1.41% | -1.11% | -10.29% | -9.33% | 17.66% | -1.26% | 5.61% | |
| Cons. Disc. | -20.58% | -56.97% | -23.19% | -22.92% | -6.19% | -18.65% | 34.21% | |
| Financials | -72.12% | -71.42% | -73.83% | -634.03% | -19.39% | -64.16% | 135.13% | |
| S&P | -13.00% | -16.48% | -9.03% | 21.79% | 3.04% | -5.06% | 20.27% | |