Author Archive for Zacks.com

Q4 Earnings Season Gets Underway

By Sheraz Mian, Zacks.com

We are still some days away from what is ‘unofficially’ considered the start of the fourth earnings season when aluminum producer Alcoa (AA) reports results on January 8th. But we ‘officially’ count all companies that have financial quarters ending in November as part of our fourth quarter results tally.

As such, while taking nothing away from Alcoa’s first-to-report status, we will be counting Tech giant Oracle’s (ORCL) earnings report after the close on Tuesday as the start of the fourth quarter reporting season. And Oracle is not alone; we have a total of 45 companies reporting results this week, including 16 S&P 500 members. Companies reporting results include FedEx (FDX) on Wednesday, Discover Financial (DFS) and Nike (NKE) on Thursday and Walgreen’s (WAG) on Friday. But in fairness to Alcoa, the reporting cycle each quarter really gets going after it comes out with results.

Earnings expectations for the fourth quarter have been steadily coming down over the last three months, but they still remain positive. At present, total earnings for companies in the S&P 500 are expected to be up 1.2% from the same period last year. This is a sharp drop from the roughly 7% earnings growth rate that consensus expected just three months ago. That said, it is still a better performance than what was expected in the third quarter just before the start of that reporting cycle.

At this stage in the third quarter, total earnings were expected to be down 3.4% from the same period last year. Actual results came out a little better than that, with total third quarter earnings just barely in positive territory (up only 0.1%) on essentially flat revenues (down 0.5%). Excluding Finance, total earnings in the third quarter were down 3.9%, while total ex-Finance revenues were down 1.1%.

Even the once-mighty Tech sector had barely positive earnings growth in the third quarter (up only 0.5%), while Finance and Construction were the only sectors with double-digit earnings growth. In total, half of the 16 Zacks sectors had negative earnings comparisons in the third quarter. In the fourth quarter, a total of 9 sectors will have negative earnings growth, with Tech sector earnings expected to be down 4.6% from the same period last year.

Basic Materials is expected to see 12.2% earnings growth in the fourth quarter, which will reverse a negative earnings growth over the preceding four quarters. Hard to envision such a material turnaround in an economically sensitive sector, but it’s mostly a function of easy comparisons for companies in this group.

The market’s focus will remain on the unresolved ‘Fiscal Cliff’ issue, but we do have a number of top-tier economic reports on deck, including the November Housing Starts report on Wednesday, Existing Home Sales on Thursday, and the Personal Income & Outlays and Durable Goods reports on Friday.

A Weak Start to Earnings Season

By Zacks.com

We have results from only 32 S&P 500 companies at this stage, but what we have seen thus far — in terms of the actual reports as well as the pre-announcements — do not inspire much confidence about the rest of the earnings season. If the trend set by these companies holds through the rest of the season, then we probably have a very weak earnings season on our hands.

Expectations were low to begin with, but growing global growth concerns have been pushing them down even further. By the end of next week, we will have a much more representative sample to judge the quality of this earnings season, as by then we will have seen results from almost a quarter of all S&P 500 results.

Key Points

  • The second-quarter 2012  reporting season has gotten underway, but reports from the 32 S&P 500 companies that are already out do not inspire much confidence. With results from 90 companies in the index reporting next week, including bellwethers like Intel (INTC), IBM (IBM), Google (GOOG) and Coca Cola (KO), we will have a representative-enough sample to judge the quality of this earnings season.
  • Of the 30 that have reported results already, only 17 have come out with positive surprises, with a very weak median surprise of 1.1%, down from the 3.6% median surprise for these same companies in the first quarter.
  • Total earnings for these 32 companies are flat from the same period last year (up only 0.1%), while these same companies had positive 4.9% growth in the first quarter. This reflects revenue gains of 4% being offset by margin declines of 30 basis points from the same period last year.
  • On the earnings calls and pre-announcements, we are starting to hear a lot more about global growth uncertainties than was the case last quarter. We saw this with the earnings results from FedEx (FDX) and Nike (NKE), and pre-announcements from operators like Cummins (CMI), Procter & Gamble (PG),Ford (F) and others.
  • Notwithstanding the weak start to the reporting cycle, it is still quite early to write off the earnings season, with 96% of the companies still to report results. Total earnings for these companies are expected to be up 1.4% in the second quarter, reflecting flat revenues and margin gains of 13 basis points.
  • Half of the sixteen Zacks sectors are expected to show negative year-over-year earnings comparisons in the second quarter. The Finance sector  has the best year-over-year growth numbers, largely reflecting the group’s sub-par results in the second quarter of 2011 due to weak results at Bank of America (BAC). Despite the massive hit to J.P. Morgan’s (JPM) results, Finance earnings increase 35.9% year over year. However, Excluding Bank of America, Finance barely ekes out with positive growth.
  • Tech earnings are expected to increase by up 6% in the second quarter — a sharp deceleration from the persistent double-digit quarterly growth trend of recent quarters. This compares to growth of 17.7% growth in the first quarter. Even this modest growth disappears once Apple is excluded from the group.
  • Full-year earnings for companies in the S&P 500 are expected to increase 9.3% this year and 9% next year. Nine of the sixteen Zacks sectors will have double-digit earnings growth in 2012, with Finance, Tech and Construction showing strong gains, while Utilities and Energy in the negative. Earnings expectations for next year had held up even as the same 2012 were steadily coming down. But we are starting to see estimates for next year come down in recent days.
  • Total revenues are expected to increase 3.2% in 2012 and 4.9% in 2013, after gains of 9% and 8.1% in 2011 and 2010, respectively. Construction is the only sector with double-digit revenue growth this year, with Industrial Products and Medical in the high single digits.
  • The best of the margin expansion trend is now firmly behind us, with second quarter margins expected to be down by 33 basis points sequentially. However, margins are expected to expand by 13 basis points in the second quarter from the same quarter last year. Keep in mind, however, that only 7 of the 16 Zacks sectors will have positive year-over-year margin comparisons, with Finance as the biggest positive driver. Excluding Finance, the year-over-year margin comparison turns negative.
  • For full-year 2012, margins are expected to increase 53 basis points, with Finance as the biggest contributor to the expansion and five sectors experiencing contracting margins. Excluding Finance, margins would be up a much more modest 10 basis points this year.
  • The bottom-up ‘EPS’ estimates for 2012 and 2013 — reflecting projections of analysts at brokerage firms covering individual companies — currently stand at $102.95 and $112.21, respectively. The top-down estimate for 2012 and 2013 — reflecting the projections of strategists at brokerage firms — currently stand at $102.87 and $109.88 for 2012 and 2013, respectively. As you can see, the macro analysts are more bearish in their outlook than the micro analysts.

THE BAR IS SET LOW FOR 1ST QUARTER EARNINGS

By Dirk Van Dijk, CFA, Zacks Investment Research

Key Points:

  • The Fourth Quarter earnings season effectively over.  Started out very poor, but improved to mediocre as the season wore on.  Total reported earnings growth is 5.59% for the 495 firms (99.0%) that have reported so far, but those represent 99.8% of total expected earnings.  Ex-Financials growth is 6.09% year over year.  Total revenue growth 5.58%, 8.14% ex-Financials.  Median earnings surprise 2.27% and median sales surprise 0.18%.  Net margins reported at 8.91% unchanged from last year.
  • Sharp slowdown from the 14.84% earnings, and 11.25% revenue growth those same 495 firms reported in the third quarter.
  • Full year total earnings for the S&P 500 jumps 44.9% in 2010, expected to rise 15.2% further in 2011.  Growth to continue in 2012 with total net income expected to rise 9.3%.  Financials major earnings driver in 2010.  Excluding Financials growth was 28.2% in 2010, and expected to be 17.4% in 2011 and 6.5% in 2012.  Growth of 12.5%, 12.1% ex-Financials expected for 2013.
  • Total revenues for the S&P 500 rise 8.04% in 2010, expected to be up 8.93% in 2011, and just 1.37% in 2012.  Excluding Financials, revenues up 9.34% in 2010, expected to rise 10.90% in 2011 and 3.42% in 2012.  For 2013, 4.91% growth expected, 4.94% ex financials.  
  • Annual Net Margins marching higher, from 5.88% in 2008 to 6.27% in 2009 to 8.36% for 2010, 8.84% expected for 2011 and 9.53% in 2012.  Margin expansion major source of earnings growth.  Net margins ex-Financials 7.79% in 2008, 6.93% in 2009, 8.09% for 2010, 8.56% expected in 2011, 8.81% in 2012. For 2013 10.22% expected, 9.44% ex-Financials.
  • Revisions ratio for full S&P 500 at 1.03 for 2012 (neutral), at 1.09 for 2013 (neutral). Ratio of firms with rising to falling mean estimates at 1.05 for 2012 (neutral), 1.14 (neutral) for 2013.  Total revisions activity past seasonal peak, and falling fast.  
  • S&P 500 earned $788.8 billion in 2010, expected to climb to $893.4 billion in 2011.  In 2012 the 500 are collectively expected to earn $975.2 billion. For 2013, $1.098 Trillion expected.  
  • S&P 500 earned $56.79 in 2009: $81.98 in 2010 and $94.53 in 2011 expected bottom up.  For 2012, $103.32 expected, $116.25 for 2013.  Puts P/E’s at 14.45 for 2011, and 13.22x for 2012 and 11.75x for 2013, very attractive relative to 10-year T-note rate of 2.04%.

The Earnings Picture

While we started out the fourth quarter earnings season on a very weak note, the picture has improved as the season has worn on.  I would not want to suggest that this has been a good earnings season, but it is not the ugly one it appeared to be just a few weeks ago. The season is effectively over now.

So far 495, or 99.0% of the firms have reported.  However, assuming that all the remaining firms report exactly in like with expectations, then 99.8% of all earnings are in.  Normally, when all is said and done, the median surprise runs about 3.00% and the ratio about 3.0.  So far, the median is at 2.27% and the ratio is 2.26.

While we don’t have the drama of multi-billion-dollar bank losses, this is still the weakest earnings season since the depths of the Great Recession.  In most recent quarters, we have started out of the gate much faster than that only to fade towards those levels; this time the reverse is true, but we are running out of real estate to catch up.

Total net income for the 495 that have reported is 5.59% above a year ago.  It is less than half the 14.84% growth rate that the same 495 firms reported in the third quarter. The picture is similar if we take the Financials out of the picture.  Without them, the year-over-year rise in net income is 6.09%, down from 17.70% growth in the third quarter.  Sequentially, total net income so far is 3.18% below the third quarter, or 3.58% lower ex-Financials.  The pressure on the growth rate is coming from both the numerator and the denominator (year-ago earnings growth was strong, and thus tougher comps).

The remaining seven firms are too small and few to have any significant impact on the overall results, thus we skip the expected income growth, sales growth and net margin tables this week.  Fourteen of the 16 sectors are done with earnings season.

Revenue growth has also slowed down, with the 495 reporting 5.58% growth.  If we exclude the Financials that have reported, revenue is up 8.14% year over year.  In the third quarter, revenue growth was 11.25, or 13.15% excluding Financials.

For the 495, net margins have come in at 8.91%, unchanged from a year ago, and down from 9.37% in the third quarter. Excluding the Financials, net margins are 8.01%, up ever so slightly from 7.98% a year ago and well off the 8.49% of the third quarter.  While in an absolute sense, those are still very healthy net margins, much higher than the average of the last 50 years or so, but they are no longer expanding significantly.  Then again, it was unrealistic to expect that they would always rise.  It does mean that earnings growth is going to be harder to come by going forward.

Net Margins Keep Growing

On an annual basis (all 500), net margins continue to march northward.  In 2008, overall net margins were just 5.88%, rising to 6.27% in 2009.  They hit 8.36% in 2010 and are expected to continue climbing to 8.84% in 2011 and 9.53% in 2012.  The very preliminary expectation is that they will rise to 10.22% in 2013.

The pattern is a bit different if the Financials are excluded, as margins fell from 7.78% in 2008 to 6.93% in 2009, but have started a robust recovery and rose to 8.09% in 2010.  They are expected to rise to 8.56% in 2011.  They are expected to rise to 8.81% in 2012, and then up to 9.41% in 2013.  There should be some caution in using the 2013 numbers, as the analyst sample sizes are still well below those for 2012, especially when it comes to revenues.

However the rise in net margins for 2012 and 2013 seems to be more due to very low revenue growth than fast earnings growth.  After posting 8.73% growth in 2011, and 10.90% ex-Financials, revenue growth is expected to drop to just 1.37% for 2012 and rebound to only 4.91% in 2013.  Excluding Financials, growth is expected to be 3.42% for 2012 and 4.94% for 2013.

Quite frankly, given the recovering economy, the very low rate of revenue growth is surprising.  Weakness in Europe and a somewhat stronger dollar may be playing a role there.  However, I suspect that either the analysts are being overly cautious about their revenue estimates, or the economy might not do as well as people are now expecting.  I suspect it is more the former than the later.

Total net income in 2010 rose to $788.8 billion in 2010, up from $538.6 billion in 2009.  The expectations for the full year are very healthy.  In 2011, the total net income for the S&P 500 should be $893.4 billion, or increases of 44.9% and 15.2%, respectively.  The expectation is for 2012 to have total net income come close to $1 Trillion mark to $976.6 Billion, for growth of 9.3%, followed by growth of 12.5% in 2013.  Total net income is expected to finally pass the $1 Trillion mark in 2013 at $1.099 Trillion.

S&P’s “EPS” & Revisions Ratios

The “EPS” for the S&P 500 is expected to be over the $100 “per share” level for the first time at $103.32 in 2012.  That is up from $56.79 for 2009, $81.98 for 2010 and $94.53 for 2011.  For 2013, the S&P 500 is expected to earn $116.25.  In an environment where the 10-year T-note is yielding 2.04%, a P/E of 14.5x based on 2011 and 13.2x based on 2012 earnings looks attractive.  The P/E based on 2013 earnings is just 11.8x.

Estimate revisions activity is past its seasonal peak. And starting to decline rapidly.  In previous earnings seasons we have generally seen a bounce in the revisions ratio, as the analysts have reacted to better-than-expected earnings and the outlooks on the conference calls. We finally have some evidence of that, but not much and it comes more from old estimate cuts falling out of the moving four-week total than from new estimate increases being made.

The revisions ratio for FY1, which is mostly 2012 earnings now stands at 1.03.  The picture for FY2, or mostly 2013 is only slightly better, with a revisions ratio of just 1.09. The ratio of firms with rising mean estimates to falling mean estimates, which now stand at 1.05 and 1.14, respectively.

As the earnings season has progressed, things have been getting a bit better, but only moved the season from being very poor to mediocre.  This is happening when the bar is set at its lowest point in a very long time.  For the remaining firms, the bar is set even lower.

The market has been off to a very strong start of the year, despite the weak early results.  Valuations are still compelling, if somewhat less so than a few months ago.  While earnings growth is slowing, it is still positive.  The numbers for the first quarter look like they could be a little weak. With a decline of 2.15% year over year expected. For the full year, growth of 9.31% is not all that bad, especially with it expected to pick back up again to 12.52% in 2013.

With all the fourth quarter reports in, and virtually no first quarter results in, we omit the surprise and reported quarterly earnings, revenues and margin tables this week.  The focus is all on the expectations for the first quarter.

Expected Quarterly Growth: Total Net Income

  • Total net income is expected to be 2.59% below what was reported in the first quarter of 2011, versus +5.88% growth in the third quarter.  Excluding Financials, negative growth of 3.01%, down from +46.30% reported in the fourth quarter.
  • Relative to the fourth quarter total net income to fall 5.41%, ex-Financials to drop 8.34%.
  • Nine sectors expected to post negative year-over-year growth, seven lower sequentially.  Autos and Materials particularly weak year over year.

