Key Points:
- Second quarter early indications positive. Only 5.2% of firms reporting, all with May fiscal period ends. Surprise ratio 3.40 with a 5.67% median surprise. The medians and ratios will swing dramatically in the early going and one must keep an eye on the percentage reporting when evaluating sector data. Total net income grows 37.3%.
- Sales Surprise ratio at 2.13, median surprise 0.25%; 68.0% of all firms do better than expected on top line.
- Total net income for the vast majority that have yet to report is expected to be 21.6% above second quarter of 2009 levels. Significant slowdown from the 48.0% growth those same firms had in the first quarter. A further slowdown to 18.2% growth expected in the third quarter.
- Total revenue growth for those yet to report expected to be 6.6%, down from the 12.1% the same firms reported in the first quarter. Still a very healthy level of revenue growth. Revenue growth expected to accelerate to 7.6% in the third quarter.
- Total earnings for the S&P 500 expected to jump 36.4% in 2010, 19.2% further in 2011.
- Autos, Finance, Basic Materials, and Energy expected to be earnings growth leaders in 2010. Construction expected to move from the red to the black. No sector expected to see earnings decline in 2010.
- Total revenues for the S&P 500 expected to rise 4.64% in 2010, 6.39% in 2011.
- Given 12.1% revenue growth in first quarter, and 6.6% and 7.6% expectations for second quarter and third quarters, implies slowdown in the fourth quarter (or increases in full-year estimates).
- Huge net margin expansion in 1Q expected to continue in 2010 and 2011.
- Revisions ratio for full S&P 500 at 0.73 for 2010, at 0.71 for 2011, both bearish readings. Ratio of firms with rising-to-falling mean estimates at 0.64 for 2010, 0.57 for 2011, both also bearish.
- S&P 500 firms earned a total of $544.8 billion in 2009, expected to earn $743.0 billion in 2010, $885.4 billion in 2011.
- S&P 500 earned $57.54 in 2009, $78.69 in 2010 and $93.88 in 2011 expected, bottom up.
- Top Down estimates: $80.32 for 2010, $90.95 for 2011.
The second quarter earnings season will be getting underway as this is published. Traditionally, Alcoa (AA) reporting is seen as the kickoff of the earnings season, but there are actually a few “pregame festivities.”
We define the second quarter as any fiscal period ending in May, June or July, so there are actually a total of 26 (5.2%) of the S&P 500 firms with May fiscal periods that have already reported. This is hardly a representative sample since seven sectors have not had any firms report, and an additional five have had only a single firm report.
That being said, we seem to be off to a fairly solid start. The median surprise so far is 5.67%, and there have been 17 positive surprises and only 5 disappointments (surprise ratio of 3.40) as far as EPS is concerned. As for growth, the total net income of those 26 firms is 37.3% higher than it was a year ago. For those firms, that actually represents acceleration from the 25.5% growth they posted in the first quarter.
As far as the top line is concerned, the story is pretty similar. Positive surprises lead disappointments by 17 to 8, or a surprise ratio of 2.13 and a median surprise of 0.25%. Total revenue is 11.9% higher, acceleration from the 8.7% growth those same firms saw in the first quarter. In the early going, just a handful of firms being added to the mix can drastically change the ratios and the medians, so expect some volatility in the numbers over the next few weeks, and it is still too early to draw any firm conclusions, but the early indications look promising.
Heading into Earnings Season Proper
Still, the focus has to be on the vast majority of firms that have yet to report and the expectations for them. For the 474 S&P 500 firms that are still to come, the total net income is expected to rise 21.6% from a year ago. That is pretty solid growth, even if it does represent a big slowdown from the 48.0% growth in the first quarter. The first quarter was in turn a big slowdown from the 120% growth in the fourth quarter.
However, the slowdown in growth really says much more about what was happening a year ago than what is happening now. Quite simply, there has probably never been as easy a comparison as the fourth quarter of 2008, and corporate earnings were not exactly shooting the lights out in the first quarter of 2009. Looking ahead to the third quarter, the comparisons continue to get tougher, and growth is expected to drop to 18.2%.
