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Here Comes Earnings Season

Posted By James Bianco On July 3, 2012 @ 11:30 am In Earnings,Think Tank | Comments Disabled

Click to enlarge:
[1]

 

Reuters – Analysis: U.S. companies blame Europe for earnings warnings [2]:

As an increasing number of American companies warn their earnings [3] will fall short of expectations, many are pointing the finger at Europe as the culprit.  As the second-quarter corporate results season gets underway in the next few weeks, the euro zone [4] debt crisis, weak European demand, the euro currency’s decline and the impact of it all on the global economic environment, will be front and center.  A Thomson Reuters study of 85 Standard & Poor’s 500 companies that have warned investors their earnings would be worse than expected in the quarter shows at least 20 cited Europe specifically, 15 noted currency movements and 12 talked more vaguely about uncertainty due to global economic conditions. Most of the others were not specific or had more unique or isolated problems.

Factset – Earnings Insight, June 29, 2012 [5]
Q2 EPS Guidance: More Negative, Fewer Positive than Recent Quarters

With the second quarter ending this week, it marks a good time to analyze guidance data for the second quarter. To date, 102 companies in the S&P 500 have issued quarterly EPS guidance for the second quarter. Of these 102 companies, 74 have issued negative EPS guidance and 28 have issued positive EPS guidance. How do these numbers compare to recent quarters? Are they more negative? Are they more positive? Compared to Q1 2012, these numbers are definitely more negative. For Q1 2012, 111 companies issued EPS guidance. Of these 111 companies, 67 issued negative EPS guidance and 44 issued positive EPS guidance. The Consumer Discretionary sector has witnessed the largest increase (+7) in the number of companies issuing negative EPS guidance and the largest decrease (-9) in the number of companies issuing positive EPs guidance in Q2 2012 relative to Q1 2012.

Comment

Reports of Q2 earnings season starts next week.  As the chart and story above show, it is not going to be good.  Growth is now expected to be negative.

Source: Bianco Research [6]


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URL to article: http://www.ritholtz.com/blog/2012/07/here-comes-earnings-season/

URLs in this post:

[1] Image: http://www.ritholtz.com/blog/wp-content/uploads/2012/07/earn0702121_big.gif

[2] Analysis: U.S. companies blame Europe for earnings warnings: http://www.reuters.com/article/2012/07/02/us-markets-usa-earnings-europe-idUSBRE86105D20120702

[3] earnings: http://www.reuters.com/finance/earnings

[4] euro zone: http://www.reuters.com/subjects/euro-zone

[5] Earnings Insight, June 29, 2012: http://www.factset.com/websitefiles/PDFs/earningsinsight/earningsinsight_6.29.12

[6] Bianco Research: http://www.arborresearch.com/bianco/?p=65134

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