Zacks Earnings Trends Highlights: Oracle, FedEx, Nike, Bank of America and
CHICAGO, Jan. 9, 2014
CHICAGO, Jan. 9, 2014 /PRNewswire/ --Zacks Director of Research Sheraz Mian
says, "The real Q4 earnings story is not about the 18 companies that have
reported already, but the remaining 482 companies."
Q4 Earnings Season Gets Underway
We are still a couple of weeks away from getting into the heart of 2013 Q4
earnings season. But the reporting cycle has gotten underway, with results
from 18 S&P 500 companies out already. Even though these early reports from
companies with fiscal quarters ending in November include a few industry
leaders like Oracle (NYSE:ORCL-Free Report), FedEx (NYSE:FDX-Free Report) and
Nike (NYSE:NKE-Free Report), we can't draw any firm conclusions from what we
have seen thus far.
The real Q4 earnings story is not about the 18 companies that have reported
already, but the remaining 482 companies. And as we have been seeing
repeatedly over the past year or so, estimates have come down sharply as the
quarter unfolded. The current expected Q4 total earnings growth for the S&P
500 of +6.3% is down quite a bit over the last three months.
The actual earnings growth rate in Q4 will most certainly be higher than the
+6.3% expected at this stage, a function of management's highly refined
expectations management game (more on that a little later). But even this
growth rate will be the highest quarterly growth pace of 2013.
The chart above is a picture of accelerating growth. But looks could be
deceiving, as the stronger-looking Q4 growth pace is primarily a function of
easy comparisons, particularly for the Finance sector. Bank of America
(NYSE:BAC-Free Report) has a roughly $2 billion positive swing in its total
earnings and many insurers like Chubb (NYSE:CB-Free Report), among others
don't have to deal with the type of catastrophic losses they suffered in the
2012 East Coast storms. Outside of Finance, total earnings growth for the S&P
500 drops to +3.5%.
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