As for the top line, second quarter growth is expected to be 6.6%, a sharp slowdown from the 12.1% registered in the first quarter. A partial rebound to 7.6% growth is forecast for the third quarter. It should be noted that the revenue estimates, particularly for the quarters, is “thinner” than it is for earnings.
Still, when you think about it, 6.6% revenue growth for the S&P 500 is a very healthy level. The 500 firms account for a very large percentage of economic activity in the country, and it is rather doubtful that nominal GDP will grow anything like 6.6% in the second quarter, especially with inflation all but non-existent.
Upward Revisions, Big Misses or Slowdown?
The strong revenue growth numbers for the quarters are a bit at odds with the revenue growth forecasts for the full year, which are looking for growth of just 4.6% for all of 2010, and 6.4% in 2011. Either we are going to have a very big fall-off in revenue growth in the fourth quarter, or there are going to be a lot of revenue disappointments in the second and third quarters. Another possibility is that the full-year revenue growth estimates will rise significantly from here.
There is less of a discrepancy between the quarterly earnings forecasts and the annual outlook. For the full year, earnings are expected to grow 36.4% in 2010, with further growth of 19.2% in 2011. That is a big improvement over the 7.3% decline we saw in 2009, and a very big improvement over the 27.2% plunge in 2008. It means that earnings will have fully recovered by mid-2011, and that full-year 2011 earnings will be 9.7% above full-year 2007 earnings (before the Great Recession started). This is years before we are likely to see a full recovery in the job market.
Collectively, the 500 firms in the S&P 500 earned $544.8 billion in 2009, and that is going to grow to $743.0 billion this year and $885.4 billion in 2011. Translated into “EPS” for the index, earnings are expected to rise from $57.54 in 2009 to $78.69 in 2010 and $93.88 in 2011.
In other words then, the S&P 500 is selling for 18.6x 2009 earnings, but just 13.6x 2010 and 11.4x 2011 earnings. By historical standards that is quite cheap. Normally, when interest rates and inflation are low, P/E ratios are higher than average. Well, we currently have some of the lowest rates of inflation in decades and interest rates are at near record lows.
It only costs the government 3.02% to borrow for 10 years. It is not hard to find good, solid blue-chip companies that are providing dividend yields of more than that, and not just a bunch of electric utilities either. Based on this year’s earnings, the earnings yield is 7.35% and based on next year it is 8.77%.
Despite rapidly growing earnings, record low interest rates and very reasonable P/E ratios, surveys of investor sentiment are showing almost as much bearishness as back in the fall of 2008. The time to buy is when others are despondently selling, and the time to sell is when others are greedily buying. This is particularly true when the actual fundamentals are solid and when the market is simply depressed.
There is nothing more fundamental than earnings (OK, perhaps the balance sheets, but those look better than they have in decades as well, with about $1.8 trillion in cash sitting on them) and earnings look pretty good, or at least the expectations for them do. Over the next few weeks we will see if those expectations are rational or not.
Scorecard & Earnings Surprise
- Second quarter early indications positive. Only 5.2% of firms reporting, all with May fiscal period ends. Surprise ratio 3.40 with a 5.67% median surprise. The medians and ratios will swing dramatically in the early going, and one must keep an eye on the percentage reporting when evaluating sector data. Total net income to grow 37.3%.
- Ratio of positive to negative growth reports 2.71:1. Positive earnings growth in 73.1% of all firms reporting.
