Tuesday, October 30, 2012
Markets remain closed for a second day on Tuesday due to
Hurricane Sandy, with published accounts putting the preliminary
estimates of the storm's total cost at close to $20 billion. In
addition to insured losses, this cost estimate would include
damage to power lines and other infrastructure.
The estimated insured losses of $5 billion to $10 billion will
put Sandy in the Top 10 category of most expensive hurricanes in
the country's history. Last year's Hurricane Irene cost the
insurance industry in excess of 4 billion. Given the relatively
uneventful hurricane season this year before this storm, the
insurance industry is in fairly good shape to absorb
Sandy-related losses. While it's quite early at this stage, but
the storm will likely have some stimulative economic effects for
the region as well, as homeowners, businesses, and local
governments repair storm damage in the coming days. The net
effect on the retail sector may have been wash, with heavy sales
ahead of the storm offsetting the impact of the shutdowns.
In ongoing third quarter earnings season, a number of companies
scheduled to report results today had to delay the announcements.
Major companies in this category include
Automatic Data Processing
). But many others are sticking to their published schedules and
coming out with third quarter results. The better than expected
Archer Daniels Midland
) this morning would fall in that category. Ford's results are
particularly impressive, with North American strength offsetting
European weakness, resulting in a top- and bottom-line beat.
As of this morning, we have third quarter results from 285
companies in the S&P 500 or 57% of the index's total
membership. Total earnings for these 285 companies are down 2.4%
from the same period last year, with 62.8% of the companies
beating earnings expectations. Total revenues are down 2.1% from
the same period last year, with only 37.2% of the companies
coming out with positive revenue surprises. Excluding Finance,
total earnings and revenues are down 4.3% and 2.7%, respectively.
The composite growth rate for the third quarter, where we combine
the reported results with those still to come out, is for a
decline of 0.7% (down 4.6% excluding Finance).
Estimates for the fourth quarter and beyond have started to
come down as companies have guided lower, but they still remain
elevated. Total earnings in the fourth quarter are expected to be
up 4.9%, which is down from close to 8% before the third quarter
reporting season got underway.
ARCHER DANIELS (ADM): Free Stock Analysis
AUTOMATIC DATA (ADP): Free Stock Analysis
AVON PRODS INC (AVP): Free Stock Analysis
CUMMINS INC (CMI): Free Stock Analysis Report
FORD MOTOR CO (F): Free Stock Analysis Report
PFIZER INC (PFE): Free Stock Analysis Report
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