For Immediate Release
Chicago, IL - May 10, 2012 - Zacks Director of Research Sheraz
Mian explains how first quarter earnings season is an improvement
on fourth quarter earnings.
Quarter Better Than 4
The first quarter 2012 earnings season has turned out to be way
better relative to pre-season expectations. And with the bulk of
the results now known, this reporting season has also proven to be
better than the fourth quarter of 2011. Most of us suspected in the
run up to the earnings season that the odds of disappointing
results were lower, given the extremely low expectations. But
hardly anyone of us could foretell how good the earnings season has
turned out to be, particularly at this late stage of the earnings
Total earnings for the 88% of S&P 500 companies that have
already reported are up 7.4% from the same period last year.
Approximately 65% of the companies are coming ahead of
expectations, with the median surprise at a very good 3.5%. At this
stage in the previous quarter (4Q-11), total earnings for the same
companies were up 6.6%. Approximately 62% of these companies beat
expectations in the fourth quarter, with a median surprise of
Most of the earnings growth is coming from top-line gains, with
margins essentially flat from the year-earlier level. Revenues for
the companies that have already reported are up 4.7% year over
year, though only 38.7% have come out with positive revenue
surprises, with a median surprise of 0.9%.
As the Earnings Scorecard table below shows, the Tech and
Finance sectors have been major growth drivers, though overall
growth is fairly well dispersed with half of the sixteen Zacks
sectors showing double-digit earnings growth.
Blowout results from
) no doubt play a major role in the Tech sector's strong
performance. Excluding Apple's results, the sector's earnings
growth drops to only 3.4% from the very impressive 21.8%. Earnings
growth for the 88% of companies that have already reported drop to
4.9% from 7.4%, once Apple's results are excluded.
Expectations Remain Low
Estimates have started going up a little in recent days, though
they still remain quite low relative to what we have seen thus far
Most of the remaining companies still to report results are in the
retail sector, though we do have a number notable tech companies
) coming out with results as well. Many important retail players
) still have to report results. In total, these 59 S&P 500
companies are expected to show an earnings drop of 1.9% from the
year-earlier level. A major contributor to the negative growth
expectation is Dell, which is expected to see earnings decline from
the year-earlier level.
The first quarter is expected to be the low point in terms of
earnings growth this year, with a meaningful ramp-up apparent in
current growth expectations for the second quarter and the rest of
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Disclaimer: Past performance does not guarantee future results.
Investors should always research companies and securities before
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offer or solicitation to buy or sell any security.
Contact: Sheraz Mian, Director of Research
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