The first quarter was a great earnings season both relative to expectations and to the year-ago earnings levels, even somewhat better than the very strong fourth quarter, on balance. The second quarter is starting out strong, but it is still very early and the firms that have reported are far from a representative sample.
|
Scorecard & Earnings Surprise
|
|||||||
|---|---|---|---|---|---|---|---|
| Income Surprises | Yr/Yr Growth |
% Reported |
Surprise Median |
EPS Surp Pos |
EPS Surp Neg |
# Grow Pos |
# Grow Neg |
| Construction | 322.22% | 9.09% | 2200.00 | 1 | 0 | 1 | 0 |
| Finance | 315.12% | 1.30% | 200.00 | 1 | 0 | 1 | 0 |
| Computer and Tech | 81.02% | 8.33% | 8.61 | 5 | 0 | 6 | 0 |
| Consumer Discretionary | 9.25% | 8.82% | 6.67 | 2 | 0 | 2 | 1 |
| Consumer Staples | 0.33% | 10.81% | 4.28 | 2 | 1 | 2 | 2 |
| Business Service | 1.75% | 5.26% | 3.23 | 1 | 0 | 1 | 0 |
| Basic Materials | -36.02% | 4.35% | 1.25 | 1 | 0 | 0 | 1 |
| Transportation | 109.50% | 11.11% | 0.00 | 0 | 0 | 1 | 0 |
| Retail/Wholesale | 11.32% | 18.18% | -0.04 | 4 | 4 | 5 | 3 |
| Medical | na | na | na | 0 | 0 | 0 | 0 |
| Auto | na | na | na | 0 | 0 | 0 | 0 |
| Industrial Products | na | na | na | 0 | 0 | 0 | 0 |
| Conglomerates | na | na | na | 0 | 0 | 0 | 0 |
| Aerospace | na | na | na | 0 | 0 | 0 | 0 |
| Oils and Energy | na | na | na | 0 | 0 | 0 | 0 |
| Utilities | na | na | na | 0 | 0 | 0 | 0 |
| S&P | 37.34% | 5.20% | 5.67 | 17 | 5 | 19 | 7 |
Sales Surprises
- Sales Surprise ratio at 2.13, median surprise 0.25%, 68.0% of all firms do better than expected on top line.
- More firms report growing than shrinking revenues, ratio 2.57:1, 72.0% of all firms report higher revenues than a year ago.
- Revenue growth healthy at 5.2%, but still greatly lags earnings growth pointing to net margin expansion.
- Tech appears to be early leader in revenue surprises.
- As with the income surprise data, it is still very early, and the results will change significantly over the coming weeks. This is not a representative sample, as seven sectors have yet to have any firms report and five more have only a single firm reporting.
|
Sales Surprises
|
|||||||
|---|---|---|---|---|---|---|---|
| Sales Surprises | Yr/Yr Growth |
% Reported |
Surprise Median |
Sales Surp Pos |
Sales Surp Neg |
# Grow Pos |
# Grow Neg |
| Transportation | 20.07% | 11.11% | 4.08 | 1 | 0 | 1 | 0 |
| Computer and Tech | 43.07% | 8.33% | 3.66 | 6 | 0 | 6 | 0 |
| Finance | -14.39% | 1.30% | 2.75 | 1 | 0 | 0 | 1 |
| Business Service | 0.00% | 5.26% | 1.42 | 1 | 0 | 1 | 0 |
| Retail/Wholesale | 8.84% | 18.18% | 0.22 | 6 | 2 | 7 | 1 |
| Consumer Staples | -3.24% | 10.81% | -0.42 | 2 | 2 | 1 | 3 |
| Consumer Discretionary | 10.30% | 8.82% | -1.38 | 1 | 2 | 3 | 0 |
| Construction | -8.74% | 9.09% | -5.36 | 0 | 1 | 0 | 1 |
| Basic Materials | -6.30% | 4.35% | -5.46 | 0 | 1 | 0 | 1 |
| Medical | na | na | na | 0 | 0 | 0 | 0 |
| Auto | na | na | na | 0 | 0 | 0 | 0 |
| Industrial Products | na | na | na | 0 | 0 | 0 | 0 |
| Conglomerates | na | na | na | 0 | 0 | 0 | 0 |
| Aerospace | na | na | na | 0 | 0 | 0 | 0 |
| Oils and Energy | na | na | na | 0 | 0 | 0 | 0 |
| Utilities | na | na | na | 0 | 0 | 0 | 0 |
| S&P | 10.67% | 5.20% | 0.25 | 17 | 8 | 18 | 7 |
Reported Quarterly Growth: Total Net Income
With the earnings reports starting to come in for the first quarter, we have broken things up with the first table showing the actual reported growth of those that have already reported, and the second table showing the expected growth for the vast majority of firms that have yet to report.
