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Zacks Earnings Preview: Alcoa, FedEx, Oracle and Nike

            Zacks Earnings Preview: Alcoa, FedEx, Oracle and Nike

PR Newswire

CHICAGO, Ill., Oct. 1, 2012

CHICAGO, Ill., Oct. 1, 2012 /PRNewswire/ -- Zacks.com releases the list of
companies likely to issue earnings surprises. This week's list includes Alcoa
(NYSE:AA), FedEx (NYSE:FDX), Oracle (Nasdaq:ORCL) and Nike (NYSE:NKE).

(Logo: http://photos.prnewswire.com/prnh/20101027/ZIRLOGO)

To see more earnings analysis, visit http://at.zacks.com/?id=3207.

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Big Week for Economic Data

Economic reports dominate the news flow this week, with the September non-farm
payroll report coming out on Friday as the most significant. The tepid pace of
jobs improvement has been a persistent source of frustration for investors.
But the loss of momentum in the manufacturing sector in recent months has
added to those worries. The two ISM surveys on deck this week will give a good
sense of where the factory and service sectors stood.

Alcoa's (NYSE:AA) release the following week will 'unofficially' kick-off the
third reporting season, but we 'officially' count all companies that have
financial quarters ending in August as part of our third quarter results
tally. As such, recent earnings from reports FedEx (NYSE:FDX), Oracle
(Nasdaq:ORCL), Nike (NYSE:NKE) and others are part of the 'official' third
quarter tally.

That said, it is the very early going at this stage. We will need to wait two
to three more weeks to get a sense of the third quarter reporting season.

We have a total of 16 companies reporting results this week, including five
S&P 500 companies. Expectations for the third quarter remain quite low, with
total earnings expected to drop 3% from the same period last year. This growth
expectation reflects a 2.4% drop in total revenues and a 10-basis point
expansion in net margins.

The actual growth rates will most likely be better than these pre-season
expectations, given how company managements have refined the art of
under-promising and over-delivering quarter after quarter. Just to give you an
idea of how good they are at anchoring expectations, roughly two-thirds of the
companies in the S&P 500 would typically beat earnings expectations in any
given quarter – it was 62% in the second quarter and 65% in the first quarter.

If we do get negative earnings growth this quarter as currently expected, that
will be the first decline in quarterly earnings since the earnings recovery
got underway after the end of the Great Recession in 2009. The earnings
weakness is quite broad-based, with half of the 16 Zacks sectors expected to
have negative earnings growth.

As was the case in the second quarter, the Energy and Basic Material sectors
are the weakest, with earnings declines of 24.9% and 22.3%, respectively.
Energy and Basic Materials earnings were down 16% and 20.5% respectively in
the second quarter, when total earnings for the S&P 500 as a whole were up 4%.

Only two sectors are expected to have double-digit earnings growth – Finance
(up 15.5%) and Construction (up 42.3%). Construction doesn't carry much weight
in the aggregate picture as it contributes less than 0.5% of total S&P 500
earnings, but the Finance strength is making the aggregate growth rate look a
lot better than it otherwise would be. Excluding Finance, total S&P 500
earnings in the third quarter would be down 6.6%.

Sheraz Mian is the Director of Research for Zacks.com.

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
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tumbled -37.6%. Also note that the Zacks Rank system has just as many Strong
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1988, Zacks Rank #5 stocks have significantly underperformed the S&P 500 (+3%
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Contact: Sheraz Mian
Company: Zacks.com
Phone: 312-265-9211
Email: pr@zacks.com
Visit: www.Zacks.com

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