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Q4 Earnings Season Gets Underway

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Q4 Earnings Season Gets Underway

We are still some days away from what is ‘unofficially’ considered the start of the fourth earnings season when aluminum producer Alcoa (AA) reports results on January 8th. But we ‘officially’ count all companies that have financial quarters ending in November as part of our fourth quarter results tally.

As such, while taking nothing away from Alcoa’s first-to-report status, we will be counting Tech giant Oracle’s (ORCL) earnings report after the close on Tuesday as the start of the fourth quarter reporting season. And Oracle is not alone; we have a total of 45 companies reporting results this week, including 16 S&P 500 members. Companies reporting results include FedEx (FDX) on Wednesday, Discover Financial (DFS) and Nike (NKE) on Thursday and Walgreen’s (WAG) on Friday. But in fairness to Alcoa, the reporting cycle each quarter really gets going after it comes out with results.   

Earnings expectations for the fourth quarter have been steadily coming down over the last three months, but they still remain positive. At present, total earnings for companies in the S&P 500 are expected to be up 1.2% from the same period last year. This is a sharp drop from the roughly 7% earnings growth rate that consensus expected just three months ago. That said, it is still a better performance than what was expected in the third quarter just before the start of that reporting cycle.

At this stage in the third quarter, total earnings were expected to be down 3.4% from the same period last year. Actual results came out a little better than that, with total third quarter earnings just barely in positive territory (up only 0.1%) on essentially flat revenues (down 0.5%). Excluding Finance, total earnings in the third quarter were down 3.9%, while total ex-Finance revenues were down 1.1%.

Even the once-mighty Tech sector had barely positive earnings growth in the third quarter (up only 0.5%), while Finance and Construction were the only sectors with double-digit earnings growth. In total, half of the 16 Zacks sectors had negative earnings comparisons in the third quarter. In the fourth quarter, a total of 9 sectors will have negative earnings growth, with Tech sector earnings expected to be down 4.6% from the same period last year.

Basic Materials is expected to see 12.2% earnings growth in the fourth quarter, which will reverse a negative earnings growth over the preceding four quarters. Hard to envision such a material turnaround in an economically sensitive sector, but it’s mostly a function of easy comparisons for companies in this group.

The market’s focus will remain on the unresolved ‘Fiscal Cliff’ issue, but we do have a number of top-tier economic reports on deck, including the November Housing Starts report on Wednesday, Existing Home Sales on Thursday, and the Personal Income & Outlays and Durable Goods reports on Friday.   

Monday - 12/17
  • We will get the New York Fed’s Empire State regional manufacturing index for December in the morning, with expectations of a positive read after November’s -5.2 reading.
  • We will get earnings reports from Factset Research (FDS) and Jefferies (JEF) in the morning.
  • Zacks ESP or Expected Surprise Prediction, our proprietary leading indicator of earnings surprises, is showing Jefferies coming out with a positive earnings surprise.

Tuesday - 12/18

  • We will get the December Homebuilder sentiment index, with expectations that the index will remain unchanged at the prior month’s 46 reading.
  • We will get Oracle’s (ORCL) earnings report after the close. Zacks ESP is showing Oracle coming short of expectations.

Wednesday - 12/19

  • We will get the November Housing Starts in the morning, with expectations of a pullback from the prior month’s 894K level.
  • On the earnings front, we will results from FedEx (FDX) and General Mills (GIS) in the morning, while Accenture (ACN) and Bed, Bath & Beyond (BBBY) will report after the close.  
  • According to Zacks ESP, General Mills is expected to beat expectations, while Bed, Bath & Beyond is expected to come short.  

Thursday - 12/20

  • Today is a busy day on the economic calendar. In addition to weekly Jobless Claims, we will get the final read on third quarter GDP report, Existing Home Sales, Leading Indicators and the Philly Fed survey.
  • We will get results from Discover Financial (DFS), Darden Restaurants (DRI), ConAgra Foods (CAG) and KB Homes (KBH) in the morning, while Nike (NIKE) will report after the close.
  • Zacks ESP is showing Discover, ConAgra and Nike coming short of expectations.  