- The total net income of firms that have reported so far is 37.3% above what they reported in the second quarter of 2009. These same firms reported year-over-year growth of 25.5% in the first quarter.
- Reporting firms expected to show growth slowing to 14.7% in the third quarter.
- The numbers in the table (and Revenue Growth table) below only refer to those firms which have already reported.
|
Quarterly Growth: Total Net Income Reported
|
|||||
|---|---|---|---|---|---|
| Income Growth | Sequential Q3/Q2 E | Sequential Q2/Q1 A | Year over Year 2Q 10 A |
Year over Year 3Q 10 E |
Year over Year 1Q 09 A |
| Construction | -80.12% | -671.43% | 322.22% | 121.49% | 83.72% |
| Finance | -11.52% | -251.64% | 315.12% | -43.55% | 31.07% |
| Transportation | -25.03% | 75.31% | 109.50% | 73.55% | 146.39% |
| Computer and Tech | -32.71% | 50.67% | 81.02% | 56.93% | 86.79% |
| Retail/Wholesale | 9.13% | -34.06% | 11.32% | 9.40% | 17.74% |
| Consumer Discretionary | 53.06% | 29.71% | 9.25% | -9.23% | -7.83% |
| Business Service | 6.25% | -5.69% | 1.75% | -0.61% | -6.11% |
| Consumer Staples | 29.29% | -8.90% | 0.33% | -2.14% | 20.11% |
| Basic Materials | -98.16% | -52.87% | -36.02% | -31.81% | -21.17% |
| Medical | na | na | na | na | na |
| Auto | na | na | na | na | na |
| Industrial Products | na | na | na | na | na |
| Conglomerates | na | na | na | na | na |
| Aerospace | na | na | na | na | na |
| Oils and Energy | na | na | na | na | na |
| Utilities | na | na | na | na | na |
| S&P | -11.42% | 8.49% | 37.34% | 14.71% | 25.48% |
Expected Quarterly Growth: Total Net Income
- Total net income for the vast majority that have yet to report is expected to be 21.6% above second quarter of 2009 levels.
- Significant slowdown from the 48.0% growth those same firms had in the first quarter. A further slowdown to 18.2% growth expected in the third quarter. Comparisons get tougher as we move forward.
- Autos expected swing from the red into the black; Construction profits expected to rise 673.3.3% in 2Q. Materials, Energy and Transport expected to post growth of over 50%.
- Three sectors now expected to earn less than they did a year ago; nine sectors to see double-digit gains (including Autos, moving from negative to positive).
