CHICAGO, Oct. 30, 2014 /PRNewswire/ -- Zacks Director of Research Sheraz Mian says, "With the Q3 earnings season now past the halfway mark, we have a pretty good sense of how this reporting cycle is unfolding."
Q3 Earnings: The Halftime Report
With the Q3 earnings season now past the halfway mark, we have a pretty good sense of how this reporting cycle is unfolding. For the most part, the earnings picture is decent enough -- not great, but not bad either.
In terms of growth rates, beat ratios and guidance, it's a mixed bag when the results thus far are compared to other recent periods. Some metrics are showing an improvement, such as a modestly bigger ratio of companies is beating earnings estimates and the revenue growth rate appears to have picked up. But other metrics are showing weakness, such as the relatively lower earnings growth rate and the fewer positive revenue surprises.
The guidance picture is no different from what we have been seeing in recent quarters, with a majority of the companies providing guidance guiding lower. As a result, estimates for the current quarter (2014 Q4) are following the all-too-familiar pattern of sliding down. In some aspects, the negative revisions trend for the current quarter is somewhat more pronounced than what had seen at a comparable stage in the preceding reporting cycle.
Q3 Earnings Scorecard (as of October 29rd, 2014)
Including this morning's earnings announcements, we now have Q3 results from 287 S&P 500 members that combined account for 66.8% of the index's total market capitalization. Total earnings for these 287 companies are up +6.5% from the same period last year on +5.1% higher revenues, with 71.8% beating EPS estimates and 53.7% coming out with positive revenue surprises.
We compared the Q3 growth rates and beat ratios for these 287 companies with what these same companies reported in 2014 Q2 and the 4-quarter average (through Q2). The earnings growth performance for these 287 companies (+6.5%) doesn't compare favorably with what we got from these same companies in the recent past, while the revenue growth performance (up +5.1% vs. +4.9% in Q2 and the average of +3.5% over the preceding four quarters) is notably better. With respect to surprises, the earnings and revenue beat ratios are following divergent paths, with earnings surprises a bit more numerous while revenue surprises a little hard to come by.
The Q3 earnings growth rate was earlier held down by tough comparisons in the Finance sector, particularly for Bank of America (NYSE:BAC-Free Report). But that's no longer the sole reason, as the Tech sector's earnings growth is also tracking below other recent periods, despite the strong Apple (Nasdaq:AAPL-Free Report) numbers.
Looking at Q3 expectations as a whole, combining the actual results from the 287 S&P 500 members that have reported with estimates for the remaining 213, total earnings are expected to be up +4.9% on +2.9% higher revenues. The composite growth has started going up as more companies report and beat estimates.
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 BAC - FREE
Get the full Report on AAPL - 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.
Share this article