Zacks Earnings Preview: Alcoa, FedEx, Oracle and Nike
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).
To see more earnings analysis, visit http://at.zacks.com/?id=3207.
Every day, Zacks.com makes 4 stock picks available, free of charge. To see
them, go to http://at.zacks.com/?id=3567.
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
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
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.
Zacks "Profit from the Pros" e-mail newsletter offers continuous coverage of
the industries and the stocks poised to outperform the market. Subscribe to
this free newsletter today by visiting http://at.zacks.com/?id=4988.
Zacks.com is a property of Zacks Investment Research, Inc., which was formed
in 1978 by Len Zacks. As a PhD from MIT Len knew he could find patterns in
stock market data that would lead to superior investment results. Amongst his
many accomplishments was the formation of his proprietary stock picking
system; the Zacks Rank, which continues to outperform the market by nearly a 3
to 1 margin. The best way to unlock the profitable stock recommendations and
market insights of Zacks Investment Research is through our free daily email
newsletter; Profit from the Pros. In short, it's your steady flow of
Profitable ideas GUARANTEED to be worth your time! Register for your free
subscription to Profit from the Pros by going to http://at.zacks.com/?id=3568.
Follow us on Twitter: http://twitter.com/zacksresearch
Join us on Facebook: http://www.facebook.com/ZacksInvestmentResearch
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
Visit http://www.zacks.com/performance for information about the performance
numbers displayed in this press release.
Disclaimer: Past performance does not guarantee future results. Investors
should always research companies and securities before making any investments.
Nothing herein should be construed as an offer or solicitation to buy or sell
Contact: Sheraz Mian
SOURCE Zacks Investment Research, Inc.
Press spacebar to pause and continue. Press esc to stop.