CHICAGO, Oct. 22, 2012 /PRNewswire/ -- Zacks.com releases the list of companies likely to issue earnings surprises. This week's list includes Intel (Nasdaq:INTC),IBM (NYSE:IBM), Google (Nasdaq:GOOG), Apple (Nasdaq:AAPL) and Amazon (Nasdaq:AMZN).
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A Flood of Q3 Earnings Reports
The third quarter earnings season has been quite weak thus far, but we have plenty of reports still to come and things may change. This week is particularly busy on the reporting front, with a total of 668 companies coming out with third quarter results, including 155 S&P 500 members. With results from 115 S&P 500 companies already available (as of Friday, October 19), we will be past the half-way mark by the end of the week.
Total earnings for the companies that have already reported results are down 2.9% from the same period last year and only 54.8% of the companies have beat earnings expectations, with a median surprise of 1.8%. The performance on the revenue side is a bit better, with total revenues up 1.3%, but only 33.9% of them are able to beat revenue expectations. This is weaker than what these 115 companies have been reporting in recent quarters.
While the weakness is quite broad-based, the Tech sector is standing out for its sub-par performance, as we have seen in reports from Intel (Nasdaq:INTC),IBM (NYSE:IBM) and Google (Nasdaq:GOOG). The roughly one quarter of Tech sector companies that have already reported results account for more than 40% of the sector's total third quarter earnings. Total earnings for these Tech companies are down 10.9% from the same period last year, which is a sharp departure from what these companies have done consistently in recent quarters.
Of the 385 S&P 500 companies still to report results, roughly 40% will come out this week, including Apple (Nasdaq: AAPL) and Amazon (Nasdaq: AMZN), just to mention a couple. Total earnings for these 385 companies are expected to drop 2.3% from the same period last year. The still-to-come Tech sector earnings (includes Apple) are expected to be up 6.6%, which compares to growth rates of 12% in the second quarter and 26% in the first quarter of 2012 for these same companies.
The composite earnings growth rate, combining the reports that have come out with those still to come, for the third quarter is for a decline of 2.2% for the S&P 500 as a whole and a decline of 6.5%, excluding Finance. The composite Tech sector earnings growth rate is for a decline of 1.2% from the same period last year, a major reversal of the persistent strong growth for a long time. Excluding Apple, which accounts for about 20% of the sector's earnings, total Tech sector earnings would be down 6.3% vs. positive 2.1% growth in the second quarter.
Sheraz Mian is the Director of Research for Zacks.com.
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