 

Quarterly Growth: Total Net Income Reported
Income Growth Sequential Q2/Q1 E Sequential Q1/Q4 E Year over Year 1Q 12 E Year over Year 2Q 12 E
Construction 120.80% -41.96% 77.15% 24.55%
Business Services 6.35% -6.05% 14.26% 12.98%
Transportation 32.07% -20.66% 10.75% 13.66%
Conglomerates -15.70% 11.78% 5.16% 7.48%
Consumer Discretionary 8.67% 23.27% 1.02% 1.90%
Retail/Wholesale 9.51% -20.35% 0.16% 4.03%
Computer and Tech 11.18% -21.52% 0.03% 3.56%
Aerospace 9.74% -25.03% -0.38% -7.37%
Finance 4.95% 11.91% -1.91% 46.55%
Consumer Staples 21.10% -15.71% -2.64% -0.99%
Medical 2.14% 2.11% -3.94% -2.37%
Oils and Energy 7.29% 4.21% -4.19% -9.86%
Industrial Products 30.78% 6.39% -4.66% 16.80%
Utilities -4.09% 27.93% -7.02% -9.17%
Basic Materials 15.52% 46.57% -18.02% -8.35%
Auto 17.05% 25.69% -26.74% -20.20%
S&P 9.51% -5.41% -2.59% 5.57%
ex fin 10.20% -8.34% -3.01% -1.40%

Quarterly Growth: Total Revenues Expected

  • Revenue growth expected to be just 0.06% year over year, up just 2.88% ex-Financials.  Sharp slowdown from 5.54% year over eyar growth in the fourth quarter, 8.17% ex-Financials.
  • Sequentially revenues down 6.39% from the fourth quarter, down 5.51% ex-Financials.
  • Financials continue to see very negative revenue growth.
  • Thirteen sectors expected to see revenue growth decelerate from the fourth quarter.

 

Quarterly Growth: Total Revenues Reported
Sales Growth Sequential Q2/Q1 E Sequential Q1/Q4 E Year over Year 1Q 12 E Year over Year 2Q 12 E
Construction 12.06% -4.63% 14.53% 9.43%
Industrial Products 6.81% 3.08% 9.63% 9.47%
Transportation 7.59% -3.49% 8.70% 6.51%
Computer and Tech 4.05% -9.21% 7.00% 5.68%
Consumer Discretionary 2.64% -8.44% 6.59% 2.56%
Retail/Wholesale 0.82% -5.47% 6.15% 4.24%
Aerospace 4.67% -8.92% 5.26% 4.54%
Utilities -5.33% 6.19% 5.22% 2.85%
Basic Materials 6.13% 4.36% 5.00% 1.11%
Business Services 3.71% -4.30% 4.22% 4.20%
Auto 6.11% -4.61% 2.72% 0.99%
Medical 0.96% -2.76% 2.11% 0.51%
Oils and Energy 5.40% -6.58% -2.22% -4.60%
Conglomerates 7.84% -7.00% -2.40% 4.13%
Consumer Staples 9.94% -18.64% -7.95% -9.18%
Finance 1.41% -12.76% -17.77% -13.82%
3.20% -6.39% 0.06% -0.77%
3.43% -5.51% 2.88% 1.33%

Quarterly Net Margins Expected

  • Sector and S&P net margins are calculated as total net income for the sector divided by total revenues for the sector.
  • Net margins expected to fall to 9.05% from 9.32% a year ago, but up from 8.93% in the fourth quarter.  Net margins ex-Financials expected to fall to 8.31% from 8.82% a year ago and down from 8.57% in the fourth quarter.
  • Margin expansion is the key driver behind earnings growth.  Due to seasonality, it is best to compare to a year ago, particularly at the individual company and sector levels.  Even with the expected dip, margins are at very high levels relative to history.
  • Ten sectors expected to see year over year margin compression, ten to also see sequential compression.  Margins expected rebound sequentially in the second quarter for all sectors, but still be down year over year for ten sectors.

 

Net Margins Expected
Net Margins Q2 2012 Estimated Q1 2012 Reported 4Q 2011 Reported 3Q 2011 Reported 2Q 2011 Reported 1Q 2011 Reported
Computer and Tech 16.08% 15.05% 17.90% 16.06% 16.41% 16.10%
Finance 15.38% 14.86% 11.58% 11.19% 9.04% 12.46%
Busines Service 13.38% 13.05% 13.29% 12.80% 12.32% 11.90%
Medical 13.16% 13.01% 12.39% 13.63% 13.55% 13.83%
Consumer Staples 12.23% 11.10% 10.68% 11.46% 11.21% 10.49%
Conglomerates 10.43% 9.72% 10.25% 10.43% 10.10% 9.02%
Consumer Discretionary 9.39% 8.87% 10.58% 9.32% 9.46% 9.36%
Transportation 10.05% 8.19% 9.96% 9.79% 9.41% 8.03%
Oils and Energy 8.09% 7.94% 7.12% 8.70% 8.56% 8.11%
Industrial Products 9.30% 7.59% 8.18% 8.85% 8.71% 8.73%
Basic Materials 8.20% 7.53% 5.36% 7.44% 9.18% 9.64%
Utilities 7.28% 7.18% 5.96% 9.77% 8.24% 8.13%
Aerospace 6.10% 5.81% 7.06% 7.03% 6.88% 6.14%
Auto 5.23% 4.74% 3.60% 5.77% 6.62% 6.65%
Retail/Wholesale 3.54% 3.26% 3.87% 3.29% 3.57% 3.46%
Construction 3.54% 1.80% 2.95% 3.47% 3.10% 1.16%
9.58% 9.05% 8.93% 9.38% 9.10% 9.32%
Nm x fin 8.86% 8.31% 8.57% 9.12% 9.10% 8.82%

Annual Total Net Income Growth

  • Following rise of just 2.4% in 2009, total earnings for the S&P 500 jumps 44.9% in 2010, 15.2% further in 2011.  Growth ex-Financials 28.2% in 2010, 17.4% in 2011.
  • For 2012, 9.4% growth expected, 6.6% ex-Financials.  For 2013, 12.7% and 12.3% ex-Financials.
  • Fourteen sectors see total net income rise in 2011 and all but Aerospace and Utilities in 2012. Utilities only (very small) decliner in 2010.  Nine sectors expected to post double-digit growth in 2012 and nine in 2012, 13 in 2013.  Energy, Materials, Staples and Health Care expected to grow less than 5% in 2012. Aerospace and Utilities only sectors to decline.  Slow growers in 2011 to be high growers in 2012.
  • Sector dispersion of earnings growth narrows dramatically between 2010 and 2013.  Nine sectors expected to grow between 13 and 17% in 2013.  Only three in single digits and only Construction (still a low base) over 20%.

 

Annual Earnings Growth
Total Net Income Growth 2010 2011 2012 2013
Construction - to + -4.57% 33.42% 39.86%
Finance 297.94% 4.30% 24.88% 14.89%
Transportation 80.48% -3.21% 16.95% 15.25%
Conglomerates 11.10% 6.95% 15.42% 13.69%
Industrial Products 36.44% 37.25% 14.16% 14.45%
Computer and Tech 47.27% 22.82% 12.69% 13.43%
Business Service 13.59% 19.73% 12.62% 13.39%
Retail/Wholesale 14.85% 11.35% 10.64% 13.99%
Consumer Discretionary 22.95% 20.06% 10.62% 16.99%
Auto 1458.91% 6.80% 8.10% 16.56%
Consumer Staples 11.62% 9.25% 4.80% 9.94%
Basic Materials 56.42% 30.54% 3.16% 19.22%
Medical 10.34% 8.15% 1.91% 6.81%
Oils and Energy 51.00% 35.86% 1.28% 11.22%
Aerospace 21.82% 11.55% -3.07% 11.87%
Utilities 0.00% 4.32% -4.92% 9.51%
S&P 44.92% 15.24% 9.37% 12.72%

Annual Total Revenue Growth

  • The number of revenue estimates is smaller than earnings estimates, especially for 2013.
  • Total revenues for the S&P 500 rise 8.93% in 2011, but growth expected to slow to 1.87% in 2012, early expectation for 4.88% growth in 2013.
  • Energy, Industrials, Materials and Autos lead revenue race in 2011.  Three other sectors (all cyclical) also expected to show double digit revenue growth in 2011. Construction leads for 2012 and 2013, Industrials, Transports and Tech also strong.
  • All sectors but Staples, Finance and Aerospace show positive top line growth in 2011.  Financials and Staples expected to see negative growth again in 2012. All sectors expected to see 2013 growth.
  • Revenue growth significantly different if Financials are excluded, down 10.56% in 2009 but growth of 9.34% in 2010, 10.92% in 2011, and 3.92% in 2012.  Early expectation for 4.98% growth in 2013.

 

Total Annual Revenue Growth
Sales Growth 2010 2011 2012 2013
Construction 0.47% 4.19% 10.07% 10.36%
Industrial Products 12.34% 19.87% 9.13% 6.99%
Computer and Tech 15.45% 13.73% 8.06% 8.34%
Transportation 10.70% 12.60% 7.64% 7.14%
Basic Materials 10.76% 18.24% 6.74% 6.19%
Retail/Wholesale 4.10% 6.61% 6.36% 4.70%
Utilities 2.46% 3.26% 6.33% 3.09%
Consumer Discretionary 5.30% 12.24% 5.39% 4.94%
Conglomerates 0.94% 3.68% 4.28% 7.10%
Business Service 4.81% 9.24% 4.02% 5.37%
Aerospace -0.34% -1.05% 3.89% 2.69%
Auto 9.21% 18.33% 2.17% 6.72%
Medical 11.40% 5.57% 0.72% 3.01%
Oils and Energy 23.76% 22.01% 0.69% 3.69%
Consumer Staples 4.79% 7.44% -5.71% 3.71%
Finance 0.10% -3.15% -12.49% 4.04%
S&P 7.98% 8.94% 1.87% 4.88%
Gro x Fin 9.34% 10.92% 3.92% 4.98%

Annual Net Margins

  • Net Margins marching higher, from 5.88% in 2008 to 6.27% in 2009 to 8.38% for 2010, 8.86% for 2011.  Trend expected to continue into 2012 with net margins of 9.51% expected.  Rise to 10.22% expected for 2013.
  • Financials significantly distort overall net margins. Net margins ex-Financials 7.78% in 2008, 6.93% in 2009, 8.10% for 2010, 8.58% expected in 2011.  Expected to rise to 8.80% in 2012, then to 9.41% in 2013.
  • Financials net margins soar from -8.42% in 2008 to 15.33% expected for 2012, 17.08% for 2013.  As much from revenue weakness as earnings strength.
  • Fourteen sectors saw higher net margins in 2011 than in 2010.  Thirteen sectors expected to post higher net margins in 2012 than in 2011.  Thirteen sectors expected to see margin expansion in 2012.  All sectors see expansion in 2013.
  • Sector net margins are calculated as total net income for sector divided by total revenues.  However, there are generally fewer revenue estimates than earnings estimates for individual companies.

 

Annual Net Margins
Net Margins 2010A 2011A 2012E 2013E
Computer and Tech 14.85% 16.04% 16.73% 17.51%
Finance 10.06% 10.84% 15.46% 17.08%
Medical 12.63% 12.94% 13.09% 13.58%
Business Service 10.75% 11.78% 12.75% 13.72%
Consumer Staples 10.27% 10.44% 11.61% 12.30%
Conglomerates 9.03% 9.31% 10.31% 10.94%
Consumer Discretionary 8.40% 8.98% 9.43% 10.51%
Industrial Products 7.33% 8.40% 8.79% 9.40%
Transportation 9.24% 7.94% 8.63% 9.28%
Oils and Energy 7.17% 7.98% 8.03% 8.61%
Basic Materials 7.08% 7.81% 7.55% 8.48%
Utilities 8.12% 8.21% 7.34% 7.80%
Aerospace 5.84% 6.58% 6.14% 6.69%
Auto 5.23% 4.72% 5.00% 5.46%
Retail/Wholesale 3.27% 3.41% 3.55% 3.86%
Construction 2.65% 2.66% 3.22% 4.08%
8.38% 8.86% 9.51% 10.22%
NM x fin 8.10% 8.58% 8.80% 9.41%

Earnings Estimate Revisions: Current Fiscal Year
The Zacks Revisions Ratio: 2012

  • Revisions ratio for full S&P 500 at 0.96, down from 1.03, still neutral.  Total revisions activity past seasonal peak and falling.
  • Industrials lead, Autos also strong, both with two increases per cut or more (but very small samples).  Utilities, Aerospace, Transports very weak.
  • Ratio of firms with rising to falling mean estimates at 1.24, up from 1.05, still a neutral reading.
  • Total number of revisions (4 week total) past seasonal peak at 1,912, down from 2,651 (-27.9%).  Increases at 934, down from 1,343 (-30.4%), cuts at 978 down from 1,343 (-27.2%).

 

Revisions FY1 (2012)
Sector %Ch
Curr Fiscal Yr
Est – 4 wks
#
Firms
Up
#
Firms
Down
#
Ests
Up
#
Ests
Down
Revisions
Ratio
Firms
up/down
Industrial Products 0.24 9 7 41 14 2.93 1.29
Auto -0.61 4 3 10 5 2.00 1.33
Retail/Wholesale 0.24 29 17 222 115 1.93 1.71
Finance 0.22 46 28 189 103 1.83 1.64
Busines Service 0.52 12 4 26 16 1.63 3.00
Medical 0.14 21 20 54 46 1.17 1.05
Computer and Tech -0.52 40 19 123 136 0.90 2.11
Construction -0.88 7 3 14 17 0.82 2.33
Oils and Energy -1.85 26 16 128 189 0.68 1.63
Conglomerates -0.17 4 2 5 8 0.63 2.00
Consumer Staples 1.32 15 17 25 43 0.58 0.88
Basica Materials -1.73 4 16 26 58 0.45 0.25
Consumer Discretionary -1.76 12 14 25 68 0.37 0.86
Utilities -1.79 10 23 37 106 0.35 0.43
Aerospace 0.07 4 4 2 6 0.33 1.00
Transportation -2.29 2 5 7 48 0.15 0.40
S&P 500 -0.45 245 198 934 978 0.96 1.24

Earnings Estimate Revisions: Next Fiscal Year
The Zacks Revisions Ratio: 2013

  • Revisions ratio for full S&P 500 at 1.14 up from 1.09, still in neutral territory.
  • Eight sectors have positive revisions ratios (at or above 1.0). Autos, Conglomerates and Industrials lead.  Utilities, Aerospace and Transports very weak, have two or more per increase. Very small samples, however.
  • Ratio of firms with rising estimate to falling mean estimates at 1.39, up from 1.14.  Now in Bullish territory.
  • Total number of revisions (4-week total) at 1,897, down from 1,897 (-20.0%).
  • Increases at 808 down from 991 (-18.5%), cuts at 710, down from 1,160 (-38.8%).

 

Revisions FY2 (2013)
Sector %Ch
Next Fiscal Yr Est – 4 wks
#
Firms Up
#
Firms Down
#
Ests Up
#
Ests Down
Revisions
Ratio
Firms up/down
Auto 0.56 4 2 8 1 8.00 2.00
Conglomerates -0.11 3 1 7 1 7.00 3.00
Industrial Products 0.39 10 5 37 12 3.08 2.00
Finance 0.47 44 28 183 76 2.41 1.57
Business Service -0.44 8 8 17 9 1.89 1.00
Retail/Wholesale 0.17 29 17 140 77 1.82 1.71
Medical 0.47 23 17 52 41 1.27 1.35
Computer and Tech 0.21 43 15 121 96 1.26 2.87
Consumer Staples 1.68 18 15 40 48 0.83 1.20
Construction -0.48 6 4 9 11 0.82 1.50
Basic Materials 0.72 8 12 23 32 0.72 0.67
Oils and Energy -1.20 24 17 99 141 0.70 1.41
Consumer Discretionary -1.39 15 11 30 49 0.61 1.36
Utilities -0.78 13 22 33 77 0.43 0.59
Aerospace 0.08 4 4 2 5 0.40 1.00
Transportation -1.11 2 5 7 34 0.21 0.40
S&P 0.04 254 183 808 710 1.14 1.39

Total Income and Share

  • S&P 500 earned $538.6 billion in 2009, rising to earn $788.8 billion in 2010, $893.42 billion expected in 2011.  Earnings to approach the $1 Trillion mark in 2012 at $976.6 billion, pass in 2013 at $1.099 Trillion.
  • Finance share of total earnings moves from 5.9% in 2009 to 17.3% in 2010, dip to 15.3% expected for 2011; rebound to 17.4% then rise to 17.8% in 2013.  Energy share also rising going from 11.9% in 2009 to 14.6% in 2011, dip to 13.4% in 2012, 13.3% in 2013.
  • Medical share of total earnings exceeds market cap share (index weight), but earnings share expected to shrink from 17.3% in 2009 to 10.5% in 2013, down each year.
  • Market Cap shares of Construction, Staples, Retail, Transportation, and Business Service sectors far exceed earnings shares of any of the years from 2010 through 2013.
  • Earnings shares of Energy, Finance, Autos and Medical well above market-cap shares.
  • As a general rule, one should try to overweight sectors with rising earnings shares, underweight falling earnings shares, but also over weight sectors where earnings shares exceed market-cap shares.

