CHICAGO, Sept. 15, 2014 /PRNewswire/ -- Zacks.com releases the list of companies likely to issue earnings surprises. This week's list includes Darden Restaurant (NYSE:DRI-Free Report), Adobe Systems (Nasdaq:ADBE-Free Report), FedEx (NYSE:FDX-Free Report) and Oracle (NYSE:ORCL-Free Report).
To see more earnings analysis, visit http://at.zacks.com/?id=3207.
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What Will Q3 Earnings Season Bring?
The 2014 Q3 earnings season for companies in the S&P 500 index got underway with the Friday morning release from Darden Restaurant (NYSE:DRI-Free Report). We will get some more Q3 reports this week, with a little over two dozen companies coming out with quarterly results, including 7 S&P 500 members like Adobe Systems (Nasdaq:ADBE-Free Report), FedEx (NYSE:FDX-Free Report) and Oracle (NYSE:ORCL-Free Report).
All of these early reporters have fiscal quarters ending in August and their earnings reports form part of our Q3 tally. By the end of this month, we will have seen Q3 results from roughly 30 S&P 500 members. We will have to wait till the middle of next month for the Q3 reporting cycle to really ramp up.
This earnings season will give us a good sense of whether the profitability strength on display in the last reporting cycle was a one-off event or the start of something enduring. Please recall that part of the Q2 strength was a bounce back from the extremely low levels to which all activity levels had fallen in the weather-disrupted first quarter of the year. As such, one could argue that none of the last two earnings seasons represented truly normal conditions, which we will most likely see for the first time this year only in Q3. Total earnings are expected to be up +3% from the same period last year on +1.4% higher revenues and modest margin gains.
As has been the trend each quarter for quite some time, estimates for Q3 have come down as the quarter has unfolded. The negative revisions trend has been broad based, with most sectors suffering downward adjustments in estimates. But the trend has been most pronounced for Oil/Energy, Retail, and Consumer Staples. Estimates for Basic Materials and Transportation have gone up.
Estimates for the Finance and Technology sectors have come down, but not by that much. For the Finance sector, total earnings are expected to be up +4% while the Tech sector earnings are expected to be up +3.6%.
Total earnings for the S&P 500 reached an all-time quarterly record in 2014 Q2 and current estimates for Q3 put the quarterly total as the second highest ever. But given the historical trend of roughly two-thirds of the companies beating earnings estimates, the final Q3 tally will likely be right in the preceding quarter's record vicinity.
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