|
Quarterly Growth: Total Net Income Expected
|
|||||
|---|---|---|---|---|---|
| Income Growth | Sequential Q3/Q2 E | Sequential Q2/Q1 E | Year over Year 2Q 10 E |
Year over Year 3Q 10 E |
Year over Year 1Q 10 A |
| Auto | -20.85% | 21.94% | – to + | 7.83% | – to + |
| Construction | 8.54% | 101.74% | 673.32% | 809.34% | – to + |
| Basic Materials | -3.20% | 1.83% | 139.74% | 35.09% | 409.42% |
| Oils and Energy | 4.74% | 3.11% | 74.77% | 42.92% | 65.62% |
| Transportation | 6.30% | 25.69% | 50.08% | 40.99% | 36.74% |
| Computer and Tech | 7.60% | 1.99% | 42.47% | 34.07% | 61.46% |
| Industrial Products | 9.21% | 37.92% | 34.13% | 22.51% | 46.71% |
| Business Service | 6.13% | 3.54% | 17.47% | 16.56% | 14.87% |
| Retail/Wholesale | 15.66% | -22.31% | 10.90% | 8.14% | 19.51% |
| Finance | 10.04% | -23.51% | 8.96% | 16.50% | 105.40% |
| Medical | 2.36% | -5.93% | 7.87% | 5.82% | 14.94% |
| Consumer Staples | 3.58% | 8.73% | 3.20% | 3.29% | 25.09% |
| Consumer Discretionary | 8.84% | -4.16% | 1.93% | 4.87% | 37.25% |
| Utilities | 28.56% | -13.57% | -1.10% | 4.12% | 1.01% |
| Aerospace | 2.67% | 12.30% | -7.09% | 144.21% | -5.84% |
| Conglomerates | 3.70% | 13.00% | -10.67% | -5.80% | 7.23% |
| S&P | 7.62% | -5.82% | 21.64% | 18.16% | 47.97% |
Quarterly Growth: Total Revenues Reported
Just a relative handful of S&P 500 firms have reported their first quarter results (all have May fiscal period ends). This is hardly a representative sample, as seven sectors have no reports in at all yet. The first table shows the growth actually reported, and the second table shows the expectations for the (vast majority) firms that have yet to report.
- The S&P 500 reported revenues up 11.9% year over year in 2Q, up from over 8.7% revenue increase the same firms showed in the 1Q. This is a very healthy level of revenue growth, but it is still very early.
- Tech, Transport and Discretionary seeing double-digit revenue growth so far.
|
Quarterly Growth: Total Revenues Reported
|
|||||
|---|---|---|---|---|---|
| Sales Growth | Sequential Q3/Q2 E | Sequential Q2/Q1 A | Year over Year 2Q 10 A |
Year over Year 3Q 10 E |
Year over Year 1Q 09 A |
| Computer and Tech | 0.21% | 31.38% | 43.07% | 49.55% | 20.89% |
| Transportation | 1.60% | 8.36% | 20.07% | 15.83% | 6.93% |
| Consumer Discretionary | -0.78% | 7.99% | 10.30% | 9.08% | 8.76% |
| Retail/Wholesale | 3.61% | -10.02% | 8.84% | 7.37% | 9.09% |
| Business Service | 2.22% | -2.36% | 0.00% | 1.00% | -3.97% |
| Consumer Staples | 13.34% | 0.23% | -3.24% | 1.17% | 0.91% |
| Basic Materials | -40.21% | -23.86% | -6.30% | -5.00% | -3.59% |
| Construction | 9.09% | 41.81% | -8.74% | 15.53% | -3.20% |
| Finance | -51.75% | -1.83% | -14.39% | -57.07% | -0.12% |
| Medical | na | na | na | na | na |
| Auto | na | na | na | na | na |
| Industrial Products | na | na | na | na | na |
| Conglomerates | na | na | na | na | na |
| Aerospace | na | na | na | na | na |
| Oils and Energy | na | na | na | na | na |
| Utilities | na | na | na | na | na |
| S&P | 5.14% | -1.36% | 11.88% | 10.67% | 8.66% |
Quarterly Growth: Total Revenues Expected
The table shows the growth expected for the second and third quarters.
- Total revenue growth for those yet to report expected to be 6.6%, down from the 12.1% the same firms reported in the first quarter. Still a very healthy level of revenue growth.
- Revenue growth expected to accelerate to 7.6% in the third quarter.
