The bulk of the third quarter reporting season is now behind
us, with results from 460 companies in the S&P 500 or 92% of
the index's total membership, already known. The earnings season
has ended for half of the 16 Zacks sectors, with most of the
remaining sectors waiting for only a handful of reports still to
come. Retail has the most quarterly reports pending, with third
quarter results from 29.8% of the sector's companies still to
come.
Any way you look at it, it has been a fairly weak earnings
season; the weakest since the start of the current earnings cycle
in 2009. Importantly, this earnings season has raised credible
doubts about the earnings outlook for the fourth quarter and
beyond.
Total earnings for these 460 companies are down 2.2% from the
same period last year, with 62.6% of the companies beating
earnings expectations. On the revenue side, total revenues are
down 3.8% and only 38% of the companies are able to beat revenue
expectations. The growth rates look even weaker when Finance is
excluded from the aggregate numbers. Excluding Finance, total
earnings and revenues are down 6.9% and 4.9% from the same period
last year, respectively.
The positive surprise from
Cisco
(
CSCO
) aside, results from the Tech sector have been quite weak this
quarter, as we have seen in reports from a host of bellwethers
show. Total earnings for the 87% of Tech sector companies that
have already reported results are down 4.3% from the same period
last year, which compares to 9.2% positive growth rate for the
same group in the second quarter.
Key Points:
- The bulk of the third-quarter 2012 reporting season is now
behind us, with results from 460 companies in the S&P 500
already out. Overall results are weaker than what we have been
seeing in quite a while.
- Total earnings for these companies are down 2.2% from the
same period last year, with only 62.6% of the companies beating
earnings expectations.
- Total revenues are down 3.6% and only 38% of the companies
have come out with positive revenue surprises.
- Unlike recent quarters, results from the Tech sector have
been disappointing. Cisco's positive surprise stands in
contrast to disappointing results from industry leaders like
Amazon
(
AMZN
),
Google
(
GOOG
),
Apple
(
AAPL
) and
Intel
(
INTC
) show. Total Tech earnings are down 4.3%, with only 61.7% of
them beating earnings expectations; a significantly weaker
performance than we have been seeing from the sector in recent
quarters.
- Finance and Construction are the only sectors with
double-digit earnings growth in the quarter, with Finance
earnings up 23.3%. Excluding Finance, total third quarter
earnings for the S&P 500 would be down 6.9%.
- Basic Materials is the weakest, both in terms of growth as
well as negative surprises. Energy is a close second in terms
of earnings growth, with total quarterly earnings down
19.8%.
- The composite earnings growth rate, combining the reports
that have come out with those still to come, for the third
quarter is for flat growth for the S&P 500 as a whole and a
decline of 4% excluding Finance.
- Unlike the third quarter, estimates for the following
quarter remain quite strong, though they have come down in
recent days. Total earnings expected to be up 3.5% in the
fourth quarter at present, which is a drop from the 7%-plus
growth rate expected at the start of the third quarter
reporting season.
- Net margins are barely up in the aggregate, but declining
once Finance is excluded. Nine of the 16 sectors have negative
margin comparisons in the third quarter, including Tech.
- Total earnings for the full years 2012 and 2013 are
expected to be up 5% and 11% respectively. Revenues are
expected to be essentially flat this year (down 0.8% %), but up
3.6% in 2013.
READ THE FULL EARNINGS TRENDS REPORT HERE:
Q3 Earnings Season Mostly Behind Us
APPLE INC (AAPL): Free Stock Analysis Report
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