Zacks Earnings Preview: Apple, Google, Amazon, Caterpillar and DuPont

    Zacks Earnings Preview: Apple, Google, Amazon, Caterpillar and DuPont

PR Newswire

CHICAGO, Oct. 29, 2012

CHICAGO, Oct. 29, 2012 /PRNewswire/ -- releases the list of
companies likely to issue earnings surprises. This week's list includes Apple
(Nasdaq:AAPL), Google (Nasdaq:GOOG), Amazon (Nasdaq:AMZN), Caterpillar
(NYSE:CAT) and DuPont (NYSE:DD).


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Q3 Earnings: Disappointingly Weak

Having seen more than half of the third quarter earnings reports already, we
probably don't any need any more evidence to pass a definitive judgment on
this earnings season. And what is that verdict? Weak, disappointing, or better
still: disappointingly weak.

We have a ton of earnings reports still to come. In fact, we have 716
companies coming out with results this week, including 106 S&P 500 companies.
This means that by the end of this week we will have seen 75% of third quarter
earnings results. The aggregate metrics will change over the coming days as
more and more companies release results.

But it is unlikely that we will have toned down the 'disappointingly weak'
description for this reporting season. When even companies like Apple
(Nasdaq:AAPL), Google (Nasdaq:GOOG), Amazon (Nasdaq:AMZN), Caterpillar
(NYSE:CAT) and DuPont (NYSE:DD) come short of expectations, then you know that
the earnings picture can't be good.

Here is the current status of the 270 S&P 500 companies that have reported
third quarter results as of Friday, October 25th. Total earnings for these
companies are down 2.8% from the same period last year and only 61% of the
companies are beating earnings expectations. Total revenues are down 2.3%, but
only 30.7% of the companies are able to beat revenue expectations.

In a typical quarter, roughly two-thirds of the companies would beat earnings
expectations, and close to 60% would come ahead of revenue expectations. In
the second quarter of 2012 -- which by no means was a strong earnings season
-- we had 68.3% of the companies that have already reported Q3 results beat
earnings expectations.

On the revenue side, the 'beat ratio' was 39.3% in the second quarter. The
average earnings and revenue 'beat ratios' over the last four quarters for
this same cohort of 270 companies is 69% and 58.2%, respectively.

We always whine that there isn't the much surprise in an 'earnings surprise'
since management teams have fine-tuned expectations by under-promising and
over-delivering. The third quarter earnings season thus far runs counter to
this narrative, as the surprise this time around has predominantly been on the
negative side. May be the redeeming feature of this earnings season is that
the underperformance this time around restores our confidence in the earnings
surprise all over again.

Total earnings for the 241 S&P 500 companies still to report results are
expected to up 1.2% from the same period last year. The composite growth rate
for third quarter total earnings -- where we combine results for the 270
companies that have reported results with what is expected for the 241
companies – is for a decline of 1.1% and revenue decline of 2.5%.

Modestly down Tech sector earnings (down 0.3%) add to seven other sectors that
have negative year-over-year comparisons. The predominantly negative tone of
company guidance has started showing up in estimate revisions, but overall
estimates for the fourth quarter and beyond remain elevated at present.

Total earnings are expected to grow 6.1% in the fourth quarter and in excess
of 11% of in 2013. These growth expectations have come down from a few months
back, but they still have more room to fall.

While earnings may no longer have much "newsy" value, we do have a bunch of
market-moving economic reports on deck as well. The most important economic
report coming out this week is the October non-farm payroll report coming out
on Friday, but we also have the manufacturing ISM report and other key

Sheraz Mian is the Director of Research for

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Since 1988, the Zacks Rank has proven that "Earnings estimate revisions are
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Contact: Sheraz Mian


Phone: 312-265-9211



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