Friday - 12/21

  • We will get the November Personal Income & Outlays and Durable Goods reports in the morning, while the December University of Michigan Consumer Sentiment survey comes out a little later.
  • Walgreens (WAG) will report results in the morning.

Here is a list of the 45 companies reporting this week, including 16 S&P 500 members.

Company Ticker Current Qtr Year-Ago Qtr Last EPS Surprise % Report Day Time
SHFL ENTERTNMT SHFL 0.21 0.18 -10 Monday AMC
STEWART ENTRP A STEI 0.1 0.09 22.22 Monday AMC
AAR CORP AIR 0.41 0.45 7.14 Tuesday AMC
APOGEE ENTRPRS APOG 0.24 0.2 88.89 Tuesday AMC
FACTSET RESH FDS 1.11 1.02 3.74 Tuesday BTO
HEICO CORP HEI 0.43 0.4 2.44 Tuesday AMC
JEFFERIES GP-NW JEF 0.34 0.17 0 Tuesday BTO
NORDION INC NDZ 0.26 0.25 31.58 Tuesday AMC
ORACLE CORP ORCL 0.58 0.53 -3.92 Tuesday AMC
SANDERSON FARMS SAFM 0.32 -0.7 13.64 Tuesday BTO
ACCENTURE PLC ACN 1.04 0.96 0 Wednesday AMC
ACTUANT CORP ATU 0.5 0.5 1.85 Wednesday BTO
BED BATH&BEYOND BBBY 1.02 0.95 -3.92 Wednesday AMC
CASH STORE FINL CSFS 0.02 0.11 -120 Wednesday AMC
CHINAEDU CP-ADR CEDU 0.11 0.07 42.86 Wednesday AMC
COASTAL CONTACT COA -0.11 999 N/A Wednesday AMC
FEDEX CORP FDX 1.4 1.57 3.57 Wednesday BTO
GENL MILLS GIS 0.79 0.76 6.45 Wednesday BTO
HERMAN MILLER MLHR 0.39 0.41 -2.56 Wednesday AMC
JABIL CIRCUIT JBL 0.47 0.56 -12 Wednesday AMC
PAYCHEX INC PAYX 0.4 0.39 2.44 Wednesday AMC
STEELCASE INC SCS 0.21 0.19 31.58 Wednesday AMC
AMER GREETINGS AM 0.48 0.5 71.43 Thursday BTO
BIOANALYTIC SYS BASI -0.03 -0.1 92.86 Thursday BTO
CALAMP CORP CAMP 0.12 0.07 12.5 Thursday AMC
CARMAX GP (CC) KMX 0.39 0.36 -7.69 Thursday BTO
CINTAS CORP CTAS 0.63 0.57 3.45 Thursday AMC
CONAGRA FOODS CAG 0.55 0.47 25.71 Thursday BTO
DARDEN RESTRNT DRI 0.26 0.41 2.41 Thursday BTO
DISCOVER FIN SV DFS 1.12 0.95 17.48 Thursday BTO
FUELCELL ENERGY FCEL -0.05 -0.06 -50 Thursday AMC
KB HOME KBH 0.06 0.18 41.18 Thursday BTO
MARCUS CORP MCS 0.15 0.1 -24.49 Thursday BTO
MICRON TECH MU -0.19 -0.19 -9.09 Thursday AMC
NEOGEN CORP NEOG 0.28 0.22 3.7 Thursday BTO
NIKE INC-B NKE 1 1 13.39 Thursday AMC
RED HAT INC RHT 0.2 0.21 -4.76 Thursday AMC
RESEARCH IN MOT RIMM -0.35 1.27 2.17 Thursday AMC
RESOURCES CNCTN RECN 0.17 0.11 0 Thursday AMC
RITE AID CORP RAD -0.04 -0.06 37.5 Thursday BTO
SCHOLASTIC CORP SCHL 2.05 2.62 2.86 Thursday BTO
SHILOH INDS INC SHLO 0.19 0.14 100 Thursday BTO
TIBCO SOFTWARE TIBX 0.32 0.37 0 Thursday AMC
WINNEBAGO WGO 0.09 0.04 -17.65 Thursday BTO
WALGREEN CO WAG 0.68 0.63 -5.45 Friday BTO

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