CHICAGO, Sept. 29, 2014 /PRNewswire/ -- Zacks.com releases the list of companies likely to issue earnings surprises. This week's list includes Alcoa (NYSE:AA-Free Report) and Bank of America (NYSE:BAC-Free Report).
To see more earnings analysis, visit http://at.zacks.com/?id=3207.
Every day, Zacks.com makes their Bull Stock of the Day available, free of charge. To see it, click here.
Ready for Q3 Earnings Season?
The 2014 Q3 earnings season has gotten underway, with results from 17 members of S&P 500 members already out. All of these early reporters have fiscal quarters ending in August and some of them are notable industry leaders.
It is way too early to draw even preliminary conclusions from the results thus far. 64.7% of the total (11 out of 17) have beat EPS estimates while 70.6% have come out with positive revenue surprises. Top line surprises stood out in the last quarter as well, though it's premature to say what we will get this time around.
The focus this week is on economic data, with the September jobs report coming out on Friday. There is not much on the earnings front, with less than two dozen companies coming out with results, including four (4) S&P 500 members. We are still about two weeks away from a full ramp up in the reporting cycle. But the Q3 earnings season will start getting attention with the Alcoa (NYSE:AA-Free Report) report on October 8th.
This earnings season will give us a good sense of whether the profitability strength on display in the last reporting cycle was a one-off event or the start of something enduring. Please recall that part of the Q2 strength was a bounce back from the extremely low levels to which all activity levels had fallen in the weather-disrupted first quarter of the year. As such, one could argue that none of the last two earnings seasons represented truly normal conditions, which we will most likely see for the first time this year only in Q3.
Total earnings are expected to be up +1.2% from the same period last year on +1.5% higher revenues and modest margin gains. Finance remains a big drag this quarter, with total earnings for the sector expected to be down -4.5% from the same period last year. Excluding Finance, total earnings for the S&P 500 would be up +2.6%.
As has been the trend each quarter ahead of the start of the earnings season, estimates for Q3 have come down as well as the quarter unfolded. The recent leg down in estimates has mostly been due to Bank of America (NYSE:BAC-Free Report), with the bank's settlement with the government causing its Q3 EPS estimates to drop from positive 32 cents to the current 8 cents loss. In dollar terms, that's a $4.2 billion negative swing in Bank of America's Q3 earnings estimates.
The negative revisions trend has been broad based, with most sectors suffering downward adjustments in estimates. But the trend has been most pronounced for Oil/Energy, Retail, and Consumer Disc. The Finance sector swing is primarily due to Bank of America.
Total earnings for the S&P 500 reached an all-time quarterly record in 2014 Q2 and current estimates for Q3 put the quarterly total as the second highest ever. But given the historical trend of roughly two-thirds of the companies beating earnings estimates, the final Q3 tally will likely be right in the preceding quarter's record vicinity.
For these estimates to hold, we need an improvement on the guidance front, which has been persistently been weak for almost two years now. There was modest improvement in tone of management guidance on the Q2 earnings calls, but the majority of companies providing guidance still guided lower. That said, continuation of even the modest improvement in guidance will be a net positive in the overall earnings picture.
Zacks "Profit from the Pros" e-mail newsletter offers continuous coverage of the industries and the stocks poised to outperform the market. Click 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 AA - FREE
Get the full Report on BAC - 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
[email protected]
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 assumed that 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 and is 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.
WANT YOUR COMPANY'S NEWS FEATURED ON PRNEWSWIRE.COM?
Newsrooms &
Influencers
Digital Media
Outlets
Journalists
Opted In
Share this article