- Double-digit revenue growth expected for six sectors, led by Energy and Materials (tied to rise in commodity prices). Finance and Staples only sectors expected to see lower revenues than a year ago.
|
Quarterly Growth: Total Revenues Expected
|
|||||
|---|---|---|---|---|---|
| Sales Growth | Sequential Q3/Q2 E | Sequential Q2/Q1 E | Year over Year 2Q 10 E |
Year over Year 3Q 10 E |
Year over Year 1Q 10 A |
| Oils and Energy | 2.08% | 6.02% | 28.50% | 19.92% | 35.54% |
| Basic Materials | -1.54% | 5.05% | 18.65% | 15.47% | 21.32% |
| Computer and Tech | 9.44% | 1.37% | 16.46% | 26.23% | 16.31% |
| Transportation | 3.99% | 4.94% | 16.24% | 17.87% | 11.72% |
| Industrial Products | -0.59% | 16.50% | 15.48% | 17.64% | 2.68% |
| Auto | 4.49% | -2.67% | 11.62% | 2.88% | 24.20% |
| Medical | 2.75% | 0.97% | 9.78% | 12.49% | 11.72% |
| Construction | -1.79% | 13.01% | 6.81% | 3.52% | -4.65% |
| Business Service | 5.94% | 1.45% | 5.67% | 11.99% | 5.66% |
| Utilities | -2.20% | -6.99% | 4.65% | -3.23% | 1.58% |
| Retail/Wholesale | 1.75% | -6.57% | 4.31% | 2.75% | 4.29% |
| Consumer Discretionary | 7.32% | 2.97% | 3.99% | 10.25% | 5.72% |
| Conglomerates | 7.17% | 5.92% | 1.86% | 10.95% | 0.05% |
| Aerospace | 6.09% | 6.39% | 0.20% | 9.71% | -2.14% |
| Consumer Staples | 3.91% | -2.49% | -3.26% | 0.04% | 11.07% |
| Finance | 0.92% | -20.87% | -14.92% | -11.11% | 13.75% |
| S&P | 2.87% | -2.60% | 6.57% | 7.60% | 12.12% |
Annual Total Net Income Growth
- Total S&P 500 net income in 2009 was 7.3% below 2008 levels, following a 27.2% plunge in 2008.
- Total earnings for the S&P 500 expected to jump 36.4% in 2010, 19.2% further in 2011.
- Earnings recovery to happen by mid-2011, full-year 2011 earnings to be 9.7% above 2007 levels. In other words, the recovery in earnings will occur far before the recovery in jobs, as we are unlikely to return to 2007 job levels until 2013 at the earliest.
- Autos, Finance, Basic Materials, and Energy expected to be earnings growth leaders in 2010. Construction expected to move from red to black. No sector expected to see earnings decline in 2010.
- Finance, Construction and Autos expected to be 2011 growth leaders, with over 30% growth.
- Despite strong growth in both 2010 and 2011, Energy earnings in 2011 expected to be 21.3% below 2008 levels.
|
Annual Total Net Income Growth
|
||||
|---|---|---|---|---|
| EPS Growth | 2008 | 2009 | 2010 | 2011 |
| Construction | + to – | – to – | – to + | 37.90% |
| Auto | + to – | – to + | 1448.34% | 31.14% |
| Finance | + to – | – to + | 290.31% | 42.23% |
| Basic Materials | -4.43% | -50.17% | 63.12% | 24.96% |
| Oils and Energy | 20.87% | -56.55% | 46.59% | 23.62% |
| Computer and Tech | 16.19% | -4.16% | 36.86% | 16.51% |
| Transportation | 1.20% | -30.04% | 36.16% | 20.24% |
| Industrial Products | 5.39% | -36.71% | 29.03% | 24.69% |
| Consumer Discretionary | 8.56% | -10.95% | 14.52% | 17.24% |
| Aerospace | 13.20% | -14.87% | 14.16% | 12.51% |
| Retail/Wholesale | 1.43% | 2.62% | 11.85% | 12.71% |
| Consumer Staples | -11.64% | 6.33% | 9.79% | 10.80% |
| Medical | 9.32% | 1.87% | 6.44% | 8.31% |
| Business Service | 24.80% | 1.07% | 4.57% | 18.56% |
| Conglomerates | -10.96% | -23.88% | 1.16% | 3.95% |
| Utilities | -1.15% | -13.62% | 0.86% | 7.09% |
| S&P | -27.20% | -7.28% | 36.38% | 19.16% |
Annual Total Revenue Growth
- Total S&P 500 revenue in 2009 6.49% below 2008 levels.
