Rocky earnings season ahead?

Expectations are that first-quarter earnings will be slightly lower this year.

By Jim J. Jubak Mar 21, 2012 3:19PM
Image: Wall Street trader at trading desk (© Tom Grill/Photographer)First-quarter earnings season doesn't officially start until Alcoa (AA) reports on April 10, but I'm already seeing signs that Wall Street analysts are buckling their seatbelts in preparation for a bumpy ride.

The current read is that first-quarter earnings for the stocks in the Standard & Poor's 500 ($INX) will come in 0.5% below earnings for the same period a year earlier. That would be the first year-to-year drop in quarterly earnings since the third quarter of 2009.

There's no one big culprit to the drop, according to analysts, but rather lots of modest declines adding up to an overall drop. The strong dollar, as a result of the turmoil of the Greek debt crisis, will cut into profit margins. Slower growth in emerging economies such as China will reduce sales. Commodity prices have crept higher, again reducing margins.

Revenue for the S&P 500 stocks is expected to climb by 3.5% from the first quarter of 2011, but profit margins are projected to fall for the first time in two years.

One result of expectations for a blah earnings season is that some companies are jostling for position at the front of the earnings parade so they can get their good news out while investors are still in a mood to notice. 

JPMorgan Chase (JPM) is always near the first of the big banks to report, but this quarter Wells Fargo (WFC), which usually reports well down the bank schedule, has moved its earnings report up. Now both banks will report earnings before the New York market opens on April 13. Think maybe Wells Fargo believes it has a good story to tell?

At the time of this writing, Jim Jubak didn't own shares of any companies mentioned in this post in personal portfolios. The mutual fund he manages, Jubak Global Equity Fund (JUBAX), may or may not own positions in any stock mentioned. The fund did not own shares of any stock mentioned in this post as of the end of December. For a full list of the stocks in the fund as of the end of the most recent quarter, see the fund's portfolio here. 

Tags: AAJPMWFC
3Comments
Mar 21, 2012 4:21PM
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This is the calm before the storm.  People do not want to believe that the economy or market will turn.  But the market is run by two emotions, fear and greed.  It is alright to be a pig but hogs get slaughtered.  Smile
Mar 21, 2012 7:43PM
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riding the storm out!!!!!!!!!!!!!!!!!!!
Mar 22, 2012 7:13AM
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I watch from the side lines I love hoggy blood baths

 

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