For Immediate Release
Chicago, IL – April 27, 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.
Spectacular So Far
The strong reporting season so far also applies to the top line as well as the bottom line, but to a lesser extent. Positive revenue surprises have topped revenue disappointments by a ratio of 2.55:1 and a median surprise of 1.43%. However, positive revenue growth firms lead firms with falling revenues by 3.33:1, and 76.9% of all firms have higher revenues.
In the fourth quarter, 56% of all firms reported year-over-year revenue growth, and in the third quarter fewer than 30% of all firms did. Total revenues reported so far are 6.92% above the revenues those same firms had a year ago.
At this point, the expectations for the 65.4% that have not reported are probably more important than the actual results of the 34.6% that have. The bar is set fairly high on a year-over-year basis with 44.3% growth expected. If those firms come in as expected, combined with the firms that have already reported, we could easily see total net income grow by over 35% for the full quarter, and 40% growth is not out of the question if the positive surprises in the last two thirds of this season are anything like the first third.
Many Big Players Yet to Weigh In
In evaluating the results, especially at the sector level, remember that some firms have a much bigger impact on the overall results than others, and in many sectors the heavy hitters have yet to weigh in. The best example of this is the Energy sector, where we are still waiting to see the results from Exxon (XOM), Chevron (CVX) and Conoco (COP), the three firms that traditionally make up more than half the sector’s total earnings. Looking forward to the second quarter, strong year-over-year growth of 28.6% is expected among the firms that have yet to report their first quarter results, which is stronger than the expectations of 19.5% growth for those that have already reported their first quarter numbers.
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Contact: Dirk Van Dijk, CFA
Company: Zacks.com
Phone: 312-265-9211
Email: pr@zacks.com
Visit: www.zacks.com
