CHICAGO, May 16, 2014 /PRNewswire/ -- Zacks Director of Research Sheraz Mian says, "What we saw this earnings season was anemic growth and continuation of the negative guidance that has become a recurring theme quarter after quarter for more than a year now."
Q1 Earnings Season Coming to an End
We are at the end of the Q1 earnings season, with results from only 38 S&P 500 members still awaited at this stage. The reporting cycle has ended for 10 of the 16 Zacks sectors and even the Retail sector now has Q1 results from 74% of the sector's total market capitalization. As such, the remaining reports are unlikely to change the Q1 earnings picture in any meaningful way.
What we saw this earnings season was anemic growth and continuation of the negative guidance that has become a recurring theme quarter after quarter for more than a year now.
This didn't come as a surprise, as earnings growth has been hard to come by for some time and Q1's unique issues only added to those pre-existing challenges. Weather became a recurring theme in everything related to Q1. The U.S. economy's growth numbers for the quarter provide a good context for the earnings performance of Wal-Mart (NYSE:WMT-Free Report), FedEx (NYSE:FDX-Free Report) and many others in Q1. With respect to the economy, however, more recent economic data is pointing towards improved growth momentum from Q2 onwards, even though the pathway to the more aggressively optimistic GDP growth estimates is unclear at this stage.
We are not seeing anything comparable on the earnings front, with estimates for the current period starting to follow the trend that has been in place for almost two years now – they are going down. This is a trend that has been in place for almost two years now, with the pace expected to accelerate further in the coming days.
Q1 Scorecard (as of May 15th, 2014)
We now have Q1 results from 463 S&P 500 members that combined account for 94.7% of the index's total market capitalization. Total earnings for these 463 companies are up +1.3% from the same period last year on +0.9% revenues, with 69.1% beating EPS estimates and 51.6% coming out with positive revenue surprises.
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