Back to top

Alcoa, Ford, United, American and Apple are part of Zacks Earnings Preview

Read MoreHide Full Article

For Immediate Release

Chicago, IL – October 03, 2016 – releases the list of companies likely to issue earnings surprises. This week’s list includesAlcoa (NYSE: (AA - Free Report) - Free Report), Ford (NYSE: (F - Free Report) - Free Report), United (NYSE: (UAL - Free Report) -Free Report), American (NASDAQ: (AAL - Free Report) -Free Report) and Apple (NASDAQ: (AAPL - Free Report) - Free Report).

To see more earnings analysis, visit

Every day, makes their Bull Stock of the Day available, free of charge. To see it, click here .

Q3 Earnings Season Preview

Alcoa (NYSE: (AA - Free Report) - Free Report) will report Q3 results on October 10th, but this earnings season has started already, with results from 17 S&P 500 members already out. All of these companies are reporting results for their fiscal periods ending in August, which gets counted as part of our Q3 tally.

Most of the index members are on the calendar quarter and Alcoa is the first among them to come out with quarterly results; hence its reputation for kick-starting each quarterly reporting cycle. But the fact remains that we will have seen results from more than two dozen such index members by the time the Alcoa report comes out.

The chart below shows the quarterly reporting schedule for this earnings season.

Total earnings for the 17 S&P 500 members that have reported results already are up +5.6% from the same period last year on +5.3% higher revenues, with 82.4% beating EPS estimates and 64.7% coming ahead of revenue estimates. This is a better performance than we have seen from the same group of 17 index members in other recent periods.

The picture emerging would be in-line with our modestly favorable commentary on the Q2 earnings season when we were detecting an ever-so-slight improvement in the growth picture. Earnings growth was in negative territory in Q2 – the 5th quarter in a row of earnings declines for the index – but the pace of declines was nevertheless an improvement over what we had seen in the preceding two quarters. This gave rise to the narrative that the worst was likely behind us now on the growth front and that the picture will steadily be improving going forward.

We will see if those hopes will pan out in the coming days, but we probably shouldn’t read too much into the very small sample of reports at this stage.

Q3 Estimates As a Whole

Estimates for Q3 came down as the quarter got underway, in-line with the trend that we have become used to seeing over the last few years. That said, the magnitude of negative revisions that Q3 estimates suffered has been smaller relative to other recent quarters.

Total earnings for the S&P 500 index are currently expected to be down -2.8% from the same period last year on +1% higher revenues. This would compare to 2016 Q2 earnings growth of -2.8% on +0.2% higher revenues.

Energy remains the biggest drag on the aggregate growth picture, with Autos and Transportation as the other major growth laggards. Tough comparisons at Ford (NYSE: (F - Free Report) - Free Report) and the air carriers, particularly United (NYSE: (UAL - Free Report) -Free Report) and American (NASDAQ: (AAL - Free Report) - Free Report), explain the growth issues in those two sectors.

For the two biggest sectors, Technology earnings are expected to be down -1.8% on -1% lower revenues while Finance earnings are expected to be up +3.7% on +1.3% higher revenues. The Tech decline is solely a function of Apple (NASDAQ: (AAPL - Free Report) - Free Report), which is expected to see earnings decline -20.6% from the same period last year on -9.6% lower revenues. Excluding the Apple drag, the Tech sector’s earnings would be up +2.9%.

Expectations Beyond Q3

Q3 is expected to be last quarter of negative-growth with Q4 earnings expected to be in positive territory. The Energy sector drag is expected to end in 2016 Q4 and beyond. We will see if those estimates will hold up as companies report Q3 results and provide guidance for Q4 and beyond. It will be interesting to see if the decelerated pace of negative revisions that we saw the last earnings season will get repeated this time as well.

About the Zacks Rank

Since 1988, the Zacks Rank has proven that "Earnings estimate revisions are the most powerful force impacting stock prices." Since inception in 1988, #1 Rank stocks have generated an average annual return of +28%. During the 2000-2002 bear market, Zacks #1 Rank stocks gained +43.8%, while the S&P 500 tumbled -37.6%. Also note that the Zacks Rank system has just as many Strong Sell recommendations (Rank #5) as Strong Buy recommendations (Rank #1). Since 1988, Zacks Rank #5 stocks have significantly underperformed the S&P 500 (+3% versus +10%). Thus, the Zacks Rank system allows investors to truly manage portfolio trading effectively.

Strong Stocks that Should Be in the News

Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has nearly tripled the market from 1988 through 2015. Its average gain has been a stellar +26% per year. See these high-potential stocks free >>.

Get the full Report on AA - FREE

Get the full Report on F - FREE

Get the full Report on UAL - FREE

Get the full Report on AAL - FREE

Get the full Report on AAPL - FREE

Follow us on Twitter:

Join us on Facebook:

Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.

Media Contact
Zacks Investment Research

800-767-3771 ext. 9339 provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. .

Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.

This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit for information about the performance numbers displayed in this press release.

More from Zacks Press Releases

You May Like