Zacks Earnings Preview: Alcoa, FedEx, Oracle and Nike

            Zacks Earnings Preview: Alcoa, FedEx, Oracle and Nike

PR Newswire

CHICAGO, March 18, 2013

CHICAGO, March 18, 2013 /PRNewswire/ 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).


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Looking Ahead to Q1 Earnings Season

It will be a few more weeks before the first quarter reporting cycle gets into
high gear, but the earnings season will actually get underway this week. Alcoa
(NYSE:AA) typically gets credit for kick-starting each earnings season, but
that's not really accurate -- the 'official' earnings season generally gets
underway before Alcoa's report comes out.

And that's exactly what will happen this earnings season as well. Before
Alcoa's first quarter 2013 earnings report comes out on April 8th, we will
have seen first quarter earnings reports from a host of companies, including
such bellwethers like FedEx (NYSE:FDX), Oracle (Nasdaq:ORCL), Nike (NYSE:NKE),
and others that will start reporting this week. We have 75 companies reporting
quarterly results this week, including 14 S&P 500 companies.

As has been the case at the start of recent quarterly earnings cycles,
expectations for the first quarter earnings season remain quite low. Total
earnings for companies in the S&P 500 are expected to be down -3.9% from the
same period last year. This would compare to actual earnings growth of +2% in
the fourth quarter. The key variance between the first quarter and preceding
quarter is in the expectations for the Finance and Tech sectors.

Finance has been a key driver of earnings growth over the last several
quarters. Total earnings growth for the S&P 500 in the fourth quarter of 2012
drops from +2% to +0.5% when Finance is excluded from the index's results. But
Finance earnings are expected to drop -9.8% in the first quarter from the same
period last year following the +10% growth in the fourth quarter. Earnings in
the Tech and Energy sectors are expected to be down -4.6% (vs. +1.3% in Q4)
and -8.9% (vs. +3.6% in Q4), respectively.

Stepping back from these expectations and taking a big-picture view of
earnings, it becomes clear that earnings growth has been essentially flat,
particularly outside of Finance, since the second quarter of 2012. This
underwhelming trend carries into the first quarter, but we start getting a
rebound from the second quarter onwards and a material ramp-up in the back
half of the year.

What this means is that the market expects the first quarter of 2013 to serve
as an earnings growth bottom. Current consensus expectations put earnings
growth in the second quarter at +3.7%, in the third quarter at +7%, and an
impressive +13% in the last quarter of the year.

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