The shutdown saga continues, threatening to overshadow the
2013 Q3 earnings season that gets underway after the close today
with reports from
). Stocks have been under pressure because of the Washington
fight, but there are no signs of anxiety as everyone expects the
issue to be eventually resolved.
Alcoa's quarterly release today is the company's first since it
was exiled from the Dow Jones Industrial Average. For a long
time, they jealously guarded their first out-the-gate reporting
status, even though earnings data collectors like us would count
the start of each earnings season before they reported results.
For the Q3 earnings season, we count the 21 S&P 500 companies
with fiscal quarters ending in August that have already reported
results already as part of the Q3 tally. The list of companies
that have reported already includes such industry leaders like
), which incidentally replaced Alcoa in the Dow,
) and others.
That said, Alcoa and Yum Brands will be the first S&P 500
companies with fiscal quarters ending in September that will
report Q3 results. We will get just a trickle of earnings reports
this week, but the reporting season ramps up materially next
week. Let's hope that the budget and debt ceiling issues are
resolved this week, as otherwise they have the potential of
overshadowing the reporting season.
Similar to what we have been witnessing over the last few
quarters, estimates for Q3 fell as the quarter progressed, with
the overwhelmingly negative tone of company guidance as the
primary driver of estimate cuts. Total earnings for companies in
the S&P 500 are expected to be up +1.1% from the same period,
with the growth expectation down from +5.1% in early July. Actual
results will likely be better, given management teams' tendency
to under-promise and over-deliver.
But more important than the likely Q3 earnings growth tally in
the +2% to +3% range (that's where growth was in the last few
quarters) will be guidance for Q4 which will be key to setting
expectations for that quarter. Current estimates for Q4 represent
a material growth ramp up of almost +9%, the starting point of
the long hoped-for resumption in earnings growth. Regular readers
know that I have been skeptical of estimates for Q4 and beyond
and expect them to come down. We will find out in the coming
weeks if we will get another round of estimate cuts or something
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