First Real Week of SP 500 Earnings, Revenue Growth Still an Issue

Briefing.com has a decent earnings calendar and carries more prospective earnings reports than the SP 500.

According to Briefing’s table, 74 companies reported earnings this past week:

Beat consensus estimates: 41

Met consensus estimates: 13

Missed consensus est: 20

Here is the stat that jumped out, after I went through the table manually, day-by-day this week: only 15 of the 74 companies beat the consensus revenue estimate.

According to Thomson Reuter’s “This Week in Earnings”, only 43% beat consensus revenue estimates this week of the SP 500 companies that reported.

However, here is the other aspect to that statistic: GE missed big on revenue this morning, reporting $26.5 billion in revenue versus the $28.6 billion consensus estimate, and the stock had a record day, up 3.4% on the day on 4(x) average volume. Obviously, Nelson Peltz and Trian’s activism is helping propel the stock. GE is acting just like Microsoft did when ValueAct announced a 1% stake in Microsoft in April, 2013.

By the numbers: 

Forward 4-quarter estimate; $125.14 down from $125.88 last week.

P.E ratio: 16.25

PEG ratio: still negative, but maybe not for long

SP 500 earnings yield: 6.16%

Forward 4-quarter growth rate: -2.68%.

Analysis / conclusion: Bank of America and Wells Fargo both beat consensus revenue estimates, whole Goldman Sachs and JP Morgan missed. Probably not a big surprise given the weakness in the stock and bond markets in the 3rd quarter, but it is nice to see some Financials starting to beat the consensus.

Here are the reports I am watching for each day next week:

Monday, 10/19: IBM reports after the bell. Stock is trying to hold $150 or the Dec ’14 low. Needs to hold right here, technically. (Long IBM)

Tuesday, 10/20: United Technologies, Verizon: two laggards. UTX is down from $120 to $92. (long UTX)

Wednesday, 10/21: General Motors (GM). GM is expected to grow earnings in 2015, 55% (Yes, not kidding.) I wonder if the Tesla, EV, tectonic shift in auto business weighing on Ford and GM. (Long F, GM, TSLA)

Thursday: 10/22: Amazon and Microsoft: Amazon is crushing Wal-Mart. Microsoft locked in trading range between $40 – $50 for 12 months. (Long AMZN. MSFT, WMT)

Friday: 10/23: Procter & Gamble (PG): wrong business model, i.e. higher-priced premium brands, with depressed economies in emerging markets. Not much going for PG.

The SP 500 needs to trade back over its 200-day moving average at 2,059. That is the first sign that the equity market is healing from the August ’15 correction.

I still think Q3 ’15 earnings ex-Energy will be at least mid-single-digit y/y growth. The soft revenue growth is an issue. Hard to see a catalyst that changes this over near future.

Intel may have been the biggest surprise this week: beat on EPS and revenue, and reduced capex further. Stock up 2.8% on the week.

 

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