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Yum Brands, Tiffany, Apple and Microsoft Featured in the Zacks Earnings Preview

   Yum Brands, Tiffany, Apple and Microsoft Featured in the Zacks Earnings
                                   Preview

PR Newswire

CHICAGO, Dec. 3, 2012

CHICAGO, Dec. 3, 2012 /PRNewswire/ --Zacks.com releases the list of companies
likely to issue earnings surprises. This week's list includes Yum Brands
(YUM), Tiffany (TIF), Apple (AAPL) and Microsoft (MSFT).

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

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

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Looking Ahead to Q4 Earnings

With the third quarter earnings season (almost) over and the fourth quarter
reporting season still a few weeks away, we are at a relatively quiet phase in
the earnings cycle. But we are continuing to see downbeat guidance from
management teams, as recent announcements from Yum Brands (YUM) and Tiffany
(TIF) show.

In fact, a far bigger proportion of the companies have guided lower this time
around than we have seen in any quarter since the post-recession earnings
recovery got underway in 2009. As a result, estimates for the fourth quarter
have been steadily coming down over the last months. At this stage, total
earnings for companies in the S&P 500 are expected to be up 2.2% from the same
period last year. This is significantly lower than the roughly 8% growth
expected as the third quarter reporting season was getting underway two months
back.

But while estimates for the fourth quarter have come down, we have not seen
much downward adjustment to estimates for full-year 2013. Total earnings next
year are still expected to be up 11%, which would follow the 4.7% growth in
2012.

Given the tough macroeconomic backdrop -- not just in the U.S. but all over
the world -- next year's growth expectations appear to be on the optimistic
side. We will most likely see next year's estimates start coming down as
management teams discuss full-year outlooks on the fourth quarter earnings
calls. The market will have to come to grip with this tepid earnings picture
after it is through with the 'Fiscal Cliff' debate.

But before we can start thinking about the fourth quarter earnings season, we
need to close the books on the third quarter reporting cycle. We are almost
there, but still have a handful of companies still to report third quarter
results.

As of Friday, November 30th, we have third quarter results from 494 companies
in the S&P 500. This week brings us closer to the end point, with 61 companies
reporting quarterly results, including 5 S&P 500 companies.

With respect to the scorecard for the 494 companies that have already reported
results, total earnings are barely in the positive territory (up 0.1%)
relative to the same period last year and only 62.8% of the companies came out
with positive earnings surprises. Total revenues are down 0.6%, with only
38.9% of the companies beating revenue expectations. The numbers look even
weaker once Finance is excluded. Excluding Finance, total earnings in the
quarter were down 4%, while total revenues were down 1.3%.

Half of the 16 Zacks sectors had negative year-over-year earnings growth, with
only two sectors producing double-digit earnings growth – Finance (up 23.3%)
and Construction (up 56.6%). Negative surprises from a host of tech giants
this earnings season, including such reliable players as Apple (AAPL) and
Microsoft (MSFT), are showing up in the Tech sector's sub-par performance in
the quarter. Total Tech sector earnings were barely in the positive, up only
0.5%. And the picture is expected to get even worse in the fourth quarter,
with total Tech sector earnings expected to be down 4.4%.

The economic landscape has been dominated by the 'Fiscal Cliff' debate lately
and the trend is unlikely to change this week even though we have a number of
top-tier economic reports on deck. The most important report coming out this
week is the November jobs report on Friday, but we also have the manufacturing
and service-sector ISM surveys on this week's calendar. Given the distortions
created by Superstorm Sandy, it will be difficult to get a clear read on
underlying economic trends from even these top-tier indicators.

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.

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