 

Total Income and Share
Income ($ Bill) Total
Net
Income
$ 2011
Total
Net
Income
$ 2012
Total
Net
Income
$ 2013
% Total
S&P Earn
2011
% Total
S&P Earn
2012
% Total
S&P
Earn
2013
% Total
S&P Mkt
Cap
Computer and Tech $164,897 $184,848 $208,425 18.46% 18.93% 18.97% 19.43%
Finance $136,219 $170,251 $195,014 15.25% 17.43% 17.75% 14.54%
Oils and Energy $130,209 $130,910 $146,190 14.57% 13.40% 13.30% 11.28%
Medical $106,179 $108,215 $115,556 11.88% 11.08% 10.52% 10.24%
Consumer Staples $67,873 $71,340 $78,361 7.60% 7.31% 7.13% 8.67%
Retail/Wholesale $64,267 $71,051 $81,002 7.19% 7.28% 7.37% 9.21%
Utilities $50,370 $48,268 $52,707 5.64% 4.94% 4.80% 5.94%
Conglomerates $29,558 $34,217 $38,847 3.31% 3.50% 3.54% 3.55%
Consumer Discretionary $29,867 $33,441 $38,750 3.34% 3.42% 3.53% 3.95%
Basic Materials $31,440 $32,799 $38,924 3.52% 3.36% 3.54% 3.27%
Industrial Products $22,705 $25,913 $29,658 2.54% 2.65% 2.70% 2.60%
Business Service $16,897 $18,938 $21,527 1.89% 1.94% 1.96% 2.53%
Transportation $13,745 $16,209 $18,593 1.54% 1.66% 1.69% 1.77%
Aerospace $15,032 $14,566 $16,292 1.68% 1.49% 1.48% 1.38%
Auto $12,160 $12,962 $15,269 1.36% 1.33% 1.39% 1.09%
Construction $2,002 $2,653 $3,721 0.22% 0.27% 0.34% 0.56%
S&P 500 $893,420 $976,581 $1,098,838 100.00% 100.00% 100.00% 100.00%

P/E Ratios

  • Trading at 16.65 2010, 14.45 2011 earnings, or earnings yields of 6.02% and 6.92%, respectively.  P/E for 2012 at 13.22x or earnings yield of 7.56%.  Very Preliminary 2013 P/E of 11.75, or earnings yield of 8.51%
  • Earnings Yields still attractive relative to 10-year T-Note rate of 2.04% and 30-year bond rate of 3.19.
  • No single-digit P/E sectors for 2012; Autos, Oil and Finance cheapest for 2012 and 2013.
  • Construction has highest P/E for all four years by wide margin.
  • S&P 500 earned $56.79 in 2009 rising to $81.98 in 2010.  Currently expected to earn $94.53 in 2011 and $103.32 or 2012.  Preliminary 2013 estimate $116.25.

 

P/E Ratios
P/E 2010 2011 2012 2013
Auto 12.36 11.57 10.86 9.22
Finance 14.36 13.78 11.02 9.62
Oils and Energy 15.20 11.18 11.12 9.96
Aerospace 13.20 11.84 12.21 10.92
Medical 13.47 12.46 12.22 11.45
Basic Materials 17.56 13.45 12.89 10.86
Industrial Products 20.32 14.81 12.97 11.34
Conglomerates 16.57 15.50 13.39 11.79
Computer and Tech 18.66 15.22 13.57 12.04
Transportation 16.05 16.59 14.06 12.26
Consumer Discretionary 20.52 17.09 15.27 13.17
Consumer Staples 18.01 16.49 15.69 14.28
Utilities 15.81 15.22 15.88 14.54
Retail/Wholesale 20.60 18.49 16.73 14.67
Business Service 23.22 19.32 17.24 15.17
Construction 37.53 35.89 27.09 19.31
S&P 500 16.65 14.45 13.22 11.75

Data in this report, unless stated otherwise, is through the close on Thursday 3/22/2012.

We use the convention of referring to the next full fiscal year to be completed as 2011, not all firms are on December fiscal years, this can cause discontinuities in the data.  The data is based on FY1, not based on 2011, even though I may call it 2011 in the report. All numbers, including historical ones, reflect the current composition of the S&P 500, thus some historical numbers may differ from those reported by S&P which are based on the composition of the index at the time of the reports.

THE 2012 EARNINGS OUTLOOK

By Dirk Van Dijk, CFA, Zacks Investment Research

Key Points:

  • With third quarter reports done we shift our focus to the fourth quarter expectations. Annual rankings now based on 2012, not 2011 expectations. The third quarter was a good one. Total reported earnings growth of 13.4%. Ex-Financials, growth is 17.7% year over year. Total revenue growth 10.37%, 13.14% ex-Financials. Median earnings surprise 2.72% and median sales surprise 0.62%.
  • At start of earnings season, total growth of 9.7% and 12.2% ex-Financials was expected.
  • Year-over-year growth expected to slow to 3.91% in fourth quarter, 3.32% excluding Financials. Down 4.12% sequentially, 6.01% decline expected ex-Financials. Dramatic slowdown, but easy hurdle to clear. Revenue growth expected to slow to 4.42%, 7.05% ex-Financials. Sequentially, revenue to rise 0.49%, and rise 1.31% ex-Financials.
  • Full year total earnings for the S&P 500 jumps 46.5% in 2010, expected to rise 14.5% further in 2011. Growth to continue in 2012 with total net income expected to rise 9.8%. Financials major earnings driver in 2010. Excluding Financials, growth was 28.2% in 2010, expected to be 17.8% in 2011 and 7.5% in 2012.
  • Total revenues for the S&P 500 rise 7.95% in 2010, expected to be up 6.05% in 2011, and 4.98% in 2012. Excluding Financials, revenues up 9.35% in 2010, expected to rise 9.77% in 2011 and 5.22% in 2012.
  • Annual Net Margins marching higher, from 5.88% in 2008 to 6.27% in 2009 to 8.51% for 2010, 9.19% expected for 2011 and 9.61% in 2012. Margin expansion major source of earnings growth. Net margins ex financials 7.79% in 2008, 6.93% in 2009, 8.12% for 2010, 8.72% expected in 2011 and 8.91% in 2012.
  • Revisions ratio for full S&P 500 at 0.66 for 2011 (bearish), at 0.65 for 2012 (bearish). Ratio of firms with rising to falling mean estimates at 0.78 for 2011 (bearish), 0.71 (bearish) for 2012. All down from last week. Total revisions activity near seasonal low.
  • S&P 500 earned $538.6 billion in 2009, rising to $788.8 billion in 2010, expected to climb to $903.3 billion in 2011. In 2012, the 500 are collectively expected to earn $992.1 billion.
  • S&P 500 earned $56.81 in 2009: $83.21 in 2010 and $95.28 in 2011 expected bottom up. For 2012, $104.63 expected. Puts P/Es at 14.61 for 2010, and 12.76x for 2011 and 11.62x for 2012, very attractive relative to 10-year T-note rate of 1.85%. Top-down estimates, $96.85 for 2011 and $102.63 for 2012.

The Earnings Picture

Third quarter earnings season was a good one. Total net income growth was far higher than expected, although the median surprise and the ratio of positive surprises to disappointments is slightly below normal.

This week we will change our focus to the expectations for the fourth quarter. Only eight of the S&P 500 have reported so far, so the focus is on those yet to report. For those eight, total net income is up 17.4% year over year, down from 25.7% growth in the third quarter. Five positive surprises and two disappointments with a median surprise of 2.71%.  A decent start, but too early to draw any conclusions.

The year-over-year growth rate for the remaining 492 of the S&P 500 is expected to slow dramatically, to just 3.91% from 13.75% in the third quarter. Excluding Financials, the growth slowdown is expected to be even more dramatic, dropping to just 3.32% from 17.8%.

Keep in mind, though, at the start of the third quarter earnings season the expected level of earnings growth was just 12.04%, 11.73% excluding the Financials. Thus, it is not inconceivable that we might squeak into double-digit growth again in the fourth quarter, but the odds look increasingly long.

Earnings growth is slowing on both sides. Revenue growth is expected to slow to 4.42% from 11.23% year over year. Excluding Financials, revenue growth is expected to slow to 7.05% from 13.16% in the third quarter. Sequentially, revenues are expected to be up 0.49% overall, and up just 1.31% ex-Financials.

The End of Net Margin Expansion?

As revenue growth is slowing, net margin expansion is stalling. Overall net margins are expected to fall to 9.04% from 9.05% a year ago. Excluding Financials, net margins are expected to fall to 8.56% from 8.87% last year. Sequentially, net margins are expected to be down both in total and ex-Financials from 9.48% and 9.23%, respectively.

The net margin expansion game is getting long in the tooth, but it does not look like it is entirely over.  It has played a key role in the remarkable earnings recovery we have seen since the depths of the Great Recession.

On an annual basis, net margins continue to march northward.  In 2008, overall net margins were just 5.88%, rising to 6.27% in 2009. They hit 8.51% in 2010 and are expected to continue climbing to 9.19% in 2011 and 9.61% in 2012. The pattern is a bit different, particularly during the recession, if the Financials are excluded, as margins fell from 7.78% in 2008 to 6.93% in 2009, but have started a robust recovery and rose to 8.12% in 2010. They are expected to rise to 8.72% in 2011 and 8.91% in 2012.

Total net income in 2010 rose to $788.8 billion in 2010, up from $538.6 billion in 2009. The expectations for the full year are very healthy. In 2011, the total net income for the S&P 500 should be $903.3 billion, or increases of 46.5% and 14.5%, respectively. The expectation is for 2012 to have total net income come close to $1 Trillion mark to $992.1, for growth of 9.8%.

Consider those earnings relative to nominal GDP. If we use the middle of the year GDP level, S&P 500 net income has climbed from 3.89% in 2009 to 5.45% in 2010 and assuming that the 2011 expectations are on target, 6.02% in 2011. Of course, the S&P 500 earns a lot of its income abroad, and there are a lot more than 500 companies in the U.S., so to some extent that is an apples-to-oranges comparison. Nevertheless, it does demonstrate that corporate profits are doing a heck of a lot better than the rest of the economy.

A much broader measure of (domestic only) corporate profits tracked by the government rose to 9.92% of GDP in the third quarter. Since 1959 (when the data starts), that measure has averaged 5.99% of GDP. It is still not a record though, that was set in the third quarter of 2006 at 10.29% of GDP. Meanwhile, wages fell to a record low of just 43.75% of GDP, while the average since 1959 is 48.42% of GDP.

Higher profits are great for the stock market, but ultimately companies need customers, and their customers need to have income (or borrowing capacity). Thus there has to be a very real question about the sustainability of these great earnings. I don’t think it is wise to assume that corporate profits will continue to take an ever larger share of the economic pie.

The “EPS” for the S&P 500 is expected to be over the $100 “per share” level for the first time at $104.63 in 2012. That is up from $56.81 for 2009, $83.21 for 2010, and $95.28 for 2011. In an environment where the 10-year T-note is yielding 1.85%, a P/E of 14.6x based on 2010 and 12.8x based on 2011 earnings looks attractive. The P/E based on 2012 earnings is just 11.6x.

Estimate Revisions Go Dormant

Estimate revisions activity is close to its seasonal low, and should at least triple from here by early February. We saw a little bit of a bounce in the ratio of upwards to downwards revisions during the third quarter earnings season, especially for this year, but now that bounce seems to be over.

Once again, there are more estimate cuts than increases, with a 0.66 ratio. That is now well into bearish territory. The situation for 2012 is worse. There the ratio never got above 1.0 during the earnings season, and has now also started dropping again, and currently stands at 0.65. That is a slightly bearish reading.

To some extent, there is a mechanical reason for upwards revisions to this year. After all, the third quarter is part of the full year, so if a company beats by a nickel, and the analysts don’t increase their estimates for the firms by at least that much, they are implicitly cutting their numbers for the fourth quarter. With almost three positive surprises for every disappointment, one should expect more upward revisions than cuts. Many of those increases are now falling out of the four-week moving totals. That suggests that, on balance, the guidance given in the earnings conference calls was negative.

At the sector level, with the drop in overall revisions activity, the sample sizes are getting quite thin, which makes them somewhat less significant, but that does not mean that they should be ignored entirely. For 2012, the estimate cuts are very widespread. There are just three sectors — Industrials, Transports and Retail — that have seen more upwards than downwards revisions for 2012, and Retail just barely (1.09 ratio).

Meanwhile, six sectors have at least two cuts per increase. Autos, Aerospace and Utilities are faring the worst, but on very think sample sizes. Financials and Tech still have a large number of total revisions, and there the ratios are 0.43 and 0.42, respectively.

Who Won the Quarter?

As far as sectors are concerned, it looks like the clear winner in the third quarter was Energy. It won gold by a healthy margin for both earnings and revenue surprise, as well as for revenue growth. It took home silver for earnings growth, edged out by Construction, which was coming off a very low base a year ago. There was no clear cut loser for the quarter, but Utilities, Aerospace and Financials were all candidates for that dubious distinction.

The third quarter was a good one. However, the expectations are very subdued for the fourth quarter, and the hurdle is getting lower. Looking ahead to the first quarter, that slowing is expected to continue, with just 0.78% total, and 2.24% ex-Financials growth expected.

Expected Quarterly Growth: Total Net Income

  • Total net income (for the 492 yet to report) is expected to be just 3.91% above what was reported in the fourth quarter of 2010, down from 13.75% growth in the third quarter. Excluding Financials, growth of 3.32%, down from 17.84% reported in the second quarter.
  • Relative to the third quarter total net income to fall 4.12%, ex-Financials to fall 6.01%.
  • Financials the only sector to see growth accelerate from the third quarter. Five sectors expected to see negative year-over-year growth.

 

Quarterly Growth: Total Net Income Expected
Income Growth Sequential Q1/Q4 E Sequential Q4/Q3 E Year over Year 4Q 11 E Year over Year 1Q 12 E Year over Year 3Q 11 A
Construction -29.27% -27.32% 40.95% 87.97% 60.64%
Oils and Energy 0.80% -11.26% 22.34% 2.66% 60.06%
Business Services -3.36% 6.49% 11.21% 16.70% 17.69%
Auto 32.29% -33.53% 10.26% -19.88% 21.68%
Transportation -13.04% -1.47% 10.24% 16.41% 12.06%
Industrial Products 18.39% -16.67% 10.06% 11.51% 27.57%
Finance 0.36% 6.59% 9.52% -6.00% 0.01%
Consumer Discretionary -9.23% -5.70% 2.24% 6.67% 13.28%
Retail/Wholesale -20.07% 30.69% 1.87% 5.20% 8.43%
Computer and Tech -12.11% 9.88% 1.61% 1.13% 9.41%
Medical 8.21% -10.11% 0.06% -1.53% 6.88%
Consumer Staples -4.84% -11.21% -1.13% 3.26% 6.28%
Basic Materials 50.28% -20.27% -5.22% -2.09% 35.29%
Utilities 31.31% -40.56% -6.81% -2.03% 9.39%
Aerospace -4.75% -10.93% -8.44% 5.73% 12.44%
Conglomerates -1.07% -3.08% -12.21% 11.60% 16.20%
S&P 500 -0.78% -4.12% 3.91% 0.78% 13.75%
Excluding Financial -0.88% -6.01% 3.32% 2.24% 17.84%

Quarterly Growth: Total Revenues Expected

  • Revenue growth for the 492 yet to report expected to fall to 4.42%, from the 11.23% growth posted in the second quarter. Growth ex-Financials 7.05%, down from 13.16% in 3rd quarter.
  • Sequentially revenues 0.49% higher than in the third quarter, up 1.31% ex-Financials.
  • Five sectors expecting revenue growth over 10%, Finance to see sharp 11.5% year-over-year drop in revenues.
  • Year-over-year revenue growth expected to turn negative in first quarter falling 0.47%, but up  2.21% ex-Financials.

