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For Immediate Release
Chicago, IL – July 16, 2012 – Zacks Director of Research, Sheraz Mian, says that early on, reports do not inspire much confidence about the rest of the earnings season.
A Very Weak Start to Q2 Earnings
We have results from only 32 S&P 500 companies at this stage, but what we have seen thus far -- in terms of the actual reports as well as the pre-announcements -- do not inspire much confidence about the rest of the earnings season. If the trend set by these companies holds through the rest of the season, then we probably have a very weak earnings season on our hands.
Expectations were low to begin with, but growing global growth concerns have been pushing them down even further. By the end of next week, we will have a much more representative sample to judge the quality of this earnings season, as by then we will have seen results from almost a quarter of all S&P 500 results.
The second-quarter 2012 reporting season has gotten underway, but reports from the 32 S&P 500 companies that are already out do not inspire much confidence. With results from 90 companies in the index reporting next week, including bellwethers like Intel ((INTC - Analyst Report)), IBM ((IBM - Analyst Report)), Google ((GOOG - Analyst Report)) and Coca Cola ((KO - Analyst Report)), we will have a representative-enough sample to judge the quality of this earnings season.
Of the 30 that have reported results already, only 17 have come out with positive surprises, with a very weak median surprise of 1.1%, down from the 3.6% median surprise for these same companies in the first quarter.
Total earnings for these 32 companies are flat from the same period last year (up only 0.1%), while these same companies had positive 4.9% growth in the first quarter. This reflects revenue gains of 4% being offset by margin declines of 30 basis points from the same period last year.
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Contact: Sheraz Mian