For Immediate Release
Chicago, IL – February 23, 2010 – Zacks Research Equity Strategist Dirk Van Dijk says that S&P 500 earnings are continuing to show red ink. He tracks companies on the Zacks.com web site, naming names, while forecasting trends for the months ahead.
Perfectly Surprising
While the dramatic growth in earnings is largely due to turnarounds in a handful of very large firms moving from big losses a year ago to profits this year, that is not the full story. Most of those big turnarounds were in the Financial sector. In total, the 72 S&P 500 Financial companies that have reported so far have earned $15.6 billion this year, while those same firms lost a total of $17.8 billion a year ago.
However, even if we exclude the Financial sector, total earnings are up 10.9%. Companies reporting higher earnings than a year ago outnumber firms with falling earnings by a ratio of 1.73. While the big percentage growth is largely a function of a few big turnarounds, earnings growth is still widespread with 63.3% of all firms reporting higher EPS than a year ago.
Earnings growth is dramatically higher than revenue growth, which means we are seeing a huge increase in net margins. That margin expansion is expected to continue, not only in 2010, but into 2011 as well.
The Retail strength is broad-based and led by a very eclectic group from across the spectrum. Some of the firms showing noteworthy strength include Amazon (AMZN), Macy’s (M) , Starbucks (SBUX) and Whole Foods (WFMI).
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Contact: Dirk Van Dijk, CFA
Company: Zacks.com
Phone: 312-265-9211
Email: pr@zacks.com
Visit: www.zacks.com