 

Quarterly Growth: Total Revenues Expected
Sales Growth Sequential Q1/Q4 E Sequential Q4/Q3 E Year over Year 4Q 11 E Year over Year 1Q 12 E Year over Year
3Q 11 A
Oils and Energy -3.79% -8.14% 12.37% -5.26% 32.05%
Transportation -3.52% 2.16% 11.88% 9.72% 13.13%
Consumer Discretionary -6.92% 4.88% 11.36% 8.65% 14.74%
Construction -3.20% -2.52% 11.00% 15.57% 8.47%
Industrial Products 6.05% -5.62% 10.67% 10.67% 18.36%
Utilities -7.49% 1.37% 10.51% -2.95% 2.65%
Basic Materials 6.24% -3.02% 8.04% 7.09% 19.20%
Computer and Tech -5.53% 6.62% 7.34% 6.91% 11.38%
Retail/Wholesale -6.61% 10.84% 6.94% 6.00% 8.02%
Auto -0.80% -2.86% 6.06% 2.03% 17.60%
Business Services -4.65% 3.14% 5.97% 4.66% 8.90%
Medical -1.25% 1.34% 3.98% 2.65% 7.00%
Aerospace -8.01% 7.94% 2.44% 8.06% -1.04%
Conglomerates -8.57% 7.63% 1.93% -0.15% 5.64%
Consumer Staples -9.60% -7.26% -4.22% -6.05% 10.97%
Finance -16.92% -5.14% -11.49% -17.48% -0.47%
S&P 500 -3.69% 0.49% 4.42% -0.47% 11.23%
Excluding Financial -4.65% 1.31% 7.05% 2.21% 13.16%

Quarterly Net Margins Expected

  • Sector and S&P net margins are calculated as total net income for the sector divided by total revenues for the sector. Data for the 492 that have not reported.
  • Net margins expected to fall to 9.04% from 9.05 a year ago, and down from 9.48% in the third quarter. Net margins ex-Financials expected to fall to 8.56% from 8.87% a year ago and down from 9.23% in the second quarter. Is margin expansion coming to an end? Maybe.
  • Seven sectors see year-over-year margin expansion, nine expected to see contraction.
  • Margin expansion the key driver behind earnings growth. Due to seasonality, it is best to compare to a year ago, particularly at the individual company and sector levels. Mix of companies reporting will lead to big changes in both the reported and expected net margin tables from week to week.

 

Quarterly: Net Margins Expected
Net Margins Q1 2012 Expected Q4 2011 Expected 3Q 2011 Reported 2Q 2011 Reported 1Q 2011 Reported 4Q 2010 Reported
Computer and Tech 15.31% 16.46% 15.98% 16.80% 16.19% 17.39%
Business Service 13.27% 13.09% 12.80% 12.32% 11.90% 12.48%
Finance 14.19% 12.53% 11.19% 9.04% 12.46% 10.12%
Medical 13.26% 12.10% 13.63% 13.55% 13.83% 12.58%
Consumer Staples 11.44% 10.87% 11.35% 11.07% 10.41% 10.53%
Transportation 8.52% 9.46% 9.79% 9.41% 8.03% 9.60%
Conglomerates 10.08% 9.32% 10.43% 10.10% 9.02% 10.82%
Consumer Discretionary 9.03% 9.26% 10.44% 9.36% 9.20% 10.09%
Oils and Energy 8.81% 8.41% 8.72% 8.57% 8.13% 7.72%
Industrial Products 8.76% 7.85% 8.82% 8.69% 8.69% 7.89%
Basic Materials 8.69% 6.14% 7.33% 9.06% 9.50% 7.00%
Aerospace 6.01% 5.80% 7.03% 6.88% 6.14% 6.49%
Utilities 8.04% 5.65% 9.64% 8.14% 7.96% 6.70%
Retail/Wholesale 3.36% 3.93% 3.33% 3.62% 3.39% 4.12%
Auto 5.21% 3.91% 5.71% 6.59% 6.64% 3.76%
Construction 1.89% 2.59% 3.47% 3.10% 1.16% 2.04%
S&P 500 9.50% 9.04% 9.48% 9.21% 9.38% 9.05%
Excluding Financial 8.90% 8.56% 9.23% 9.23% 8.90% 8.87%

Annual Total Net Income Growth

  • Following rise of just 2.1% in 2009, total earnings for the S&P 500 jumps 46.5% in 2010, 14.5% further expected in 2011. Growth ex-Financials 28.2% in 2010, 17.8% in 2011.
  • For 2012, 9.83% growth expected, 7.54% ex-Financials.
  • Thirteen sectors expected to see total net income rise in 2011 and all in 2012. Utilities only (small) decliner in 2010. Eight sectors expected to post double-digit growth in 2011 and nine in 2012. Only Utilities, Autos, Energy and Health Care expected to grow less than 5% in 2012.
  • Cyclical/Commodity sectors expected to lead in earnings growth again in 2011 and into 2012. Materials, Industrials and Energy expected to grow over 30% for second year.
  • Sector dispersion of earnings growth narrows dramatically between 2010 and 2012, only Construction and Financials (low base) expected to grow more than 20% in 2012, eight grew more than 30% in 2010.

 

Annual Total Net Income Growth
Total Net Income Growth 2009 2010 2011 2012
Construction - to - - to + -11.17% 56.55%
Finance - to + 324.70% -0.46% 22.28%
Transportation -30.21% 80.16% -4.15% 18.56%
Industrial Products -34.97% 36.49% 32.58% 18.05%
Conglomerates -24.01% 11.13% 8.37% 14.37%
Business Service 1.47% 13.59% 17.37% 14.24%
Consumer Discretionary -14.99% 23.14% 19.73% 13.73%
Retail/Wholesale 2.61% 14.70% 11.52% 11.88%
Basic Materials -46.98% 55.97% 34.43% 10.53%
Computer and Tech -5.52% 47.10% 22.57% 8.46%
Consumer Staples 5.46% 11.65% 8.85% 7.92%
Aerospace -17.55% 21.76% 6.37% 5.31%
Medical 2.43% 10.24% 7.56% 3.96%
Utilities -14.16% -0.67% 3.79% 1.95%
Oils and Energy -54.89% 50.46% 39.16% 1.88%
Auto - to + 1499.15% 16.06% 1.64%
S&P 2.10% 46.47% 14.51% 9.83%

Annual Total Revenue Growth

  • Total S&P 500 Revenue in 2010 rises 7.95% above 2009 levels, a rebound from a 6.41% 2009 decline.
  • Total revenues for the S&P 500 expected to rise 6.05% in 2011, 4.98% in 2012.
  • Industrials, Materials and Energy to lead revenue race in 2011. Four other sectors (all cyclical) also expected to show double-digit revenue growth in 2011.
  • All sectors but Staples, Finance and Aerospace expected to show positive top line growth in 2011, but four sectors expected to show positive growth below 5%. All sectors but Energy see 2012 growth, but only Construction, Tech and Industrials seen in double digits.
  • Aerospace the only sector to post lower top line for 2010. Revenues for Financials, Construction, and Conglomerates were virtually unchanged.
  • The widespread revenue gains are not consistent with the idea of a double-dip recession, particularly in a low inflation environment.
  • Revenue growth significantly different if Financials are excluded, down 10.56% in 2009 but growth of 9.35% in 2010, 9.77% in 2011 and 5.22% in 2012.

 

Annual Total Revenue Growth
Sales Growth 2009 2010 2011 2012
Construction -15.92% 0.47% 4.21% 13.33%
Computer and Tech -3.84% 15.49% 13.05% 12.11%
Industrial Products -20.96% 12.34% 19.28% 11.48%
Transportation 7.25% 10.70% 13.05% 9.19%
Basic Materials -16.96% 11.22% 18.27% 8.88%
Consumer Discretionary -10.97% 5.30% 12.45% 8.23%
Auto -21.40% 8.53% 14.18% 7.33%
Business Service -3.61% 4.81% 9.20% 6.76%
Retail/Wholesale 1.40% 4.08% 6.67% 6.73%
Consumer Staples -0.52% 4.79% -1.95% 5.40%
Aerospace 6.51% -0.34% -0.55% 5.05%
Conglomerates -13.51% 0.94% 4.68% 4.06%
Utilities -6.24% 2.13% 5.42% 3.23%
Finance 21.61% 0.09% -16.76% 3.02%
Medical 6.23% 11.40% 5.05% 1.76%
Oils and Energy -34.24% 23.74% 19.50% -2.13%
S&P 500 -6.41% 7.95% 6.05% 4.98%
Excluding Financial -10.56% 9.35% 9.77% 5.22%

Annual Net Margins

  • Net Margins marching higher, from 5.88% in 2008 to 6.27% in 2009 to 8.51% for 2010, 9.19% expected for 2011. Trend expected to continue into 2012 with net margins of 9.61% expected. Major source of earnings growth.
  • Financials significantly distort overall net margins. Net margins ex-Financials 7.78% in 2008, 6.93% in 2009, 8.12% for 2010, 8.72% expected in 2011. Expected to grow to 8.91% in 2012.
  • Financials net margins soar from -8.42% in 2008 to 15.42% expected for 2012.
  • All sectors but Medical and Utilities saw higher net margins in 2010 than in 2009. Thirteen sectors expected to post higher net margins in 2011 than in 2010. Widespread margin expansion currently expected for 2012 as well with 13 sectors expected to post expansion in margins.
  • Sector net margins are calculated as total net income for sector divided by total revenues. However, there are generally fewer revenue estimates than earnings estimates for individual companies.

 

Annual Net Margins
Net Margins 2009A 2010E 2011E 2012E
Computer and Tech 11.72% 14.92% 16.18% 15.65%
Finance 2.56% 10.86% 12.99% 15.42%
Medical 12.89% 12.76% 13.06% 13.35%
Business Service 9.97% 10.81% 11.62% 12.43%
Consumer Staples 9.68% 10.31% 11.45% 11.72%
Conglomerates 8.19% 9.02% 9.33% 10.26%
Consumer Discretionary 7.27% 8.51% 9.06% 9.52%
Oils and Energy 5.93% 7.22% 8.40% 8.75%
Industrial Products 6.06% 7.37% 8.19% 8.67%
Transportation 5.70% 9.28% 7.87% 8.55%
Basic Materials 4.96% 6.95% 7.90% 8.02%
Utilities 8.08% 7.86% 7.74% 7.64%
Aerospace 4.80% 5.86% 6.27% 6.28%
Auto 0.35% 5.22% 5.30% 5.02%
Retail/Wholesale 2.98% 3.29% 3.44% 3.60%
Construction -0.54% 2.64% 2.25% 3.11%
S&P 500 6.27% 8.51% 9.19% 9.61%
Excluding Financial 6.93% 8.12% 8.72% 8.91%

Earnings Estimate Revisions: Current Fiscal Year
The Zacks Revisions Ratio: 2011

  • Revisions ratio for full S&P 500 at 0.66, down from 0.90 last week, now bearish. Total revisions activity near seasonal low. Thin samples in many sectors.
  • Two sectors with revisions ratio above 1.0, one above 2.0. Seven with two cuts per increase or more. Industrials and Energy lead, Business Service and Aerospace very weak.
  • Ratio of firms with rising to falling mean estimates at 0.78, down from 0.96 last week, now a bearish reading.
  • Total number of revisions (4-week total) near seasonal low at 1,488, down from 1,498 last week (-0.7%). Increases at 591 down from 708 (-16.5%), cuts at 897, up from 788 (13.8%).

 

The Zacks Revisions Ratio: 2011
Sector %Ch
Curr Fiscal Yr
Est – 4 wks
#
Firms
Up
#
Firms
Down
#
Ests
Up
#
Ests
Down
Revisions
Ratio
Firms
up/down
Industrial Products 0.79 11 4 46 9 5.11 2.75
Oils and Energy -2.73 17 24 111 93 1.19 0.71
Consumer Staples -0.14 14 16 43 43 1.00 0.88
Construction -1.46 4 5 6 6 1.00 0.80
Conglomerates -0.02 3 4 9 9 1.00 0.75
Transportation -0.1 4 5 6 6 1.00 0.80
Medical 0.01 20 15 43 47 0.91 1.33
Retail/Wholesale -0.12 23 18 130 152 0.86 1.28
Consumer Discretionary -0.23 10 12 20 31 0.65 0.83
Finance -0.4 25 39 60 134 0.45 0.64
Auto 0.7 3 2 3 7 0.43 1.50
Utilities -0.01 8 23 21 51 0.41 0.35
Computer and Tech -2.42 24 35 76 236 0.32 0.69
Basic Materials -0.74 7 14 12 40 0.30 0.50
Aerospace -0.09 3 5 3 12 0.25 0.60
Business Service -2.55 3 9 2 21 0.10 0.33
S&P -0.79 179 230 591 897 0.66 0.78

Earnings Estimate Revisions: Next Fiscal Year
The Zacks Revisions Ratio: 2012

  • Revisions ratio for full S&P 500 at 0.65, down from 0.77 from last week, back in bearish territory.
  • The Revisions ratio for 2012 never rose above 1.0 during earnings season and is now falling again. This is a very troubling sign, will be more so if it stays low as activity picks up.
  • Only three sectors have positive revisions ratio (above 1.0). Six sectors with more than two cuts per increase. Autos and Aerospace very weak, but on small samples.
  • Ratio of firms with rising estimate to falling mean estimates at 0.71, down from 0.73 last week. Still in bearish territory.
  • Total number of revisions (4-week total) at 1,699, up from 1,673 last week (1.6%). Thin samples for many sectors. Near seasonal low.
  • Increases at 667 down from 726 last week (-8.1%), cuts rise to 1,032 from 947 last week (9.0%).

 

The Zacks Revisions Ratio: 2012
Sector %Ch
Next Fiscal Yr Est – 4 wks
#
Firms Up
#
Firms Down
#
Ests Up
#
Ests Down
Revisions
Ratio
Firms up/down
Industrial Products 0.42 9 8 35 15 2.33 1.13
Transportation 0.19 4 5 7 5 1.40 0.80
Retail/Wholesale -1.44 24 21 159 146 1.09 1.14
Oils and Energy -2.01 19 21 138 147 0.94 0.90
Conglomerates -0.17 3 4 11 12 0.92 0.75
Construction -0.46 4 5 6 8 0.75 0.80
Basic Materials -0.96 5 15 27 38 0.71 0.33
Medical -0.25 15 23 48 76 0.63 0.65
Consumer Staples -0.51 11 20 30 49 0.61 0.55
Business Service -0.33 6 8 8 14 0.57 0.75
Consumer Discretionary -0.32 12 12 17 37 0.46 1.00
Finance -0.42 22 47 66 153 0.43 0.47
Computer and Tech -0.77 27 30 86 206 0.42 0.90
Utilities -0.56 14 20 25 89 0.28 0.70
Aerospace -0.75 1 8 3 25 0.12 0.13
Auto -0.42 2 4 1 12 0.08 0.50
S&P -0.66 178 251 667 1032 0.65 0.71

Total Income and Share

  • S&P 500 earned $538.6 billion in 2009, rising to earn $788.8 billion in 2010, $903.3 billion expected in 2011.
  • The S&P 500 total earnings expectations dip below the $1 Trillion mark in 2012 at $992.1 Billion. Finance share of total earnings moves from 5.9% in 2009 to 17.9% in 2010, dip to 15.6% expected for 2011; rebound to 17.3% in 2012, but still well below 2007 peak of over 30%. Energy share also rising, going from 11.9% in 2009 to 14.9% in 2011, dip to 13.8% in 2012.
  • Medical share of total earnings exceeds market cap share (index weight), but earnings share expected to shrink from 17.3% in 2009 to 11.2% in 2012, down each year.
  • Market Cap shares of Construction, Staples, Retail, Transportation and Business Service sectors far exceed earnings shares of any of the years from 2010 through 2012.
  • Earnings shares of Energy, Finance, Autos, Materials and Medical well above market cap shares.
  • As a general rule, one should try to overweight sectors with rising earnings shares, underweight falling earnings shares, but also over weight sectors where earnings shares exceed market cap shares.

