Zacks Earnings Preview: Alcoa, Oracle, FedEx, Discover Financial and Nike

  Zacks Earnings Preview: Alcoa, Oracle, FedEx, Discover Financial and Nike

PR Newswire

CHICAGO, Dec. 17, 2012

CHICAGO, Dec. 17, 2012 /PRNewswire/ -- Zacks.com releases the list of
companies likely to issue earnings surprises. This week's list includes Alcoa
(NYSE:AA), Oracle (Nasdaq:ORCL), FedEx (NYSE:FDX), Discover Financial
(NYSE:DFS) andNike (NYSE:NKE).

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Q4 Earnings Season Gets Underway

We are still some days away from what is 'unofficially' considered the start
of the fourth earnings season when aluminum producer Alcoa (NYSE:AA) reports
results on January 8th. But we 'officially' count all companies that have
financial quarters ending in November as part of our fourth quarter results
tally.

As such, while taking nothing away from Alcoa's first-to-report status, we
will be counting Tech giant Oracle's (Nasdaq:ORCL) earnings report after the
close on Tuesday as the start of the fourth quarter reporting season. And
Oracle is not alone; we have a total of 45 companies reporting results this
week, including 16 S&P 500 members. Companies reporting results include FedEx
(NYSE:FDX) on Wednesday, and Discover Financial (NYSE:DFS) andNike (NYSE:NKE)
on Thursday. But in fairness to Alcoa, the reporting cycle each quarter really
gets going after it comes out with results.

Earnings expectations for the fourth quarter have been steadily coming down
over the last three months, but they still remain positive. At present, total
earnings for companies in the S&P 500 are expected to be up 1.2% from the same
period last year. This is a sharp drop from the roughly 7% earnings growth
rate that consensus expected just three months ago. That said, it is still a
better performance than what was expected in the third quarter just before the
start of that reporting cycle.

At this stage in the third quarter, total earnings were expected to be down
3.4% from the same period last year. Actual results came out a little better
than that, with total third quarter earnings just barely in positive territory
(up only 0.1%) on essentially flat revenues (down 0.5%). Excluding Finance,
total earnings in the third quarter were down 3.9%, while total ex-Finance
revenues were down 1.1%.

Even the once-mighty Tech sector had barely positive earnings growth in the
third quarter (up only 0.5%), while Finance and Construction were the only
sectors with double-digit earnings growth. In total, half of the 16 Zacks
sectors had negative earnings comparisons in the third quarter. In the fourth
quarter, a total of 9 sectors will have negative earnings growth, with Tech
sector earnings expected to be down 4.6% from the same period last year.

Basic Materials is expected to see 12.2% earnings growth in the fourth
quarter, which will reverse a negative earnings growth over the preceding four
quarters. Hard to envision such a material turnaround in an economically
sensitive sector, but it's mostly a function of easy comparisons for companies
in this group.

The market's focus will remain on the unresolved 'Fiscal Cliff' issue, but we
do have a number of top-tier economic reports on deck, including the November
Housing Starts report on Wednesday, Existing Home Sales on Thursday, and the
Personal Income & Outlays and Durable Goods reports on Friday.

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

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Since 1988, the Zacks Rank has proven that "Earnings estimate revisions are
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