- Total revenues for the S&P 500 expected to rise 4.64% in 2010, 6.39% in 2011.
- Given 12.1% revenue growth in first quarter, and 6.6% and 7.6% expectations for second quarter and third quarters, implies slowdown in the fourth quarter (or increases in full-year estimates).
- However, quarterly revenue estimates are thinner (fewer ests in the consensus) than annual ones.
- Energy to lead 2010 revenue race, Tech and Materials to take silver and bronze, but Transports and Industrials have a chance to make it on to the medal stand.
- Looking out to 2011, Energy and Autos are the only sectors expected to see double-digit revenue growth, although four other sectors expected to have revenue growth over 8%.
|
Annual Total Revenue Growth
|
|||
|---|---|---|---|
| Sales Growth | 2009 | 2010 | 2011 |
| Oils and Energy | -34.47% | 21.36% | 14.29% |
| Computer and Tech | -5.13% | 14.45% | 8.26% |
| Basic Materials | -19.30% | 12.61% | 7.42% |
| Transportation | -13.65% | 11.94% | 8.23% |
| Industrial Products | -19.55% | 11.70% | 9.37% |
| Medical | 6.16% | 9.29% | 3.44% |
| Business Service | -2.03% | 6.48% | 6.18% |
| Retail/Wholesale | 2.60% | 5.07% | 5.14% |
| Consumer Discretionary | -8.72% | 5.04% | 5.45% |
| Utilities | -5.87% | 4.75% | 2.50% |
| Conglomerates | -13.19% | 1.82% | 2.18% |
| Auto | -21.36% | 1.79% | 10.65% |
| Aerospace | 6.30% | 1.24% | 5.86% |
| Construction | -15.92% | 1.24% | 9.60% |
| Consumer Staples | -1.59% | -3.18% | 4.57% |
| Finance | 21.25% | -17.75% | 3.02% |
| S&P | -6.49% | 4.64% | 6.39% |
Revisions: Earnings
The Zacks Revisions Ratio: 2010
- Revisions ratio for full S&P 500 at 0.73, a bearish reading.
- Tech leads among large sectors. Transports and Autos strong, but small sample size.
- Sharp decline in revisions ratios, mostly due to old estimate increases falling out of sample, not a flood of estimate cuts.
- Ratio of firms with rising to falling mean estimates at 0.64, also a bearish reading.
- Total number of revisions (4 week total) down to 1,730 from 1,782 (-2.9%).
- Increases down to 729 from 859 (-15.1%), cuts up to 1,001 from 923 (8.5%).
- Total Revisions activity approaching seasonal low, will probably triple over the next month.
|
The Zacks Revisions Ratio: 2010
|
|||||||
|---|---|---|---|---|---|---|---|
| Sector | %Ch Curr Fiscal Yr Est – 4 wks |
# Firms Up |
# Firms Down |
# Ests Up |
# Ests Down |
Revisions Ratio |
Firms up/down |
| Transportation | 0.50 | 5 | 3 | 42 | 21 | 2.00 | 1.67 |
| Computer and Tech | 0.60 | 27 | 33 | 126 | 65 | 1.94 | 0.82 |
| Auto | 0.42 | 3 | 2 | 8 | 5 | 1.60 | 1.50 |
| Construction | -2.10 | 5 | 4 | 14 | 11 | 1.27 | 1.25 |
| Industrial Products | 0.20 | 11 | 6 | 24 | 19 | 1.26 | 1.83 |
| Consumer Discretionary | 0.28 | 14 | 14 | 46 | 50 | 0.92 | 1.00 |
| Conglomerates | 0.48 | 5 | 3 | 6 | 7 | 0.86 | 1.67 |
| Basic Materials | -1.39 | 7 | 15 | 36 | 44 | 0.82 | 0.47 |
| Oils and Energy | -0.21 | 8 | 30 | 93 | 142 | 0.65 | 0.27 |
| Utilities | -0.18 | 18 | 18 | 30 | 46 | 0.65 | 1.00 |
| Medical | 0.44 | 19 | 27 | 41 | 63 | 0.65 | 0.70 |
| Retail/Wholesale | -0.13 | 12 | 30 | 71 | 126 | 0.56 | 0.40 |
| Consumer Staples | -0.20 | 8 | 26 | 47 | 90 | 0.52 | 0.31 |
| Finance | -1.01 | 24 | 46 | 134 | 262 | 0.51 | 0.52 |
| Aerospace | -0.01 | 3 | 4 | 2 | 8 | 0.25 | 0.75 |
| Business Service | -0.27 | 5 | 9 | 9 | 42 | 0.21 | 0.56 |
| S&P | -0.16 | 174 | 270 | 729 | 1001 | 0.73 | 0.64 |
Revisions: Earnings
The Zacks Revisions Ratio: 2011
- Revisions ratio for full S&P 500 at 0.71, in bearish territory.