 

Total Income and Share
Income ($ Bill) Total
Net
Income
$ 2010
Total
Net
Income
$ 2011
Total
Net
Income
$ 2012
% Total
S&P Earn
2010
% Total
S&P Earn
2011
% Total
S&P
Earn
2012
% Total
S&P Mkt
Cap
Computer and Tech $135,462 $166,031 $180,084 17.17% 18.38% 18.15% 18.67%
Finance $141,298 $140,655 $171,987 17.91% 15.57% 17.34% 13.79%
Oils and Energy $96,418 $134,171 $136,688 12.22% 14.85% 13.78% 11.38%
Medical $98,893 $106,367 $110,581 12.54% 11.78% 11.15% 10.70%
Consumer Staples $62,398 $67,919 $73,295 7.91% 7.52% 7.39% 9.33%
Retail/Wholesale $57,913 $64,582 $72,257 7.34% 7.15% 7.28% 9.30%
Utilities $47,962 $49,778 $50,749 6.08% 5.51% 5.12% 6.45%
Basic Materials $24,096 $32,392 $35,802 3.05% 3.59% 3.61% 3.27%
Consumer Discretionary $25,169 $30,135 $34,273 3.19% 3.34% 3.45% 3.85%
Conglomerates $27,645 $29,960 $34,265 3.50% 3.32% 3.45% 3.49%
Industrial Products $16,626 $22,043 $26,021 2.11% 2.44% 2.62% 2.54%
Business Service $14,144 $16,600 $18,964 1.79% 1.84% 1.91% 2.47%
Transportation $14,269 $13,678 $16,216 1.81% 1.51% 1.63% 1.88%
Aerospace $13,553 $14,416 $15,181 1.72% 1.60% 1.53% 1.42%
Auto $11,062 $12,839 $13,050 1.40% 1.42% 1.32% 0.95%
Construction $1,911 $1,698 $2,658 0.24% 0.19% 0.27% 0.51%
S&P 500 $788,819 $903,264 $992,070 100.00% 100.00% 100.00% 100.00%

P/E Ratios

  • Trading at 14.61x 2010, 12.76x 2011 earnings, or earnings yields of 6.84% and 7.83%, respectively. P/E for 2012 at 11.62x or earnings yield of 8.61%. P/Es significantly higher than a month ago, but still low relative to history and interest rates.
  • Earnings Yields still attractive relative to 10-year T-Note rate of 1.85% and 30-year bond rate of 2.86%.
  • Autos and Energy only sectors with single-digit P/E for both years. Finance also has single digit P/Es based on 2012 earnings.
  • Construction has highest P/E for all three years by wide margin.
  • S&P 500 earned $56.81 in 2009 rising to $83.21 in 2010. Currently expected to earn $95.28 in 2011 and $104.63 for 2012.

 

P/E Ratios
P/E 2009 2010 2011 2012
Auto 157.97 9.88 8.51 8.37
Finance 47.77 11.25 11.30 9.24
Oils and Energy 20.47 13.61 9.78 9.60
Basic Materials 24.36 15.62 11.62 10.51
Aerospace 14.73 12.10 11.38 10.80
Medical 13.74 12.47 11.59 11.15
Industrial Products 24.04 17.62 13.29 11.26
Conglomerates 16.17 14.55 13.43 11.74
Computer and Tech 23.36 15.88 12.96 11.95
Consumer Discretionary 21.72 17.64 14.73 12.95
Transportation 27.30 15.15 15.81 13.34
Utilities 15.40 15.51 14.94 14.66
Consumer Staples 19.24 17.23 15.83 14.67
Retail/Wholesale 21.22 18.50 16.59 14.82
Business Service 22.90 20.16 17.17 15.03
Construction NM 30.51 34.34 21.94
S&P 500 21.40 14.61 12.76 11.62

Data in this report, unless stated otherwise, is through the close on Thursday 12/15/2011.

Dirk van Dijk, CFA is the Chief Equity Strategist for Zacks.com. With more than 25 years investment experience he has become a popular commentator appearing in the Wall Street Journal and on CNBC. Dirk is also the Editor in charge of the market beating Zacks Strategic Investor service.

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Q4 EARNINGS GROWTH EXPECTED TO SLOW SHARPLY

By Dirk Van Dijk, CFA, Zacks Investment Research

Key Points:

  • With third quarter reports done we shift focus to fourth quarter expectations. Annual rankings now based on 2012, not 2011 expectations. The third quarter was a good one. Total reported earnings growth of 13.4%. Ex-Financials growth is 17.7% year over year. Total revenue growth 10.37%, 13.14% ex-Financials. Median earnings surprise 2.72% and median sales surprise 0.62%.
  • At start of earnings season, total growth of 9.7% and 12.2% ex-Financials was expected.
  • Year over year growth expected to slow to 3.40% in fourth quarter, 7.64% excluding Financials. Down 3.12% sequentially, 5.54% decline expected ex-Financials. Dramatic slowdown, but easy hurdle to clear. Revenue grow expected to slow to 3.40%, 7.64% ex-Financials. Sequentially, Revenue to fall 0.80%, but rise 1.53% ex-Financials.
  • Full-year total earnings for the S&P 500 jumps 46.5% in 2010, expected to rise 14.7% further in 2011. Growth to continue in 2012 with total net income expected to rise 9.9%. Financials major earnings driver in 2010. Excluding Financials growth was 28.2% in 2010, and expected to be 17.9% in 2011 and 7.6% in 2012.
  • Total revenues for the S&P 500 rise 7.95% in 2010, expected to be up 5.92% in 2011 and 5.26% in 2012. Excluding Financials, revenues up 9.35% in 2010, expected to rise 9.61% in 2011 and 5.53% in 2012.
  • Annual Net Margins marching higher, from 5.88% in 2008 to 6.27% in 2009 to 8.51% for 2010, 9.21% expected for 2011 and 9.62% in 2012. Margin expansion major source of earnings growth. Net margins ex-Financials 7.79% in 2008, 6.93% in 2009, 8.12% for 2010, 8.74% expected in 2011 and 8.91% in 2012.
  • Revisions ratio for full S&P 500 at 0.90 for 2011 (neutral), at 0.77 for 2012 (bearish). Ratio of firms with rising to falling mean estimates at 0.96 for 2011 (neutral), 0.73 (bearish) for 2012. All down from last week. Total revisions activity past peak and plunging.
  • S&P 500 earned $548.4 billion in 2009, rising to $788.7 billion in 2010, expected to climb to $904.5 billion in 2011. In 2012, the 500 are collectively expected to earn $994.0 billion.
  • S&P 500 earned $56.80 in 2009: $83.18 in 2010 and $95.39 in 2011 expected bottom up.  For 2012, $104.87 expected. Puts P/E’s at 14.84 for 2010, and 12.94x for 2011 and 11.77x for 2012, very attractive relative to 10-year T-note rate of 2.05%. Top-down estimates: $96.83 for 2011 and $102.66 for 2012.

The Earnings Picture

Third quarter earnings season was a good one. Total net income growth was far higher than expected, although the median surprise and the ratio of positive surprises to disappointments is slightly below normal.

This week we will change our focus to the expectations for the fourth quarter. The year-over-year growth rate for the S&P 500 is expected to slow dramatically, to just 4.62% from 13.44% in the third quarter. Excluding Financials, the growth slowdown is expected to be even more dramatic, dropping to just 3.97% from 17.7%.

Keep in mind, though, that at this point in the third quarter earnings season the expected level of earnings growth was just 12.04%, and 11.73% excluding the Financials. Thus, it is not inconceivable that we might squeak into double-digit growth again in the fourth quarter.

Earnings growth is slowing on both sides. Revenue growth is expected to slow to 3.40% from 10.37% year over year. Excluding Financials, revenue growth is expected to slow to 7.64% from 13.14% in the third quarter. Sequentially, revenues are expected to be down 0.80% overall, and up just 1.53%.

Net Margins Expansion Slowing

As revenue growth is slowing, so to is the rate of net margin expansion. Overall net margins are expected to climb to 9.11% from 8.94% a year ago, but excluding Financials, net margins are expected to actually fall to 8.45% from 8.74% last year. Sequentially net margins are expected to be down both in total and ex-Financials from 9.35% and 9.07%, respectively.

The net margin expansion game is getting long in the tooth, but it does not look like it is entirely over. It has played a key role in the remarkable earnings recovery we have seen since the depths of the Great Recession.

On an annual basis, net margins continue to march northward. In 2008, overall net margins were just 5.88%, rising to 6.27% in 2009. They hit 8.51% in 2010 and are expected to continue climbing to 9.21% in 2011 and 9.62% in 2012. The pattern is a bit different, particularly during the recession, if the Financials are excluded, as margins fell from 7.78% in 2008 to 6.93% in 2009, but have started a robust recovery and rose to 8.12% in 2010. They are expected to rise to 8.74% in 2011 and 8.91% in 2012.

Full-Year Expectations Still Good

Total net income in 2010 rose to $788.7 billion in 2010, up from $538.4 billion in 2009. The expectations for the full year are very healthy. In 2011, the total net income for the S&P 500 should be $904.5 billion, or increases of 46.5% and 14.7%, respectively. The expectation is for 2012 to have total net income come close to $1 Trillion mark to $994.0, for growth of 9.9%.

Consider those earnings relative to nominal GDP. If we use the middle of the year GDP level, S&P 500 net income has climbed from 3.89% in 2009 to 5.45% in 2010, and assuming that the 2011 expectations are on target, 6.02% this year. Of course, the S&P 500 earns a lot of its income abroad, and there are a lot more than 500 companies in the U.S. so to some extent that is an apples-to-oranges comparison. Nevertheless, it does demonstrate that corporate profits are doing a heck of a lot better than the rest of the economy.

A much broader measure of (domestic only) corporate profits tracked by the government rose to 9.92% of GDP in the third quarter. Since 1959 (when the data starts), that measure has averaged 5.99% of GDP. It is still not a record, though, that was set in the third quarter of 2006 at 10.29% of GDP. Meanwhile, wages fell to a record low of just 43.75% of GDP, while the average since 1959 is 48.42% of GDP.

Higher profits are great for the stock market, but ultimately companies need customers, and their customers need to have income (or borrowing capacity). Thus there has to be a very real question about the sustainability of these great earnings. I don’t think it is wise to assume that corporate profits will continue to take an ever larger share of the economic pie.

The “EPS” for the S&P 500 is expected to be over the $100 “per share” level for the first time at $104.87 in 2012. That is up from $56.80 for 2009, $83.18 for 2010, and $95.39 for 2011. In an environment where the 10-year T-note is yielding 2.05%, a P/E of 14.8x based on 2010 and 12.9x based on 2011 earnings looks attractive. The P/E based on 2012 earnings is just 11.8x.

Estimate Revisions Drying Up

Estimate revisions activity is well past its’ seasonal peak and is plunging (seasonally normal). We saw a little bit of a bounce in the ratio of upwards to downwards revisions, especially for this year, but now that bounce seems to be over. Once again, there are more estimate cuts than increases, with a 0.90 ratio. That is still in neutral territory.

However, the situation for 2012 is not as good. There the ratio never got above 1.0 during the earnings season, and has now also started dropping again, and currently stands at 0.77. That is a slightly bearish reading.

To some extent, there is a mechanical reason for upwards revisions to this year. After all, the third quarter is part of the full year, so if a company beats by, say, a nickel and the analysts don’t increase their estimates for the firms by at least that much, they are implicitly cutting their numbers for the fourth quarter. With almost three positive surprises for every disappointment, one should expect more upwards revisions than cuts.

Many of those increases are now falling out of the four-week moving totals. That suggests that on balance the guidance given in the earnings conference calls was negative.

At the sector level, with the drop in overall revisions activity, the sample sizes are getting quite thin, which makes them somewhat less significant, but that does not mean that they should be ignored entirely. For 2012, the estimate cuts are very widespread. There are just two sectors — Industrials and Retail — that have seen more upwards than downwards revisions for 2012, and Retail just barely (1.08 ratio).

Meanwhile, five sectors have at least two cuts per increase. Autos, Aerospace and Business Service are faring the worst, but on very thin sample sizes. Financials still have a large number of total revisions, and there the ratio is 0.49.

The Industry Winners (& Losers)

As far as sectors are concerned, it looks like the clear winner in the third quarter was Energy. It won gold by a healthy margin for both earnings and revenue surprise, as well as for revenue growth. It took home silver for earnings growth, edged out by Construction, which was coming off a very low base a year ago. There was no clear-cut loser for the quarter, but Utilities, Aerospace and Financials were all candidates for that dubious distinction.

The third quarter was a good one. However, the expectations are very subdued for the fourth quarter, and the hurdle is getting lower. Looking ahead to the first quarter, that slowing is expected to continue, with just 1.04% total, and 2.62% ex-financial growth expected.

Expected Quarterly Growth: Total Net Income

  • Total net income is expected to be just 3.40% above what was reported in the fourth quarter of 2010, down from 10.37% growth in the third quarter. Excluding Financials, growth of 7.64%, down from 13.14% reported in the second quarter.
  • Relative to the third quarter total net income to fall 0.80%, ex-Financials to rise 1.53%.
  • Construction to lead the way (low base in 2010), followed by Energy and Transports.
  • Financials the only sector to see growth accelerate from the third quarter, six sectors expected to see negative year-over-year growth.

 

Quarterly Growth: Total Net Income Expected
Income Growth Sequential Q1/Q4 E Sequential Q4/Q3 E Year over Year 4Q 11 E Year over Year 1Q 12 E Year over Year 3Q 11 A
Construction -29.21% 241.55% 41.13% 88.37% 60.64%
Oils and Energy 0.50% -49.48% 22.98% 2.90% 60.06%
Transportation -12.87% -7.30% 12.33% 20.88% 13.19%
Finance -1.32% 50.55% 12.31% -5.35% 1.07%
Business Services -5.53% -12.81% 12.24% 14.83% 20.10%
Auto 32.29% 7.83% 10.26% -19.88% 21.68%
Industrial Products 19.99% -21.40% 9.18% 12.12% 25.22%
Consumer Discretionary -10.73% 6.92% 3.56% 6.26% 13.28%
Computer and Tech -12.09% 6.93% 2.76% 2.27% 9.31%
Retail/Wholesale -14.74% 20.58% 1.57% 5.84% 7.67%
Medical 8.23% 31.83% -0.05% -1.61% 6.88%
Consumer Staples -4.87% -6.82% -1.14% 3.22% 6.28%
Basic Materials 48.69% 5.64% -4.06% -1.94% 35.29%
Utilities 27.96% 33.57% -4.80% -2.47% 9.39%
Aerospace -4.85% -72.80% -8.38% 5.68% 12.44%
Conglomerates -2.92% -6.66% -11.24% 10.74% 16.20%
S&P 500 -0.95% -3.12% 4.62% 1.04% 13.44%
Excluding Financial -0.86% -5.42% 3.97% 2.62% 17.70%

Quarterly Growth: Total Revenues Expected

  • Revenue growth for the 374 yet to report expected to fall to 7.20%, from the 12.48% growth posted in the second quarter. Growth ex-Financials 8.83%, up from 7.42% in 2nd quarter.
  • Sequentially revenues 4.22% lower than in the second quarter, down 2.01% ex-Financials.
  • Five sectors expecting revenue growth over 10%, Finance to see sharp 24.2% year-over-year drop in revenues.
  • Revenue growth expected to slow sharply in fourth quarter falling to -0.14%, 1.45% ex-Financials.

 

Quarterly Growth: Total Revenues Expected
Sales Growth Sequential Q1/Q4 E Sequential Q4/Q3 E Year over Year 4Q 11 E Year over Year 1Q 12 E Year over Year
3Q 11 A
Oils and Energy -3.74% -3.56% 17.98% -0.49% 32.05%
Transportation -1.35% 1.87% 11.49% 11.29% 12.69%
Consumer Discretionary -6.90% 4.94% 11.41% 8.74% 14.74%
Construction -3.15% -2.52% 11.00% 15.63% 8.47%
Industrial Products 6.13% -5.68% 10.61% 10.69% 18.37%
Basic Materials 5.72% -2.63% 8.47% 7.00% 19.20%
Computer and Tech -5.47% 7.03% 7.75% 7.35% 11.34%
Retail/Wholesale -6.12% 8.52% 6.94% 4.64% 8.30%
Auto -0.80% -2.86% 6.06% 2.03% 17.60%
Business Services -3.31% 1.70% 5.99% 5.40% 11.39%
Utilities -2.55% -3.94% 4.72% -2.97% 2.65%
Medical -1.30% 1.38% 4.02% 2.64% 7.00%
Aerospace -8.06% 7.90% 2.40% 7.96% -1.04%
Conglomerates -8.59% 7.64% 1.94% -0.16% 5.64%
Consumer Staples -9.57% -7.24% -4.20% -6.00% 10.97%
Finance 2.11% -17.12% -22.70% -16.92% -0.43%
S&P 500 -3.82% -0.80% 3.40% 0.34% 10.37%
Excluding Financial -4.15% 1.53% 7.64% 3.00% 13.14%

Quarterly Net Margins Expected

  • Sector and S&P net margins are calculated as total net income for the sector divided by total revenues for the sector.
  • Net margins expected to rise to 9.11% from 8.94 a year ago, but down from 9.35% in the third quarter. Net margins ex-Financials expected to fall to 8.45% from 8.74% a year ago and down from 9.07% in the second quarter. Is margin expansion coming to an end?
  • Seven sectors see year-over-year margin expansion, nine expected to see contraction.
  • Margin expansion the key driver behind earnings growth. Due to seasonality, it is best to compare to a year ago, particularly at the individual company and sector levels. Mix of companies reporting will lead to big changes in both the reported and expected net margin tables from week to week.

