Q3 Earnings Season Winding Down - Earnings Preview

We all know that the third quarter earnings season has been quite weak. In fact, with more than 95% of the earnings reports already out, we could start referring to it in the past tense. Any way you look at it, this was the weakest quarterly earnings season since the current earnings cycle got underway in 2009.

Not only were the actual results quite weak, but the overall tone of management guidance was also quite downbeat. As a result, expectations for the fourth quarter have steadily come down since the start of the third quarter reporting season. The Zacks Consensus expectation for the fourth quarter was looking for earnings growth in excess of 7% at the beginning of last month, which has now come down to a far more reasonable-looking 3.3% growth pace. But even as expectations for the fourth quarter have come down, we haven't seen the same level of downward revisions to full-year 2013 expectations, which is looking for growth rate in excess of 10%.

It is appropriate to start looking ahead to the fourth quarter reporting season, but we have yet to close the books on the third quarter. As of Friday, November 16th, we have third quarter earnings from 476 companies in the S&P 500 or 95.2% of the index's total membership. The reporting season has ended for 9 of the 16 Zacks sectors, with the remaining companies mostly in the Retail sector and a sprinkling of Technology and Industrial operators.

We have a total of 70 companies reporting this holiday-shortened week, including 13 from the S&P 500. By the end of this week, we will have results from 489 of the S&P 500 companies or 98% of the index's total membership.

While this week's earnings reports will not change the overall narrative on this earnings season, we do have a number of important companies whose commentary on the outlook for the fourth quarter and beyond will further add to our understanding of the evolving earnings picture. I would put this week's reports from ( CRM ), Deere & Company ( DE ), Lowe's ( LOW ) and Agilent ( A ) in that category. Best Buy ( BBY ) and Hewlett-Packard ( HPQ ) are also on the docket for this week, but these struggling giants no longer carry the punch they used to in the past.

With respect to a third quarter scorecard for the 476 companies that have already reported results, total earnings are down 4.7% from the same period last year and only 62.6% of the companies came out with positive earnings surprises. Total revenues are down 9.9%, with only 38.7% of the companies beating revenue expectations. The numbers look even weaker once Finance is excluded. Excluding Finance, total earnings in the quarter were down 9.8%, the weakest reading we have seen in quite a while.

We always whine that 'earnings surprises' have lost their punch since management teams have become adept at managing expectations. The third quarter earnings season ran counter to this narrative, as the surprises this time around have predominantly been on the negative side. May be the redeeming feature of this earnings season is that the underperformance this time around restores our confidence in the earnings surprise all over again.

Monday - 11/19

  • We have the October Existing Home sales data and November homebuilder index coming out after the market opens.
  • On the earnings front, we will get results from Lowe's ( LOW ) and Tyson Foods ( TSN ) in the morning, while Agilent ( A ) will report after the close.
  • Zacks ESP or Earnings Surprise Prediction, our proprietary leading indicator of earnings surprises, is showing TSN missing earnings expectations.

Tuesday - 11/20

  • We have the October Housing Starts coming out in the morning, with expectations of starts coming in at the 835K level, below September's 872K level.
  • We have Hewlett-Packard ( HPQ ) and Best Buy ( BBY ) reporting in the morning, while ( CRM ) reports after the close.
  • Based on Zacks ESP, CRM is expected to miss earnings expectations.

Wednesday - 11/21

  • The weekly Jobless Claims data comes today instead of the usual Thursday because of the Thanksgiving holiday. Last week's data was distorted by the East Coast storm, and the dust unlikely to settle for another few weeks.
  • We also have the University of Michigan sentiment survey for November and the October Leading Indicators coming out today.
  • We have Deere & Company ( DE ) reporting results in the morning. Zacks ESP is indicating that DE will come short of earnings expectations.

Thursday - 11/22

  • Thanksgiving Holiday.

Friday - 11/23

  • No major earnings or economic reports scheduled.

Here is a list of the 70 companies reporting this holiday-shortened week, including 13 S&P 500 members:

Company Ticker Current Qtr Year-Ago Qtr Last EPS Surprise % Report Day Time
AGILENT TECHA0.80.84-4.82MondayAMC
DYCOM INDSDY0.340.38-4.88MondayAMC
HASTING ENTMTHAST-1.02-0.6516.33MondayBTO
JACK IN THE BOXJACK0.360.495.71MondayAMC
LACLEDE GRP INCLG-0.16-0.1429.03MondayBTO
LOWES COSLOW0.350.35-7.14MondayBTO
NJ RESOURCESNJR-0.260.0242.86 MondayBTO
NUANCE COMM INC NUAN 0.34 0.31 10.71 MondayAMC
PERFECT WORLD PWRD 0.48 0.45 -3.77 Monday AMC
QIHOO 360 TECH QIHU 0.06 0.09 -14.29 Monday AMC
SHOE CARNIVAL SCVL 0.58 0.52 27.27 Monday AMC
TYSON FOODS A TSN 0.43 0.26 -9.09 Monday BTO
URBAN OUTFITTER URBN 0.41 0.33 27.27 Monday AMC
XUEDA EDUC-ADR XUE -0.02 -0.09 33.33 Monday AMC
AMER WOODMARK AMWD 0.05 -0.21 333.33 Tuesday BTO
AMTEC SYSTEMS ASYS -0.52 0.5 40.38 Tuesday AMC
BEST BUY BBY 0.12 0.47 N/A Tuesday BTO
BROWN SHOE CO BWS 0.47 0.5 433.33 Tuesday BTO
CAMPBELL SOUP CPB 0.85 0.82 7.89 Tuesday BTO
CHICOS FAS INC CHS 0.22 0.18 6.67 Tuesday BTO
CHINA GREEN AGR CGA 0.36 0.4 21.05 Tuesday BTO
CHINA XINIYA FS XNY 0.1 0.19 -14.29 Tuesday BTO
CHIPMOS TEC LTD IMOS 0.44 0.17 140 Tuesday BTO
CITI TRENDS INC CTRN -0.41 -0.38 -22.73 Tuesday BTO
COURIER CORP CRRC 0.49 0.53 -26.32 Tuesday BTO
DAKTRONICS INC DAKT 0.15 0.09 300 Tuesday BTO
DIANA SHIPPING DSX 0.14 0.33 10.53 Tuesday BTO
DSW INC CL-A DSW 0.88 0.88 6.45 Tuesday BTO
FREDS INC FRED 0.21 0.24 55.56 Tuesday BTO
HEINZ (HJ) CO HNZ 0.88 0.81 3.61 Tuesday BTO
HEWLETT PACKARD HPQ 1.14 1.17 1.01 Tuesday BTO
HORMEL FOODS CP HRL 0.49 0.43 17.07 Tuesday BTO
IEC ELECTRS NEW IEC 0.21 0.15 15.79 Tuesday BTO
INERGY LP NRGY -0.06 -0.36 0 Tuesday BTO
JIAYUAN.COM INT DATE 0.05 0.12 233.33 Tuesday AMC
JINKOSOLAR HLDG JKS -0.73 -1.62 -78.81 Tuesday BTO
KID BRANDS INC KID 0.08 0.1 -75 Tuesday AMC
KIRKLANDS INC KIRK -0.05 0.06 -37.5 Tuesday BTO
MECOX LANE LTD MCOX -0.16 -0.25 -28.57 Tuesday AMC
MEDTRONIC MDT 0.88 0.84 1.02 Tuesday BTO
NORTHERN TECH NTIC 0.21 0.21 -19.51 Tuesday BTO
PATTERSON COS PDCO 0.49 0.46 -8.16 Tuesday BTO
PLANAR SYSTEMS PLNR -0.05 -0.02 65 Tuesday AMC
QAD INC QADB 0.08 0.15 66.67 Tuesday AMC
QAD INC-A QADA 0.1 0.19 25 Tuesday AMC
RAVEN INDS INC RAVN 0.34 0.31 16.85 Tuesday BTO
SALESFORCE.COM CRM -0.1 0.07 25 Tuesday AMC
SCHOOL SPECIALT SCHS 0.64 0.47 73.13 Tuesday BTO
SHANGPHARMA-ADR SHP 0.09 0.14 -81.82 Tuesday N/A
SIGNET GRP PLC SIG 0.37 0.3 1.19 Tuesday BTO
SOC QUIMICA MIN SQM 0.74 0.54 10.61 Tuesday AMC
SPECTRASCIENCE SCIE -0.02 -0.01 0 Tuesday AMC
TAOMEE HOLDINGS TAOM 0.04 0.12 700 Tuesday BTO
TECH DATA CORP TECD 1.34 1.26 -25.42 Tuesday BTO
TRINA SOLAR LTD TSL -0.61 -0.45 -1.09 Tuesday BTO
VALSPAR CORP VAL 0.85 0.84 1.04 Tuesday BTO
ZALE CORP NEW ZLC -0.68 -1.17 27.38 Tuesday AMC
DEERE & CO DE 1.87 1.62 -14.29 Wednesday BTO
DONALDSON CO DCI 0.34 0.45 0 Wednesday BTO
TSAKOS EGY NAVG TNP -0.19 -0.52 44.44 Wednesday BTO

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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.

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