For Immediate Release
Chicago, IL – January 13, 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 Surge Starting…Now!
The fourth quarter earnings season is about to start. While the official kickoff by Alcoa (AA) was disappointing, it is not reflected in the numbers here. However, there are a number of firms that have November fiscal period ends that have already reported. The early indications are quite good, with positive earnings surprises outnumbering disappointments by 7:1, and on revenues positive surprises are leading disappointments by a 1.67:1 ratio. It will be a confusing earnings season due to the year-ago being a near total washout, and one filled with all sorts of extraordinary items (which we try to exclude).
Looking at full-year earnings, total net income is still expected to be lower than that of 2008, but just by 9.7% — a much smaller decline than the 22.2% plunge in 2008. Next year will be one of earnings recovery, with growth of 27.1% expected, but note that that will still leave earnings below 2007 levels.
While the data is still relatively thin for 2011, and thus should be taken with a grain of salt, further growth of 19.9% is expected for total earnings in 2011. In 2010, the percentage growth numbers will not be really meaningful for the Auto and Construction sectors, since they will be going from negative total earnings to positive total earnings. In 2009, the losses were much lower than the losses in 2008.
The Strength in the Auto sector is really all about Ford (F), which is seeing positive revisions for both the 4Q of 2009 (a good clue they might have a positive surprise) and for 2010.
The Tech sector continues to be driven higher by the Semiconductor names. Ones that look particularly noteworthy include National Semiconductor (NSM), Jabil Circuit (JBL) and Broadcom (BRCM).
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Contact: Dirk Van Dijk, CFA
Company: Zacks.com
Phone: 312-265-9211
Email: pr@zacks.com
Visit: www.zacks.com
