A Big Week for Economic & Earnings Data - Ahead of Wall Street

Monday, April 28, 2014

Pre-open sentiment remains positive today, though it's hard to pin the favorable mood on anything specific. We have a number of major deal announcements in the pharma, cable, and industrial space today and remain in peak earnings season with more than 130 S&P 500 companies reporting results this week. Importantly, this is a big weak on the economic calendar, with a Fed meeting and the monthly jobs report coming out.

The corporate headlines today are dominated by the mega Pfizer ( PFE ) - AstraZeneca ( AZN ) deal and the fight between General Electric ( GE ) and Germany's Siemans about the French firm Alstom's energy assets. Deal activity has heated up lately, likely indicating greater confidence among management teams about the business outlook. On the flip side, accelerated M&A activities may also be pointing towards lack of 'organic' growth opportunities, prompting management teams to buy growth instead of producing it internally.

We have been seeing the growth challenge on the earnings front for some time and the ongoing Q1 earnings season is further highlighting the issue. With more than half of the Q1 earnings season now behind us, earnings results are a tad bit better relative to the extremely low level to which expectations had fallen ahead of the start of the reporting season. But there is not much growth, most companies are missing top-line estimates and guidance still remains on the weak side, causing estimates for the current quarter (2014 Q2) to come down.

Including this morning's earnings reports through 7:30 CST, we now have Q1 results from 245 S&P 500 members that combined account for almost 61% of the index's total market capitalization. Total earnings for these 245 companies are up +1.9% from the same period last year on +3.8% higher revenues, with 66.8% beating EPS estimates and 49.8% coming out with positive revenue surprises. Compared to other recent quarters, the earnings growth performance from these 245 companies is on the weak side (largely due to the Finance sector), revenue growth and earnings beat ratios are along historical levels, while the revenue beat ratios are tracking lower.

Bottom line, there is nothing exciting on offer in this earnings season - there is not much growth and the outlook for the coming quarters is cloudy. The only silver lining is that Q1 earnings growth is turning out to be somewhat better relative to the lowered expectations. And what matters to the stock market is how results compare relative to expectations, not the absolute level of performance.

Sheraz Mian

Director of Research

ASTRAZENECA PLC (AZN): Free Stock Analysis Report

GENL ELECTRIC (GE): Free Stock Analysis Report

PFIZER INC (PFE): Free Stock Analysis Report

To read this article on click here.

Zacks Investment Research

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story


Other Topics

Earnings Stocks US Markets

Latest Markets Videos


Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank. A wealth of resources for individual investors is available at

Learn More