Constellation Brands, Alcoa, Oracle, FedEx and IBM are part of Zacks Earnings
CHICAGO, July 1, 2013
CHICAGO, July 1, 2013 /PRNewswire/ --Zacks.com releases the list of companies
likely to issue earnings surprises. This week's list includes Constellation
Brands (NYSE:STZ-Free Report), Alcoa (Nasdaq:AA-Free Report), Oracle
(Nasdaq:ORCL-Free Report), FedEx (NYSE:FDX-Free Report) and IBM (NYSE:IBM-Free
To see more earnings analysis, visit http://at.zacks.com/?id=3207.
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Fed to Reclaim Spotlight
Market anxieties about the future of the Fed's QE program have eased a bit
after clarifications from Fed officials that no imminent tapering decision was
in the cards. Bernanke was fairly explicit in his guidance on the issue, but
the bond market's reaction appears to have forced the Fed into retreat. At
least that's how some of us are seeing the pronouncements from Fed officials
in recent days. Did the Bond Market Stare Down the Fed?
The Fed will remain in the spotlight this holiday-shortened week, with
investors evaluating each of the week's top-tier economic reports from the
Fed's perspective. The most important report doesn't arrive till after the
July 4th holiday, when June non-farm payrolls come out on Friday. Other major
reports include the two ISM surveys, the ADP jobs report, motor vehicle sales,
and construction spending.
Earnings wouldn't be the focus this week, with Constellation Brands
(NYSE:STZ-Free Report) as the notable report coming out. But the earnings
reporting cycle is about to take the spotlight with Alcoa's (Nasdaq:AA-Free
Report) release on July 8th. The Q2 earnings season has already gotten
underway, with results from Oracle (Nasdaq:ORCL-Free Report), FedEx
(NYSE:FDX-Free Report) and others.
Accenture's weak guidance reconfirms what we saw in the recent Oracle report
about macro issues weighing on corporate spending outlook. Importantly, it
puts us on notice about what to expect fromIBM (NYSE:IBM-Free Report) and
others in the coming days.
As has become customary at the start of recent quarterly earnings cycles,
expectations for the Q2 earnings season remain quite low. A major driver of
these low expectations is company guidance during the Q1 earnings season,
which was overwhelmingly on the negative side. Total earnings for companies in
the S&P 500 are expected to be down -0.3% from the same period last year on
-0.5% lower revenues and almost flat margins. This is sharply down from +3.9%
growth expected in the quarter in early April.
Nine of the 16 Zacks sectors are expected to show negative earnings growth in
Q2. But the growth picture in Q2 is even more underwhelming when Finance is
excluded from the data. Outside of Finance, total earnings for the S&P 500
would be down -4.3%. Total earnings were up +2.4% in Q1, but growth was
expected to be in negative territory at this stage before that reporting
Finance to the Rescue
Finance wasn't a big driver of aggregate earnings growth for the S&P 500 in
Q1, but takes back the lead role in Q2, with total earnings for the sector
expected to be up +19.5% and estimates for the group are steadily going up.
Earnings for the sector were up +7.7% in Q1, which came after many quarters of
All the industries within the Finance sector like the major banks, regional
banks, brokers and insurers are expected to have positive growth. But the
growth picture is particularly notable for the brokerage and investment
management industry players, with total earnings for the group expected to be
up +38.7% in Q2 after the +2.6% gain in Q1.
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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