For Immediate Release
Chicago, IL – March 16, 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.
Earnings Season Nearly Finished
With 99.0% (495) of the S&P 500 reports in, the year-over-year earnings growth has simply been fabulous at 105.5%. However, much of that growth is due to a single firm, AIG ( AIG ) and its massive year-ago losses. By any normal standard, its losses were enormous this year as well, but last year was not normal. It is not like the $7.2 billion it lost in this year’s fourth quarter is chicken feed, but it is a huge improvement on the $37.9 billion it lost a year ago.
AIG was, of course, not alone among the financials in reporting epic losses a year ago, but if losses are epic poems, then AIG last year was the Iliad and the Odyssey rolled into one. If just AIG is excluded, the growth rate drops to 45.2%, and if all the Financials are excluded, the growth rate is just 14.2%. Still, firms with positive EPS growth outnumber those with falling EPS by a ratio of 1.80:1, and 63.2% of all firms reported positive EPS growth.
Even set against the expectations coming into the earnings season it has been an extremely good one. For every two earnings disappointments there have been more than nine positive surprises. In all, 72.9% of all firms reporting have come in with better than expected earnings. Half of all the surprises (including the disappointments) have been more than 5.54%.
Likewise, on the top line things are coming in both better than last year and better than expected. Total revenues are 6.07% higher than a year ago among the 495 firms that have already reported, and positive revenue surprises are beating revenue disappointments by a margin of 2.30:1. Put another way, 65.5% of all firms have reported better-than-expected revenues. Overall, 56.0% of all firms have reported higher revenues than a year ago. In the third quarter, that figure was below 30%.
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Contact: Dirk Van Dijk, CFA