 

Quarterly: Net Margins Expected
Net Margins Q1 2012 Expected Q4 2011 Expected 3Q 2011 Reported 2Q 2011 Reported 1Q 2011 Reported 4Q 2010 Reported
Computer and Tech 15.45% 16.61% 16.00% 16.81% 16.21% 17.42%
Finance 14.28% 14.77% 11.33% 9.17% 12.53% 10.17%
Business Service 12.11% 12.39% 11.96% 11.60% 11.11% 11.70%
Medical 13.25% 12.08% 13.63% 13.55% 13.83% 12.58%
Consumer Staples 11.43% 10.87% 11.35% 11.07% 10.41% 10.53%
Conglomerates 10.01% 9.42% 10.43% 10.10% 9.02% 10.82%
Consumer Discretionary 8.99% 9.38% 10.44% 9.36% 9.20% 10.09%
Transportation 7.33% 8.30% 8.53% 8.43% 6.75% 8.24%
Oils and Energy 8.40% 8.05% 8.72% 8.57% 8.13% 7.72%
Industrial Products 8.81% 7.79% 8.66% 8.69% 8.69% 7.89%
Basic Materials 8.71% 6.19% 7.33% 9.06% 9.50% 7.00%
Utilities 8.00% 6.09% 9.64% 8.14% 7.96% 6.70%
Aerospace 6.01% 5.81% 7.03% 6.88% 6.14% 6.49%
Auto 5.21% 3.91% 5.71% 6.59% 6.64% 3.76%
Retail/Wholesale 3.42% 3.77% 3.20% 3.49% 3.38% 3.97%
Construction 1.89% 2.59% 3.47% 3.10% 1.16% 2.04%
S&P 500 9.35% 9.11% 9.35% 9.12% 9.27% 8.94%
Excluding Financial 8.74% 8.45% 9.07% 9.11% 8.77% 8.74%

Annual Total Net Income Growth

  • Following rise of just 1.9% in 2009, total earnings for the S&P 500 jumps 46.5% in 2010, 14.69% further expected in 2011. Growth ex-Financials 28.15% in 2010, 17.94% in 2011.
  • For 2012, 9.89% growth expected. 7.62% ex-Financials.
  • Thirteen sectors expected to see total net income rise in 2011 and all in 2012. Utilities only (small) decliner in 2010. Eight sectors expected to post double-digit growth in 2011 and nine in 2012. Only Utilities, Autos, Energy and Health Care expected to grow less than 5% in 2012.
  • Cyclical/Commodity sectors expected to lead in earnings growth again in 2011 and into 2012. Materials, Industrials and Energy expected to grow over 30% for second year.
  • Sector dispersion of earnings growth narrows dramatically between 2010 and 2012, only Construction and Financials (low base) expected to grow more than 20% in 2012, eight grew more than 30% in 2010.

 

Annual Total Net Income Growth
Total Net Income Growth 2009 2010 2011 2012
Construction - to - - to + -10.60% 55.35%
Finance - to + 324.70% -0.20% 22.17%
Transportation -30.21% 80.15% -4.21% 18.40%
Industrial Products -34.97% 36.49% 32.56% 17.89%
Conglomerates -24.01% 11.13% 8.50% 14.19%
Consumer Discretionary -14.99% 23.14% 19.72% 13.63%
Business Service 1.47% 13.59% 18.11% 13.55%
Retail/Wholesale 2.61% 14.70% 11.50% 11.91%
Basic Materials -47.21% 56.36% 35.31% 10.54%
Computer and Tech -5.52% 47.10% 22.94% 8.83%
Consumer Staples 5.46% 11.65% 8.85% 8.11%
Aerospace -17.55% 21.76% 6.37% 5.39%
Medical 2.43% 10.24% 7.51% 3.92%
Auto - to + 1499.15% 16.03% 2.28%
Oils and Energy -54.89% 50.46% 39.28% 1.96%
Utilities -14.16% -0.67% 4.12% 1.93%
S&P 500 2.10% 46.48% 14.69% 9.89%

Annual Total Revenue Growth

  • Total S&P 500 Revenue in 2010 rises 7.95% above 2009 levels, a rebound from a 6.41% 2009 decline.
  • Total revenues for the S&P 500 expected to rise 5.92% in 2011, 5.26% in 2012.
  • Industrials, Materials and Energy to lead revenue race in 2011. Four other sectors (all cyclical) also expected to show double-digit revenue growth in 2011.
  • All sectors but Staples, Finance and Aerospace expected to show positive top-line growth in 2011, but four sectors expected to show positive growth below 5%. All sectors but Energy see 2012 growth, but only Construction, Tech and Industrials seen in double digits.
  • Aerospace the only sector to post lower top line for 2010. Revenues for Financials, Construction, and Conglomerates were virtually unchanged.
  • The widespread revenue gains are not consistent with the idea of a double-dip recession, particularly in a low inflation environment.
  • Revenue growth significantly different if Financials are excluded, down 10.56% in 2009 but growth of 9.35% in 2010, 9.61% in 2011 and 5.53% in 2012.

 

Annual Total Revenue Growth
Sales Growth 2009 2010 2011 2012
Construction -15.92% 0.47% 4.20% 13.50%
Computer and Tech -3.84% 15.49% 13.13% 12.40%
Industrial Products -20.96% 12.34% 18.88% 11.81%
Transportation 7.25% 10.70% 13.06% 9.24%
Basic Materials -16.96% 11.22% 18.39% 8.88%
Consumer Discretionary -10.97% 5.30% 11.97% 8.75%
Auto -21.40% 8.53% 14.17% 7.43%
Business Service -3.61% 4.81% 9.20% 6.76%
Retail/Wholesale 1.40% 4.08% 6.66% 6.73%
Consumer Staples -0.52% 4.79% -2.01% 5.48%
Aerospace 6.51% -0.34% -0.56% 5.06%
Conglomerates -13.51% 0.94% 4.68% 3.87%
Utilities -6.24% 2.13% 5.44% 3.26%
Finance 21.61% 0.09% -16.69% 3.09%
Medical 6.23% 11.40% 5.05% 1.77%
Oils and Energy -34.24% 23.74% 18.64% -0.83%
S&P 500 -6.41% 7.95% 5.92% 5.26%
Excluding Financial -10.56% 9.35% 9.61% 5.53%

Annual Net Margins

  • Net Margins marching higher, from 5.88% in 2008 to 6.27% in 2009 to 8.51% for 2010, 9.21% expected for 2011. Trend expected to continue into 2012 with net margins of 9.62% expected. Major source of earnings growth.
  • Financials significantly distort overall net margins. Net margins ex-Financials 7.78% in 2008, 6.93% in 2009, 8.12% for 2010 and 8.74% expected in 2011. Expected to grow to 8.91% in 2012.
  • Financials net margins soar from -8.42% in 2008 to 15.42% expected for 2012.
  • All sectors but Medical and Utilities saw higher net margins in 2010 than in 2009. Thirteen sectors expected to post higher net margins in 2011 than in 2010. Widespread margin expansion currently expected for 2012 as well with 13 sectors expected to post expansion in margins.
  • Sector net margins are calculated as total net income for sector divided by total revenues. However, there are generally fewer revenue estimates than earnings estimates for individual companies.

 

Annual Net Margins
Net Margins 2009A 2010E 2011E 2012E
Computer and Tech 11.72% 14.92% 16.22% 15.70%
Finance 2.56% 10.86% 13.01% 15.42%
Medical 12.89% 12.76% 13.06% 13.33%
Business Service 9.97% 10.81% 11.69% 12.43%
Consumer Staples 9.68% 10.31% 11.46% 11.74%
Conglomerates 8.19% 9.02% 9.34% 10.27%
Consumer Discretionary 7.27% 8.51% 9.09% 9.50%
Oils and Energy 5.93% 7.22% 8.47% 8.71%
Industrial Products 6.07% 7.37% 8.22% 8.66%
Transportation 5.70% 9.28% 7.87% 8.53%
Basic Materials 4.91% 6.91% 7.90% 8.02%
Utilities 8.08% 7.86% 7.76% 7.66%
Aerospace 4.80% 5.86% 6.27% 6.29%
Auto 0.35% 5.22% 5.30% 5.05%
Retail/Wholesale 2.98% 3.29% 3.44% 3.60%
Construction -0.54% 2.64% 2.27% 3.10%
S&P 500 6.27% 8.51% 9.21% 9.62%
Excluding Financial 6.93% 8.12% 8.74% 8.91%

Earnings Estimate Revisions: Current Fiscal Year
The Zacks Revisions Ratio: 2011

  • Revisions ratio for full S&P 500 at 0.90, down from 1.33 two weeks ago, now neutral. Total revisions activity plunging, change in revisions ratio driven more by old estimates falling out, not new ones being added (lower significance to changes in the revisions ratio). Thin samples in many sectors.
  • Five sectors with revisions ratio above 1.0, one above 2.0. Four with two cuts per increase or more. Industrials and Discretionary lead, Autos and Business service very weak.
  • Ratio of firms with rising to falling mean estimates at 0.96, down from 1.08 last week, still a neutral reading.
  • Total number of revisions (4-week total) past seasonal highs and plunging, at 1,498, down from 2,064 last week (-27.4%). Increases at 708 down from 1,147 (-55.3%), cuts at 788, down from 917 (-14.1%).

 

The Zacks Revisions Ratio: 2011
Sector %Ch
Curr Fiscal Yr
Est – 4 wks
#
Firms
Up
#
Firms
Down
#
Ests
Up
#
Ests
Down
Revisions
Ratio
Firms
up/down
Industrial Products 0.53 11 5 38 9 4.22 2.20
Consumer Discretionary -0.31 12 13 51 35 1.46 0.92
Consumer Staples 0.15 16 11 56 40 1.40 1.45
Oils and Energy -2.34 18 22 107 92 1.16 0.82
Retail/Wholesale -0.04 24 17 170 161 1.06 1.41
Medical -0.01 19 16 36 36 1.00 1.19
Conglomerates 0.03 5 3 8 8 1.00 1.67
Transportation -0.3 3 6 5 6 0.83 0.50
Computer and Tech -1.9 23 31 112 165 0.68 0.74
Basic Materials -0.34 9 10 13 21 0.62 0.90
Finance -0.11 38 31 71 119 0.60 1.23
Utilities -0.25 13 21 24 44 0.55 0.62
Construction -3 2 7 9 18 0.50 0.29
Aerospace -0.11 5 4 4 10 0.40 1.25
Business Service -1.24 2 11 3 16 0.19 0.18
Auto 0.99 2 3 1 8 0.13 0.67
S&P 500 -0.61 202 211 708 788 0.90 0.96

Earnings Estimate Revisions: Next Fiscal Year
The Zacks Revisions Ratio: 2012

  • Revisions ratio for full S&P 500 at 0.77, down from 0.90 from last week, back in bearish territory.
  • While better than in recent weeks, the failure of the revisions ratio to rise more significantly as activity has picked up is a very worrisome sign, the positive surprises are not translating into higher 2012 expectations.
  • Only two sectors have positive revisions ratio (above 1.0). Four sectors with more than two cuts per increase. Autos and Aerospace very weak.
  • Ratio of firms with rising estimate to falling mean estimates at 0.73, down from 0.79 last week. Still in bearish territory.
  • Total number of revisions plunging (4-week total) at 1,673, down from 2,178 last week (-21.2%). Thin samples for many sectors.
  • Increases at 726 down from 1,031 last week (-29.6%), cuts fall to 947 from 1,147 last week (-17.4%).

 

The Zacks Revisions Ratio: 2012
Sector %Ch
Next Fiscal Yr Est – 4 wks
#
Firms Up
#
Firms Down
#
Ests Up
#
Ests Down
Revisions
Ratio
Firms up/down
Industrial Products 0.41 7 8 29 15 1.93 0.88
Retail/Wholesale -1.41 27 15 177 164 1.08 1.80
Basic Materials -0.49 7 13 22 22 1.00 0.54
Consumer Discretionary -0.42 9 17 43 46 0.93 0.53
Oils and Energy -1.22 16 24 132 152 0.87 0.67
Transportation 0.16 3 6 6 7 0.86 0.50
Conglomerates -0.19 4 3 9 11 0.82 1.33
Computer and Tech -0.51 28 27 102 128 0.80 1.04
Consumer Staples -0.32 8 21 36 53 0.68 0.38
Medical -0.29 13 25 41 72 0.57 0.52
Construction -2.20 3 5 7 13 0.54 0.60
Utilities -0.41 15 20 36 72 0.50 0.75
Finance -0.27 27 43 73 148 0.49 0.63
Business Service -0.32 6 7 5 12 0.42 0.86
Aerospace -0.64 2 7 7 21 0.33 0.29
Auto -0.19 2 3 1 11 0.09 0.67
S&P 500 -0.53 177 244 726 947 0.77 0.73

Total Income and Share

  • S&P 500 earned $538.4 billion in 2009, rising to earn $788.7 billion in 2010, $904.5 billion expected in 2011.
  • The S&P 500 total earnings expectations dip below the $1 Trillion mark in 2012 at $994.0 Billion. Finance share of total earnings moves from 5.9% in 2009 to 17.9% in 2010, dip to 15.6% expected for 2011; rebound to 17.3% in 2012, but still well below 2007 peak of over 30%. Energy share also rising going from 11.9% in 2009 to 14.9% in 2011, dip to 13.8% in 2012.
  • Medical share of total earnings far exceeds market cap share (index weight), but earnings share expected to shrink from 17.3% in 2009 to 11.1% in 2012, down each year.
  • Market Cap shares of Construction, Staples, Retail, Transportation, and Business Service sectors far exceed earnings shares of any of the years from 2010 through 2012.
  • Earnings shares of Energy, Finance, Autos, Materials and Medical well above market-cap shares.
  • As a general rule, one should try to overweight sectors with rising earnings shares, underweight falling earnings shares, but also over weight sectors where earnings shares exceed market cap shares.

 

Total Income and Share
Income ($ Bill) Total
Net
Income
$ 2010
Total
Net
Income
$ 2011
Total
Net
Income
$ 2012
% Total
S&P Earn
2010
% Total
S&P Earn
2011
% Total
S&P
Earn
2012
% Total
S&P Mkt
Cap
Computer and Tech $135,462 $166,542 $181,248 17.18% 18.41% 18.24% 18.92%
Finance $141,298 $141,012 $172,279 17.92% 15.59% 17.33% 13.88%
Oils and Energy $96,418 $134,290 $136,925 12.23% 14.85% 13.78% 11.64%
Medical $98,893 $106,321 $110,488 12.54% 11.75% 11.12% 10.42%
Consumer Staples $62,398 $67,923 $73,431 7.91% 7.51% 7.39% 9.13%
Retail/Wholesale $57,913 $64,576 $72,264 7.34% 7.14% 7.27% 9.29%
Utilities $47,962 $49,939 $50,901 6.08% 5.52% 5.12% 6.33%
Basic Materials $23,943 $32,397 $35,813 3.04% 3.58% 3.60% 3.31%
Conglomerates $27,645 $29,994 $34,250 3.51% 3.32% 3.45% 3.42%
Consumer Discretionary $25,169 $30,134 $34,240 3.19% 3.33% 3.44% 3.84%
Industrial Products $16,627 $22,041 $25,985 2.11% 2.44% 2.61% 2.59%
Business Service $14,144 $16,705 $18,969 1.79% 1.85% 1.91% 2.46%
Transportation $14,270 $13,670 $16,186 1.81% 1.51% 1.63% 1.88%
Aerospace $13,553 $14,416 $15,193 1.72% 1.59% 1.53% 1.40%
Auto $11,062 $12,835 $13,128 1.40% 1.42% 1.32% 0.98%
Construction $1,911 $1,709 $2,654 0.24% 0.19% 0.27% 0.50%
S&P 500 $788,669 $904,504 $993,954 100.00% 100.00% 100.00% 100.00%

P/E Ratios

  • Trading at 14.84x 2010, 12.94x 2011 earnings, or earnings yields of 6.73% and 7.73%, respectively. P/E for 2012 at 11.77x or earnings yield of 8.45%. P/E’s significantly higher than a month ago, but still low relative to history and interest rates.
  • Earnings Yields still attractive relative to 10-year T-Note rate of 2.05%.
  • Autos only sector with single-digit P/E for both years. Energy and Finance also have single-digit P/E’s based on 2012 earnings.
  • Construction has highest P/E for all three years by wide margin.
  • S&P 500 earned $56.80 in 2009 rising to $83.18 in 2010. Currently expected to earn $95.39 in 2011 and $104.87 for 2012.

