Plenty of earnings action this week from across the pond, particularly in the big cap technology space. Factset’s latest report published at the end of last week (see below) states that, “Of the 54 S&P 500 companies that have reported earnings to date for the fourth quarter, 65% have reported earnings above estimates.” Whether the big tech stocks will disappoint or surprise will be clear by the weekend.
On Tuesday, there’s Google and IBM to look forward to and then the big one on Wednesday, Apple. The drop in Apple’s share price over the last few months has had a significant impact on the S&P 500 index, given its 3.8% weighting. Since September it has dropped from a high of $705 to its current $500, and fell 4% last week on fears of a slowdown in Iphone 5 demand (following reports that components suppliers were cutting back). Expectations are for fiscal first quarter 2013 earnings of $13.45 a share, down from $13.87 a year ago, with revenues rising from $46.3 to $55 billion. Microsoft is also due to report on Thursday.
FactSet Report January 18th 2013, http://www.factset.com/insight/2013/1/earningsinsight_1.18.13#.UP0WqSfZaSo
Of the 54 S&P 500 companies that have reported earnings to date for the fourth quarter, 65% have reported earnings above estimates. This percentage is slightly below the average of 69% recorded over the past four quarters. In terms of revenues, 69% of companies have reported sales above estimates. This percentage is well above the average of 50% recorded over the past four quarters.
The S&P 500’s blended earnings growth rate for Q4 2012 is 1.9% this week, above last week’s growth rate of 1.6%. The increase in the growth rate this week can mainly be attributed to upside earnings surprises reported by companies in the Financials sector (including Goldman Sachs, JPMorgan Chase, and Bank of America), partially offset by downward revisions to estimates for companies in the Telecom Services sector (including Verizon and AT&T). On December 31, the earnings growth rate for the index was 2.6%. Six of the ten sectors have recorded an decline in earnings growth over this time frame, led by the Telecom Services and Financials sectors. The Materials sector has witnessed the largest increase in earnings growth since the end of the fourth quarter.
Contrarian Investor UK