For Immediate Release
Chicago, IL – July 10, 2009 – 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.
Key Points from Van Dijk’s Latest Earnings Assessment
- Early reporters (May fiscal quarters) doing much better than expected
- Second-quarter total net income expected to be down 36.8% year over year
- Staples only sector expected to post positive growth in second quarter
- Six sectors expected to decline more than 25%
- Financials expected to rebound after disastrous 2008
- Median EPS growth in second quarter expected to be -14.8%
- Third-quarter expected to be down 22.3% year over year
- Full year 2009 expected to fall 13.7%, which implies strong growth in fourth quarter
- Bottom-up estimate for S&P 500 is now $59.60 in 2009 and is starting to rise.
- S&P 500 now expected to earn $74.09 in 2010
The Zacks Revisions Ratio: 2009
The revisions ratio reversed course, falling after a long string of steady increases. The reversal brought it from the abysmal lows of 0.20 last winter (i.e. 5 cuts for every increase) to a high of 1.29 two weeks ago. Last winter, in individual sectors, the cuts were often in excess of 10:1.
The current reading is on a very low number of total revisions, which is quite normal for this time of the quarter. However, it is sort of like a stock that moves on low volume. It’s good if the stock moves up, but you have less conviction about its significance than if it is on high volume.
Tech has moved up substantially in the revisions ratio rankings in large part due to the strength in the Chip industry. Some of the real standouts in terms of large numbers of estimate increases leading to very large increases in mean estimates are National Semiconductor (NSM) and Texas Instruments (TXN).
The weakness in the Industrial sector was most apparent in some of the transportation related companies, like FedEx (FDX).
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Contact:
Dirk Van Dijk
Director of Research
312-265-9211
Visit: www.zacks.com