 

P/E Ratios
P/E 2009 2010 2011 2012
Auto 166.33 10.40 8.96 8.76
Finance 48.80 11.49 11.51 9.42
Oils and Energy 21.25 14.12 10.14 9.95
Aerospace 14.70 12.07 11.35 10.77
Basic Materials 25.29 16.18 11.95 10.81
Medical 13.59 12.33 11.47 11.03
Industrial Products 24.90 18.24 13.76 11.67
Conglomerates 16.08 14.47 13.34 11.68
Computer and Tech 24.04 16.34 13.29 12.21
Consumer Discretionary 21.97 17.84 14.90 13.12
Transportation 27.72 15.39 16.06 13.57
Consumer Staples 19.12 17.13 15.73 14.55
Utilities 15.35 15.45 14.84 14.56
Retail/Wholesale 21.54 18.78 16.84 15.05
Business Service 23.09 20.32 17.21 15.15
Construction NM 30.90 34.57 22.25
S&P 500 21.73 14.84 12.94 11.77

Data in this report, unless stated otherwise, is through the close on Thursday 12/08/2011.

We use the convention of referring to the next full fiscal year to be completed as 2011, not all firms are on December fiscal years, this can cause discontinuities in the data. The data is based on FY1, not based on 2011, even though I may call it 2011 in the report. All numbers, including historical ones, reflect the current composition of the S&P 500, thus some historical numbers may differ from those reported by S&P which are based on the composition of the index at the time of the reports.

Dirk van Dijk, CFA is the Chief Equity Strategist for Zacks.com. With more than 25 years investment experience he has become a popular commentator appearing in the Wall Street Journal and on CNBC. Dirk is also the Editor in charge of the market beating Zacks Strategic Investor service.

More about Zacks Strategic Investor >>

ANOTHER STRONG EARNINGS SEASON

By Dirk Van Dijk, CFA, Zacks Investment Research

Third quarter earnings season is almost over.  Total net income growth has been far higher than expected, although the median surprise and the ratio of positive surprises to disappointments is slightly below normal.  Thus, I would characterize the season as very good, but we have seen better .  We have 483, or 96.6% of the S&P 500 firms reporting so far.  The year over year growth rate for the S&P 500 (so far) is 15.60%.  That is actually well above the 12.39% growth that those same 483 firms posted in the second quarter.

However, the second quarter was distorted by some big hits to the financial sector, most notably Bank of America (BAC).  This time it reported better than expected earnings and did not have the big “write off” it did in the second quarter.  That resulted in a $12 billion swing in total net income between the second and third quarters.  If we exclude the Financials, the year over year growth rate is higher at 18.73%, but it represents a slowdown from the second quarter, when growth was 20.30%.

The final growth tally for the quarter is likely to be slightly lower than that.  The remaining 17 stocks are expected to actually post  earnings 14.41% lower than last year, down from negative 3.72% growth in the second quarter. At the beginning of earnings second quarter season, growth of 9.7% was expected; 12.2% ex-Financials.  If we combine the already reported results with the expectations, it now looks like the final growth will come in at 14.7%.

If the remaining firms surprise to the upside the way the ones that have already reported do, it is not hard to see the final growth coming in at around 15%.  The bar for the remaining firms does seem to be set pretty low.  While the percentage decline of the remaining firms looks bad, the likely impact on the total results is very low.  The total net income of the 483 is $235.43 billion, while the total expected from the 17 is just $5.16 billion.

Relative to expectations, both earnings and revenues are doing better than expected.  Then again having far more companies report positive surprises than disappointments is entirely normal.  The current ratio of 2.75 (for the 483) is marginally worse than the average experience of the last five years or so (around 3.00). The median surprise is 2.78%, slightly below “normal” (about 3.0%). Still, it is far more positive surprises than disappointments. Top line surprises started off extremely strong, but have faded.  The surprise ratio is now 1.43 for revenues with a 0.62% median surprise.  Not bad, but not terrific either. Top line growth so far has been 11.45%, and 12.17% ex financials, on both counts actually a slight acceleration from the second quarter. The remaining 44 firms are collectively expected see their top lines rise by 3.49%, below the second quarter pace of 7.55%.   All the Financial reports are in.

Expanding net margins have been one of the keys to earnings growth.  That is still the case, with reported net margins of 9.47% so far, up from 9.13% a year ago, and 9.22% in the second quarter (for those 483 firms).  However, the mix of firms that have reported so far is skewed towards higher margin firms, and the BAC effect is very big as far as the increase relative to the second quarter is concerned.  Excluding financials, net margins have come in at 8.56% up from 8.09% a year ago, down slightly from 8.57% in the second quarter.  The remaining 17 firms are expected to post net margins of 5.94%, down from 7.18% a year ago and down 6.17% in the second quarter.

Dirk van Dijk, CFA is the Chief Equity Strategist for Zacks.com. With more than 25 years investment experience he has become a popular commentator appearing in the Wall Street Journal and on CNBC. Dirk is also the Editor in charge of the market beating Zacks Strategic Investor service.

More about Zacks Strategic Investor >>

LOTS OF DATA NEXT WEEK

By Dirk Van Dijk, CFA, Zacks Investment Research

The flood of earnings reports is slowing to a trickle. Now it is mostly down to the retailers, who tend to have October, rather than September, fiscal period ends. A total of 212 firms are scheduled to report, including 27 of the S&P 500.

The firms reporting next week include: Abercrombie & Fitch (ANFAnalyst Report), Applied Materials (AMAT – Analyst Report),Dell (DELL – Analyst Report), Heinz (HNZ – Analyst Report), Home Depot (HD – Analyst Report), Lowe’s (LOW – Analyst Report),Target (TGT – Analyst Report) and Wal-Mart (WMT – Analyst Report).

The pace of economic data releases will be on the heavy side. We get both key measures of Inflation the PPI on Tuesday and the CPI on Wednesday. Tuesday also brings Retail Sales, while Wednesday brings Industrial Production and Capacity Utilization. On the housing front we get the National Asociation of Homebulders index, and Housing Starts/Building Permits.

The week finishes up with the leading economic indicators. So there will be plenty that has the potential to move the market, in addition to what ever news flows from the other side of the Atlantic.

Monday

  • Nothing of particular significance.

Tuesday

  • The Producer Price Index (PPI) is expected to fall 0.2% in September after having risen a surprisingly high 0.8% in September. Stripping out volatile food and energy prices it is expected to rise 0.1% a slight deceleration from the 0.2% pace last month. Those numbers are for finished goods. The report will also show how prices are behaving further up the production food chain at the Raw Materials and Intermediate stages of production. Those numbers tend to be much more volatile than the numbers for finished goods, but can sometimes offer clues as to the direction of finished goods prices in the future.
  • Retail Sales are expected to have risen by 0.4% in October after having been up 1.1% in August. This is a very broad-based measure of retail sales, including not just spending at the mall, but also at auto dealers and at restaurants. October was a strong month for auto sales as the supply constraints due to the Japanese disaster eased. Excluding autos, retail sales are expected to have risen by 0.2% after a rise of 0.6% in September.
  • The first of the regional mini-ISM’s comes out, the Empire State Index. This one, unlike the overall ISM, has 0 instead of 50 as the dividing line between growth and contraction. Lately it has been very weak, indicating that the manufacturing sector in New York State has been contracting. The September reading was -8.48. For October, the consensus is looking for 0.0, indicating a manufacturing sector that is dead in the water, but at least no longer contracting.

Wednesday

  • The Consumer Price Index is expected to be unchanged in October after a rise of 0.3% in September. If we strip out volatile food and energy prices, it is expected to be up just 0.1% after being up 0.2% in September. Longer-term inflation expectations are very well contained (as measured by the spreads between regular T-Notes and Inflation Indexed TIPS). I maintain that the bigger danger the economy faces is deflation, not runaway inflation. Inflation is not what investors and especially policy makers should be worried about — unemployment and slow growth is.
  • In September, Industrial Production increased by 0.2%. This is a broad measure of industrial output, including not just what the nation’s factories are producing but also the output of its mines and utility power plants as well. The utility side can often distort the overall number, as it often reflects the weather as much as it does the level of economic activity. Thus it is important to look at just the change in manufacturing output. Factory output alone rose by 0.4% in September. In October the consensus is looking for total industrial production to rise another 0.2%.
  • The Industrial Production report also includes data on Capacity Utilization, which is in my book one of the least-appreciated economic indicators out there. Like Industrial Production, the overall headline number can be distorted by weather in the utility sector, and thus it is important to look at the level of factory utilization as well. In September, overall Capacity utilization was 77.4%, up from 75.7% a year ago, and the recession lows of 67.3%, but still well below the long-term average of 80.4%. Factory utilization was 75.1%, up from 72.7% a year before and the recession low of 64.4%, but below the long-term average of 79.0%. In October, the consensus is looking for overall capacity utilization of 77.6%, up only slightly from September. I would expect a bigger increase in the headline number, but only due to a rebound from the extremely (weather) depressed utility sector, where in September the untilization rate was actually below the lowest level of the Grea Recession. Factory untilization is likely to increase by only 0.1%.
  • The National Association of Homebuilders index is expected to remain at a dismal level of 18 in October. However, September was up a sharp 4 points from August. This is a “magic 50” index, so any reading below 50 indicates that homebuilders see conditions as poor. The index has been mired in the mid-to-low teens for over two years now. In every previous recovery, residential investment has led the economy out of the swamp. This time it has been pulling us further into it, and remains one of the key reasons why the recovery is anemic.

Thursday

  • Weekly Initial Claims for Unemployment Insurance come out. They had a very nice decline early in the year, but had then been stuck just above the psychologically important 400,000 level. Last week they fell by 10,000 to 390,000, but only after the previous week had been revised upward by 3,000, so it was really more like a 7,000 decline. The consensus is looking for 400,000. I suspect an increase, but not quite that sharp and have 395,000 penciled in. The 400,000 level is important psychologically in that it has historically been the inflection point below which we tend to create enough jobs to bring down the unemployment rate. The week-to-week numbers can be very volatile, so the four-week average is the thing to focus on. Keep an eye on the prior week’s revision as well as the change from the revised number.
  • Continuing Jobless Claims have been in a downtrend of late, but the road down has been bumpy. Last week they fell by 72,000 to 3.615 million. That is down 699,000 from a year ago. I would expect a small decline this week. The consensus is looking for a bounce to 3.648 million, a small increase. Some (most?) of the longer-term decline is due to people simply exhausting their regular state benefits which run out after 26 weeks. Those, however, don’t last forever either. Federally paid extended claims rose by 43,000 last week but are down 1.281 million over the last year. Looking at just the regular continuing claims numbers is a serious mistake. They only include a little over half of the unemployed now, given the unprecedentedly high duration of unemployment figures. A better measure is the total number of people getting unemployment benefits — currently at 6.636 million — which is up 52,000 from last week (there are some timing issues, so the change in continuing and existing claims does not match the change in the total). The total number of people getting benefits is now 2.073 million below year-ago levels. What is not known is how many people have left the extended claims via the road to prosperity — finding a new job — and how many have left on the road to poverty, having simply exhausted even the extended benefits. Unless the program is renewed, all extended benefits will end in January. Make sure to look at both sets of numbers! Many of the press reports will not, but we will here at Zacks.
  • We find out if the Homebuilders’ pessimism is well founded when the data on Housing Starts are released. In September, they ran at an annual rate of only 658,000, about a quarter of the level at the peak of the bubble. However, that was a big improvement over August. They have been extraordinarily distressed for over two years now and show little sign of improvement. In some ways the low level of starts is a blessing in disguise, since it indicates that few housing units are being added to the glut of unsold homes. However, that is very cold comfort to the unemployed construction workers, a group harder hit than almost any other in the Great Recession. It is hard to see how we have a robust recovery until housing starts start to rebound significantly. The consensus is looking for starts to fall back to 603,000 in October.
  • The best leading indicator of Housing Starts is Building Permits. In September they ran at an annual rate of only 594,000. That was much lower than the starts rate, which is one reason that the starts number is likely to fall in October. In October, the consensus is looking for permits to rise to a still very low 603,000 annual rate.
  • The Philly Fed index, another regional mini-ISM, this one covering the Mid-Atlantic States, is expected to fall to 5.0 from a  reading of 8.7. Like the Empire State Index, the dividing line between growth and contraction is Zero, thus the expectation is that manufacturing activity in the Mid-Atlantic region is rising, but at a slower rate than in October.

Friday

  • The index of Leading Economic indicators is expected to increase by 0.6% after rising 0.2% in September. While this is the leading index, most of its components are already known by the time it is released, so this number does not normally have a major market impact. Indeed, the stock market itself is one of the key leading indicators, and the great run in October is one of the key reasons for the strong showing expected for October.

Potential Positive or Negative Surprises

The best indicators of firms likely to report positive surprises are a recent history of positive surprises and rising estimates going into the report. The Zacks Rank is also a good indicator of potential surprises. Similarly, a recent history of earnings disappointments, cuts in the average estimate for the quarter in the month before the report is due and a poor Zacks Rank (#4 or #5) are often red flags pointing to a potential disappointing earnings report.

In the Earnings Calendar below, $999.00 should be read as N.A.  

Potential Positive Surprises

The Limited (LTD – Analyst Report) is expected to earn $0.24 per share, up from $0.18 a year ago. Last time out it had a positive surprise of 4.35%, and over the last four weeks analysts have raised their estimates by 3.44% for the quarter. LTD is a Zacks #2 Ranked stock.

Home Depot (HD – Analyst Report) is expected to earn $0.59 per share versus EPS of $0.51 a year ago. Last time out it had a positive surprise of 4.88%, and over the last four weeks analysts have raised their estimates by 0.62% for the quarter. HD is a Zacks #2 Ranked stock.

Target (TGT – Analyst Report) is expected to earn $0.74 per share versus EPS of $0.74 a year ago. Last time out it had a positive surprise of 6.19%, and over the last four weeks analysts have raised their estimates by 0.64% for the quarter. TGT is a Zacks #2 Ranked stock.

Potential Negative Surprises

China Sunergy (CSUN – Snapshot Report) is expected to lose $0.40 per share versus EPS of $0.35 a year ago. Last time out it had a negative surprise of 13.51%, and over the last four weeks analysts have cut their estimates by 31.67% for the quarter. CSUN is a Zacks #4 Ranked stock.

Tower Semiconductor (TSEM – Analyst Report) is expected to earn $0.08 per share versus EPS of $0.11 a year ago. Last time out it had a negative surprise of 83.33%, but over the last four weeks analysts have not changed  their estimates. TSEM is a Zacks #5 Ranked stock.

Sorl Auto Parts (SORL – Snapshot Report) is expected to earn $0.18 per share versus EPS of $0.26 a year ago.  Last time out it had a negative surprise of 16.13%, and over the last four weeks analysts have cut their estimates by 10.51% for the quarter. SORL is a Zacks #4 Ranked stock.

