For Immediate Release
Chicago, IL – May 27, 2014 – Zacks.com releases the list of companies likely to issue earnings surprises. This week’s list includes Michael Kors (KORS-Free Report), AutoZone (AZO-Free Report), Costco (COST-Free Report) and Toll Brothers (TOL-Free Report).
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Tough Retail Earnings Environment
The Q1 earnings season is now effectively behind us, though we are still waiting for reports from 11 S&P 500. We will see results this holiday-shortened week from 71 companies in total, including 5 S&P 500 members. The notable companies reporting results this week include Michael Kors (KORS-Free Report), AutoZone (AZO-Free Report), Costco (COST-Free Report), Toll Brothers (TOL-Free Report) and others.
Most of the remaining Q1 earnings reports are from the consumer-centric sectors, primarily the Retail sector. The coming reports are unlikely to change the picture that has emerged from the reports thus far. Strong results from a couple of retailers notwithstanding, it has been a tough environment for the sector. The sector’s weak stock price performance year to date, the weakest among the 16 Zacks sectors, reflects this reality. Retail sector stocks in the S&P 500 are down -5.3% year to date, which compares to positive +3.2% gain for the S&P 500 index as a whole in that same time period.
Total earnings for the 41 retailers in the S&P 500 that have reported results already (out of a total of 43) are flat +0.0% on +3.3% higher revenues, with a low 43.9% of them beating earnings estimates and an even lower 39.0% coming ahead of top-line expectations. Combining the Retail sector earnings for the 41 companies that have come out with the 2 still to come, the sector’s total earnings in Q1 should be up 0.4% on +3.7% higher revenues and lower margins. Same-store sales improved markedly in April, with pent up demand following Q1’s harsh weather and the Easter shift benefiting the numbers.
The broad trends about the Q1 earnings are fairly well established by now and the coming reports are unlikely to change them in any material way. These trends pertain to anemic growth, fewer top-line surprises and continued negative guidance that is prompting estimates for the current period to come down.
Scorecard for 2014 Q1 (as of Friday, May 23rd)
Total earnings for the 489 S&P 500 members that have reported results are up 1.2% from the same period last year, with a ‘beat ratio’ of 67.7% and a median surprise of +3.96%. Total revenues are up +2.6%, with a revenue ‘beat ratio’ of 51.3% and the median company beating top-line expectations by 0.13%.
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