Alcoa, Nike, FedEx and Oracle are part of Zacks Earnings Preview:
CHICAGO, March 31, 2014 /PRNewswire/ -- Zacks.com releases the list of companies likely to issue earnings surprises. This week's list includes Alcoa (NYSE:AA-Free Report), Nike (NYSE:NKE-Free Report), FedEx (NYSE:FDX-Free Report), and Oracle (NYSE:ORCL-Free Report).
To see more earnings analysis, visit http://at.zacks.com/?id=3207.
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Will We Finally See Some Sunshine?
The focus this week is on the economy, with a number of top-tier economic reports dominating the market's attention. But the earnings season is slowly gaining attention as well.
We don't have that many earnings reports this week, but more than a dozen S&P 500 companies have already reported 2014 Q1 results (companies with fiscal quarters ending in February get counted as part of the Q1 tally). The reporting cycle will start ramping up materially from next week onwards after Alcoa's (NYSE:AA-Free Report) release. The results thus far from the likes of Nike (NYSE:NKE-Free Report), FedEx (NYSE:FDX-Free Report), Oracle (NYSE:ORCL-Free Report) and others have been underwhelming. But it's way too early to draw any firm conclusions from what we have seen thus far.
The economic data coming out this week, particularly Tuesday's manufacturing ISM survey and Friday's non-farm payroll report, is expected to show that the economy is coming out of the weather-induced soft patch. The U.S economy did reasonably well in the second half of 2013, but lost momentum at the start of this year. Investors resigned themselves to the weather explanation for the soft data at the start of the year, but expect to see data showing the economy springing back into action in the coming days.
The market is looking for evidence that the U.S. economy is on track to graduate to a higher growth pace this year than has been the case over the last few years. The first quarter has essentially been washed out because of weather, but growth is expected to resume from the second quarter onwards, with GDP growth going above the +3%-plus pace in the second half and continuing into 2015. This favorable economic outlook is at the root of strong corporate earnings estimates as well.
Expectations for 2014 Q1
Estimates for 2014 Q1 started coming down at an accelerated pace as companies predominantly guided lower on the 2013 Q4 earnings calls, consistent with the trend we have been seeing for more than a year now. Total Q1 earnings for companies in the S&P 500 are currently expected to be down -1.8% from the same period last year, a material decline from the +2.1% growth expected in early January 2014.
The negative revision trend is widespread, but is particularly notable for the Retail, Basic Materials, Autos, Consumer Staples, and the Energy sectors, as the chart below shows.
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