Zacks Earnings Trends Highlights: Gap, DuPont, Bank of America, Verizon and Travelers

 Zacks Earnings Trends Highlights: Gap, DuPont, Bank of America, Verizon and
                                  Travelers

PR Newswire

CHICAGO, March 12, 2014

CHICAGO, March 12, 2014 /PRNewswire/ --Zacks Director of Research Sheraz Mian
says, "Positive earnings surprises started off on the weak side, but even
those turned out to be better than what we had in the earlier quarters."

Zacks Investment Research, Inc., www.zacks.com

Closing the Books on Q4 Earnings Season

With the 2013 Q4 reporting season now mostly behind us, it is fair to say that
this earnings season was no better or worse than what we have been seeing in
the last few quarters. In some respects, the Q4 earnings season was an
improvement over the recent past.

Specifically, total earnings for the S&P 500 reached a new all-time quarterly
record and even earnings growth for the quarter was the highest of the year
(even after accounting for easy comparisons). Positive surprises started off
on the weak side, but even those turned out to be better than what we had in
the earlier quarters.

Where Q4 was no different from other recent reporting cycles was in terms of
top-line growth and company guidance. Revenue growth has been a challenge for
companies for quite some time and we didn't see any improvement on that front
in Q4 either.

Guidance has been no better – it has been week for more than a year now and Q4
provided no improvement on that front. Part of the guidance weakness is likely
a function of management's need for expectations management. The need for
conservatism aside, one has to be extremely cynical to believe that management
teams would guide lower while knowing that their business outlook was stable,
if not improving. Weather provided a good excuse for many companies as well,
with Gap (NYSE:GPS-Free Report) and DuPont (NYSE:DD-Free Report) as the latest
to cite this year's tough winter in guiding lower for Q1.

The 2013 Q4 Scorecard

The earnings season is almost over, with results from 496 S&P 500 members
already out. Total earnings for these companies are up +9.2% from the same
period last year, with 64.3% beating earnings expectations with a median
surprise of +2.4%. Total revenues for these companies are barely in the
positive, up only +0.7%, with 56.0% beating revenue expectations with a median
surprise of 0.6%.

The +9.2 % 'headline' total earnings growth rate definitely looks fairly
strong, particularly when compared to the growth rate for this same group of
496 companies in the last few quarters. Easy comparisons for three companies –
Bank of America (NYSE:BAC-Free Report), Verizon (NYSE:VZ-Free Report), and
Travelers (NYSE:TRV-Free Report) – account for a big part of the strong Q4
earnings growth. Exclude these three and total earnings growth for the S&P 500
companies that have reported drops by almost half. Performance on the revenue
front is notably sub-par relative to recent quarters, dragged down by weakness
in the Finance and Energy sectors. 

The composite picture for Q4 – combining the results for the 496 companies
that have reported already with the 4 still to come – is for earnings growth
of +9.1%. This will be the highest quarterly growth pace of 2013, with easy
comparisons playing a non-trivial role propping up the growth rate. But it's
not all easy comparisons, as total earnings for the index are on track to
reach a new all-time quarterly record.

Trends on the estimate revision front have been negative for a while, but we
could afford to overlook such details in the Fed-inspired rally. It will be
interesting to see if investors will continue to shrug estimate cuts in the
post-QE world.

Want stock picks from Zacks Equity Research that are based on earnings
estimates? Subscribe to the free "Profit from the Pros" newsletter: Click here

About Zacks Equity Research

Zacks Equity Research provides the best of quantitative and qualitative
analysis to help investors know what stocks to buy and which to sell for the
long-term. Continuous analyst coverage is provided for a universe of 1,150
publicly traded stocks. Our analysts are organized by industry which gives
them keen insights to developments that affect company profits and stock
performance. Recommendations and target prices are six-month time horizons.

Zacks "Profit from the Pros" e-mail newsletter provides highlights of the
latest analysis from Zacks Equity Research. Click here to subscribe to this
free newsletter today.

About Zacks

Zacks.com is a property of Zacks Investment Research, Inc., which was formed
in 1978. The later formation of the Zacks Rank, a proprietary stock picking
system; continues to outperform the market by nearly a 3 to 1 margin. The best
way to unlock the profitable stock recommendations and market insights of
Zacks Investment Research is through our free daily email newsletter; Profit
from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED
to be worth your time! Register for your free subscription to Profit from the
Pros.

Get the full Report on GPS - FREE

Get the full Report on DD - FREE

Get the full Report on BAC - FREE

Get the full Report on VZ - FREE

Get the full Report on TRV - FREE

Follow us on Twitter: http://twitter.com/zacksresearch

Join us on Facebook:
http://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts

Zacks Investment Research is under common control with affiliated entities
(including a broker-dealer and an investment adviser), which may engage in
transactions involving the foregoing securities for the clients of such
affiliates.

Media Contact

Zacks Investment Research

800-767-3771 ext. 9339

support@zacks.com

http://www.zacks.com

Zacks.com provides investment resources and informs you of these resources,
which you may choose to use in making your own investment decisions. Zacks is
providing information on this resource to you subject to the Zacks "Terms and
Conditions of Service" disclaimer. www.zacks.com/disclaimer.

Past performance is no guarantee of future results. Inherent in any investment
is the potential for loss. This material is being provided for informational
purposes only and nothing herein constitutes investment, legal, accounting or
tax advice, or a recommendation to buy, sell or hold a security. No
recommendation or advice is being given as to whether any investment is
suitable for a particular investor. It should not be assumedthat any
investments in securities, companies, sectors or markets identified and
described were or will be profitable. All information is current as of the
date of herein andis subject to change without notice. Any views or opinions
expressed may not reflect those of the firm as a whole. Zacks Investment
Research does not engage in investment banking, market making or asset
management activities of any securities. These returns are from hypothetical
portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced
monthly with zero transaction costs. These are not the returns of actual
portfolios of stocks. The S&P 500 is an unmanaged index. Visit
http://www.zacks.com/performance for information about the performance numbers
displayed in this press release.

Logo - http://photos.prnewswire.com/prnh/20101027/ZIRLOGO

SOURCE Zacks Investment Research, Inc.

Website: http://www.zacks.com
 
Press spacebar to pause and continue. Press esc to stop.