Zacks Earnings Preview: Amazon, Facebook, Exxon, Caterpillar and Boeing

Jan 28, 2013, 09:30 ET from Zacks Investment Research, Inc.

CHICAGO, Jan. 28, 2013 /PRNewswire/ -- releases the list of companies likely to issue earnings surprises. This week's list includes Amazon (Nasdaq:AMZN), Facebook (Nasdaq:FB), Exxon (NYSE: XOM), Caterpillar (NYSE: CAT) and Boeing (NYSE: BA).


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A Flood of Q4 Earnings Reports This Week

We may have seen less than a third of the fourth quarter earnings reports thus far, but that's enough to give us a good sense of how the rest of this reporting season will likely turn out. The bottom-line verdict is that it's not as bad as many of us suspected.

Leaving aside earnings growth, which is non-existent, on most other metrics the fourth quarter reporting season is quite good. Not only are the ratio and magnitude of surprises better than the previous quarter and comparable to the last many, but the tone of management guidance has also been on the reassuring side.

But it's premature to close the books on the Q4 reporting as more than two-thirds of the earnings reports have still to come. This week promises to be the busiest thus far, with 413 companies coming out with quarterly results, including 105 S&P 500 companies. With Q4 earnings results from 147 S&P 500 companies already out, as of Friday January 25, we will cross the halfway mark by the end of this week.

Last week was dominated by Tech, but this week has everything – from Amazon (Nasdaq:AMZN) and Facebook (Nasdaq:FB) to Exxon (NYSE: XOM), Caterpillar (NYSE: CAT) and Boeing (NYSE: BA). By the end of the week, we will have seen Q4 earnings results from 65.2% of the total market cap of the S&P 500.

Total earnings for the reports that have come out (147 of S&P 500 companies as of Friday, January 25th) are up +0.9% from the same period last year, with 63.9% of the companies beating expectations with the median earnings surprise of +2.7%. Performance on the revenue front is a lot better, with total revenues up 5.1%, 59.2% of the companies coming ahead of revenue expectations and a median revenue surprise of +0.5%.

In terms of the 'beat ratio' and median surprise, the Q4 thus far is better than what this same group of companies did in the third quarter, and in line with the average for the last four quarters.

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Since 1988, the Zacks Rank has proven that "Earnings estimate revisions are the most powerful force impacting stock prices." Since inception in 1988, #1 Rank Stocks have generated an average annual return of +28%. During the 2000-2002 bear market, Zacks #1 Rank stocks gained +43.8%, while the S&P 500 tumbled -37.6%. Also note that the Zacks Rank system has just as many Strong Sell recommendations (Rank #5) as Strong Buy recommendations (Rank #1). Since 1988, Zacks Rank #5 stocks have significantly underperformed the S&P 500 (+3% versus +10%). Thus, the Zacks Rank system allows investors to truly manage portfolio trading effectively.

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