- Transportation have highest revisions ratios, small totals.
- Tech still strongest of major sectors.
- Five sectors with positive revisions ratios, eleven with ratios below 1.0.
- Staples and Energy all have more than 3 cuts for each increase.
- Ratio of firms with rising estimate to falling mean estimates at 0.57 – bearish reading.
- Thirteen sectors have more firms with falling mean estimates that rising estimates.
- Total number of revisions (4 week total) at 1,526, down from 1,683 (-9.3%).
- Increases down to 632 from 751 (-15.8%) cuts fall to 894 from 932 (-4.1%).
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The Zacks Revisions Ratio: 2011
|
|||||||
|---|---|---|---|---|---|---|---|
| Sector | %Ch Next Fiscal Yr Est – 4 wks |
# Firms Up |
# Firms Down |
# Ests Up |
# Ests Down |
Revisions Ratio |
Firms up/down |
| Transportation | 0.85 | 5 | 3 | 32 | 5 | 6.40 | 1.67 |
| Computer and Tech | 0.70 | 28 | 30 | 115 | 56 | 2.05 | 0.93 |
| Auto | 0.00 | 2 | 2 | 8 | 4 | 2.00 | 1.00 |
| Industrial Products | 0.15 | 11 | 7 | 20 | 17 | 1.18 | 1.57 |
| Basic Materials | -0.17 | 7 | 13 | 32 | 29 | 1.10 | 0.54 |
| Utilities | -0.30 | 14 | 21 | 35 | 39 | 0.90 | 0.67 |
| Consumer Discretionary | -0.01 | 12 | 16 | 35 | 46 | 0.76 | 0.75 |
| Aerospace | 0.10 | 3 | 4 | 6 | 8 | 0.75 | 0.75 |
| Construction | -1.66 | 2 | 7 | 10 | 15 | 0.67 | 0.29 |
| Medical | -0.08 | 15 | 30 | 44 | 70 | 0.63 | 0.50 |
| Oils and Energy | -1.37 | 8 | 30 | 84 | 153 | 0.55 | 0.27 |
| Retail/Wholesale | -0.32 | 11 | 30 | 64 | 118 | 0.54 | 0.37 |
| Finance | -0.26 | 23 | 46 | 107 | 226 | 0.47 | 0.50 |
| Consumer Staples | -0.11 | 10 | 22 | 30 | 72 | 0.42 | 0.45 |
| Conglomerates | -0.39 | 1 | 7 | 3 | 8 | 0.38 | 0.14 |
| Business Service | -0.33 | 5 | 9 | 7 | 28 | 0.25 | 0.56 |
| S&P | -0.16 | 157 | 277 | 632 | 894 | 0.71 | 0.57 |
Total Income and Share
- S&P500 earned $544.8 billion in 2009, expected to earn $743.0 billion in 2010, $885.4 billion in 2011.
- Finance share of total earnings moves from