,/table>

Company Ticker Qtr End EPS Est Year Ago
EPS
Last EPS
Surprise %
Next EPS Report Date Time Daily Price
CTRIP.COM INTL CTRP 201109 0.31 0.31 3.85 20111113 AMC $33.72
21VIANET GP-ADR VNET 201109 0.07 999 -25 20111114 AMC $8.50
ADV PHOTONIX -A API 201109 0 -0.01 133.33 20111114 $0.78
AG MORTGAGE INV MITT 201109 0.47 999 N/A 20111114 BTO $17.52
AMER CARESOURCE ANCI 201109 -0.04 0 -300 20111114 AMC $0.54
AMER MIDSTREAM AMID 201109 -0.07 999 N/A 20111114 $17.80
AROTECH CORP ARTX 201109 0.04 -0.08 -600 20111114 AMC $1.38
ASIA ENTMNT&RES AERL 201109 0.55 0.4 7.32 20111114 AMC $6.94
ASSURED GUARNTY AGO 201109 0.39 1.19 -14.12 20111114 AMC $11.65
ATHERSYS INC ATHX 201109 -0.17 -0.19 -7.69 20111114 AMC $1.39
BONA FILM-ADR BONA 201109 0.12 999 -200 20111114 AMC $4.33
CDV EQUIP CORP CVV 201109 0.11 0.03 55.56 20111114 $15.67
CHIMERA INVEST CIM 201109 0.14 0.16 N/A 20111114 AMC $2.57
CHINA CERAMICS CCCL 201109 0.65 0.84 0 20111114 $2.95
CHINA HOUSING CHLN 201109 0.08 0.14 -100 20111114 BTO $1.29
CHINA MING YANG MY 201109 0.18 0.25 -27.78 20111114 AMC $2.27
CHINA SHENGDA CPGI 201109 0.06 0.15 -14.29 20111114 BTO $0.98
CHINA TRANSINFO CTFO 201109 0.15 0.17 -8.33 20111114 BTO $3.20
CHINANET ONLINE CNET 201109 0.17 0.19 -16.67 20111114 $1.05
CONCORD MED-ADR CCM 201109 0.13 0.1 20 20111114 AMC $3.75
CORGENIX MEDICL CONX 201109 0 -0.01 N/A 20111114 AMC $0.17
CRUMBS BAKE SHP CRMB 201109 -0.1 -0.01 -600 20111114 AMC $5.02
CTI INDUSTRIES CTIB 201109 0.02 0.08 -100 20111114 BTO $5.23
CYCLACEL PHARMA CYCC 201109 -0.08 -0.11 27.27 20111114 AMC $0.64
CYTOMEDIX INC CMXI 201109 -0.02 -0.04 0 20111114 AMC $0.84
DAQO NEW ENERGY DQ 201109 0.44 0.13 12.31 20111114 BTO $2.74
DREAMS INC DRJ 201109 -0.03 -0.02 -100 20111114 AMC $2.09
DYNEGY INC DYN 201109 -0.19 -0.18 34.04 20111114 BTO $2.96
EDIETS.COM INC DIET 201109 -0.06 -0.3 30 20111114 AMC $1.09
ELONG INC-ADR LONG 201109 0.12 0.01 12.5 20111114 AMC $12.20
EXCEED CO LTD EDS 201109 0.48 0.59 38.24 20111114 AMC $5.23
FEIHE INTL INC ADY 201109 0.2 0.16 26.32 20111114 AMC $5.14
FRIENDFINDR NET FFN 201109 0.18 999 N/A 20111114 AMC $1.85
GLADSTONE CAPTL GLAD 201109 0.23 0.21 4.76 20111114 AMC $8.25
GLG LIFE TEC CP GLGL 201109 -0.2 0.07 -200 20111114 BTO $2.21
GLOBAL AXCESS GAXC 201109 0.01 0 0 20111114 BTO $0.51
GLOBAL POWER EQ GLPW 201109 0.27 0.89 16.67 20111114 AMC $26.49
GUANWEI RECYCLG GPRC 201109 0.17 0.19 13.33 20111114 $1.27
HAWAIIAN TELCOM HCOM 201109 0.6 999 6.58 20111114 BTO $14.40
HISOFT TECH-ADR HSFT 201109 0.18 0.17 0 20111114 AMC $11.48
IMRIS INC IMRS 201109 -0.05 0.02 0 20111114 AMC $3.45
INTEROIL CORP IOC 201109 0.04 0.1 207.69 20111114 AMC $48.84
ISOFTSTONE LTD ISS 201109 0.09 999 -8.33 20111114 BTO $9.96
LDK SOLAR CO LDK 201109 -0.14 0.72 -20 20111114 AMC $3.75
LIFEWAY FOODS LWAY 201109 0.04 0.05 -66.67 20111114 AMC $10.13
LOWES COS LOW 201110 0.33 0.31 1.49 20111114 BTO $22.46
MITEK SYSTEMS MITK 201109 0.01 0.01 116.67 20111114 AMC $8.17
MOTRICITY INC MOTR 201109 -0.15 0.07 -150 20111114 AMC $1.68
NEW MOUNTN FIN NMFC 201109 0.29 999 58.82 20111114 AMC $13.15
NOAH HLDGS LTD NOAH 201109 0.08 0.02 60 20111114 AMC $7.46
NUPATHE INC PATH 201109 -0.51 -0.81 4.35 20111114 AMC $2.87
PENNEY (JC) INC JCP 201110 -0.12 0.19 16.67 20111114 BTO $32.90
POWER SOL INTL PSIX 201109 0.12 999 N/A 20111114 AMC $11.30
QR ENERGY LP QRE 201109 0.29 999 -28.57 20111114 BTO $20.71
QUEPASA CORP QPSA 201109 -0.16 999 23.08 20111114 AMC $4.08
S&W SEED CO SANW 201109 -0.02 -0.04 40 20111114 BTO $4.60
SCORPIO TANKERS STNG 201109 -0.14 -0.09 -400 20111114 BTO $5.83
SIMCERE PHARMAC SCR 201109 0.15 0.15 15.38 20111114 BTO $8.55
SINOVAC BIOTECH SVA 201109 0.02 -0.01 300 20111114 BTO $2.18
SKY-MOBI LTD MOBI 201109 0.06 999 -33.33 20111114 $4.93
SORL AUTO PARTS SORL 201109 0.18 0.26 -16.13 20111114 BTO $3.41
STATE BANK FINL STBZ 201109 0.28 999 -13.33 20111114 BTO $14.54
SUNESIS PHARMA SNSS 201109 -0.19 -0.12 -20 20111114 BTO $1.24
SUTOR TECH GRP SUTR 201109 0.13 0.08 28.57 20111114 AMC $1.25
SWISHER HYGIENE SWSH 201109 0 999 0 20111114 AMC $4.01
TECHPRECISION TPCS 201109 0.03 0.04 -66.67 20111114 AMC $1.07
TENGION INC TNGN 201109 -0.27 -0.54 -110.34 20111114 AMC $0.52
THERMON GROUP THR 201109 0.15 999 53.85 20111114 BTO $15.11
TOWERSTREAM CP TWER 201109 -0.04 -0.04 0 20111114 AMC $2.54
TUDOU HOLDINGS TUDO 201109 -0.15 999 N/A 20111114 AMC $14.00
ULTRAPETROL LTD ULTR 201109 -0.03 -0.08 -185.71 20111114 AMC $2.84
URBAN OUTFITTER URBN 201110 0.32 0.43 9.37 20111114 AMC $26.17
VENTRUS BIOSCI VTUS 201109 -0.49 999 N/A 20111114 BTO $8.12
VIMPELCOM LTD VIP 201109 0.25 0.39 0 20111114 $10.87
VISIONCHINA MDA VISN 201109 0.02 0.01 200 20111114 AMC $1.58
WIDEPOINT CORP WYY 201109 0.01 0.02 -100 20111114 AMC $0.85
WOODWARD INC WWD 201109 0.55 0.47 2 20111114 AMC $34.53
ZAGG INC ZAGG 201109 0.07 0.16 0 20111114 AMC $10.92
AGILENT TECH A 201110 0.81 0.65 5.48 20111115 AMC $36.86
AMTEC SYSTEMS ASYS 201109 0.3 0.58 7.25 20111115 $9.79
AUTODESK INC ADSK 201110 0.34 0.25 2.94 20111115 AMC $32.72
AUXILIO INC AUXO 201109 -0.03 -0.01 N/A 20111115 AMC $0.90
AVATAR HOLDINGS AVTR 201109 -0.6 -0.84 -125.42 20111115 $8.75
BEAZER HOMES BZH 201109 -0.32 -0.54 -26.19 20111115 BTO $2.22
BOB EVANS FARMS BOBE 201110 0.52 0.48 18 20111115 AMC $33.19
CELLCOM ISRAEL CEL 201109 0.72 0.91 -7.69 20111115 BTO $21.10
CHINA VALVE TEC CVVT 201109 0.4 0.44 -11.76 20111115 BTO $3.17
CHINA XD PLASTC CXDC 201109 0.31 0.28 4 20111115 BTO $4.71
CONCUR TECH INC CNQR 201109 0.16 0.13 90 20111115 AMC $47.78
COURIER CORP CRRC 201109 0.19 0.35 -81.25 20111115 BTO $8.47
COVIDIEN PLC COV 201109 1.05 0.84 6.32 20111115 BTO $46.57
DELL INC DELL 201110 0.47 0.45 10.2 20111115 AMC $14.96
DICKS SPRTG GDS DKS 201110 0.26 0.22 4 20111115 BTO $38.71
GILAT SATELLITE GILT 201109 0.04 0.86 166.67 20111115 $3.67
HOLLYSYS AUTOMT HOLI 201109 0.21 0.19 -7.69 20111115 BTO $8.30
HOME DEPOT HD 201110 0.59 0.51 4.88 20111115 BTO $37.20
INERGY LP NRGY 201109 -0.21 -0.97 -68.42 20111115 $27.02
INTERXION HLDG INXN 201109 0.1 0.03 10 20111115 BTO $13.00
JACOBS ENGIN GR JEC 201109 0.73 0.61 1.43 20111115 BTO $37.89
K12 INC LRN 201109 0.25 0.07 30 20111115 BTO $33.99
LJ INTL INC JADE 201109 0.09 0.12 0 20111115 AMC $2.66
MERITOR INC MTOR 201109 0.25 0.08 -10.34 20111115 BTO $7.89
PERNIX THERAPTC PTX 201109 0.06 0.07 75 20111115 BTO $9.16
PHARMA PROD DEV PPDI 201109 0.41 0.32 7.89 20111115 AMC $33.08
PRESSURE BIOSCI PBIO 201109 -0.37 -0.26 2.86 20111115 $0.72
SAKS INC SKS 201110 0.09 0.06 37.5 20111115 BTO $10.02
STAPLES INC SPLS 201110 0.47 0.41 10 20111115 BTO $14.54
SYSWIN INC-ADS SYSW 201109 0.03 999 -42.86 20111115 AMC $1.73
TAOMEE HOLDINGS TAOM 201109 0.09 999 8.33 20111115 AMC $6.09
TELESTONE TECH TSTC 201109 0.81 1.14 94.74 20111115 BTO $7.76
TJX COS INC NEW TJX 201110 1.06 0.92 1.12 20111115 BTO $59.99
TOWER SEMICOND TSEM 201109 0.15 0.01 -83.33 20111115 BTO $0.74
TRANSDIGM GROUP TDG 201109 1.16 1 18 20111115 AMC $96.26
TRONOX INC TROX 201109 5.87 999 21.64 20111115 BTO $125.00
UNITEK GLOBAL UNTK 201109 0.08 -1.58 31.43 20111115 AMC $4.74
VANCEINFO TECH VIT 201109 0.16 0.19 -20 20111115 BTO $9.91
VARIAN SEMI VSEA 201109 0.72 0.79 3 20111115 AMC $62.93
VELTI PLC VELT 201109 -0.11 999 -266.67 20111115 BTO $7.98
WAL-MART STORES WMT 201110 0.97 0.9 0.93 20111115 BTO $58.13
ABERCROMBIE ANF 201110 0.73 0.56 20.69 20111116 BTO $55.46
ADECOAGRO SA AGRO 201109 0.1 999 N/A 20111116 $8.61
APPLD MATLS INC AMAT 201110 0.2 0.36 6.06 20111116 AMC $12.25
CASH STORE FINL CSFS 201109 0.23 0.41 -78.79 20111116 AMC $8.94
CENTRAL GARDEN CENT 201109 -0.06 -0.02 -34.04 20111116 AMC $8.50
CHINA DISTANCE DL 201109 0.06 0 0 20111116 AMC $2.65
CHINA RE IN-ADR CRIC 201109 0.1 0.07 -14.29 20111116 BTO $5.00
E-COMMRC CH-ADR DANG 201109 -0.07 0 -500 20111116 BTO $5.46
EDAP TMS SA-ADR EDAP 201109 -0.12 -0.22 -45.45 20111116 BTO $1.99
ELBIT SYSTEMS ESLT 201109 1.21 1.05 8.33 20111116 BTO $41.24
GREAT BASIN GLD GBG 201109 0.02 -0.02 -400 20111116 BTO $1.40
HOT TOPIC INC HOTT 201110 0.07 0.05 0 20111116 AMC $6.77
ITURAN LOCATION ITRN 201109 0.28 0.27 6.9 20111116 BTO $12.66
LIMITED BRANDS LTD 201110 0.24 0.18 4.35 20111116 AMC $42.31
NETAPP INC NTAP 201110 0.49 0.43 -4.35 20111116 AMC $41.89
NETEASE.COM-ADR NTES 201109 0.86 0.67 16.67 20111116 AMC $43.80
NORTHERN TECH NTIC 201108 0.24 0.2 4.55 20111116 BTO $14.75
OVERLAND STORAG OVRL 201109 -0.07 -0.59 -33.33 20111116 AMC $2.27
PENNANTPARK INV PNNT 201109 0.3 0.27 0 20111116 AMC $10.22
PETSMART INC PETM 201110 0.48 0.38 5.88 20111116 AMC $46.62
QIHOO 360 TECH QIHU 201109 0.05 999 350 20111116 AMC $18.07
SALLY BEAUTY CO SBH 201109 0.28 0.23 7.14 20111116 BTO $20.10
SPECTRUM BRANDS SPB 201109 0.59 0.25 15.79 20111116 BTO $25.62
TARGET CORP TGT 201110 0.74 0.74 6.19 20111116 BTO $51.77
TFS FINANCIAL TFSL 201109 0.03 -0.04 100 20111116 AMC $9.10
TYCO INTL LTD TYC 201109 0.86 0.74 18.06 20111116 BTO $44.61
VALUEVISION CLA VVTV 201110 -0.13 -0.17 -28.57 20111116 BTO $1.95
XUEDA EDUC-ADR XUE 201109 -0.07 -0.07 23.53 20111116 BTO $3.00
YOUKU.COM- ADR YOKU 201109 -0.04 -0.32 20 20111116 AMC $19.13
ZOLL MEDICAL CO ZOLL 201109 0.48 0.33 20 20111116 AMC $34.77
AMERICAS CAR-MT CRMT 201110 0.69 0.56 4 20111117 AMC $31.37
ARUBA NETWORKS ARUN 201110 0.03 0.02 100 20111117 AMC $23.04
ATWOOD OCEANICS ATW 201109 1.02 0.99 10.58 20111117 AMC $42.63
AUTONAVI HL-ADR AMAP 201109 0.16 0.12 11.76 20111117 BTO $12.03
BLUE COAT SYS BCSI 201110 0.07 0.29 -33.33 20111117 AMC $15.01
BUCKLE INC BKE 201110 0.81 0.73 0 20111117 BTO $42.36
CAMELOT INF-ADS CIS 201109 0.05 0.21 -47.37 20111117 BTO $2.57
CASUAL MALE RET CMRG 201110 0.02 0.01 7.69 20111117 BTO $4.02
CATO CORP A CATO 201110 0.2 0.23 3.39 20111117 $25.55
CHILDRENS PLACE PLCE 201110 1.27 1.14 2.56 20111117 BTO $46.50
CHINA NUOKANG NKBP 201109 0.07 0.07 0 20111117 AMC $3.57
CHINA SUNERGY CSUN 201109 -0.4 0.35 -111.11 20111117 BTO $0.93
CHINA XINIYA FS XNY 201109 0.19 999 25 20111117 BTO $1.84
COUNTRY STY-ADR CCSC 201109 0.11 0.15 -50 20111117 AMC $13.17
DESTINATION MTR DEST 201109 0.19 0.31 2.82 20111117 BTO $16.33
DOLBY LAB INC-A DLB 201109 0.6 0.57 3.77 20111117 AMC $28.85
DOLLAR TREE INC DLTR 201110 0.83 0.73 2.67 20111117 BTO $77.87
DONALDSON CO DCI 201110 0.79 0.68 5 20111117 BTO $65.75
FIBROCELL SCIEN FCSC 201109 -0.06 -0.09 -46.15 20111117 $0.50
FOCUS MEDIA HLD FMCN 201109 0.38 0.24 25.93 20111117 AMC $23.90
FOOT LOCKER INC FL 201110 0.39 0.33 100 20111117 AMC $22.18
GAMESTOP CORP GME 201110 0.39 0.38 4.76 20111117 BTO $24.60
GAP INC GPS 201110 0.37 0.48 2.94 20111117 AMC $19.68
GLOBAL SRCS-LTD GSOL 201109 0.09 0.06 11.11 20111117 BTO $6.38
GRIFFON CORP GFF 201109 0.11 0.12 -75 20111117 AMC $8.88
HAYNES INTL INC HAYN 201109 0.81 0.45 15.38 20111117 AMC $53.48
HELMERICH&PAYNE HP 201109 1.04 0.77 2.04 20111117 BTO $53.58
IFM INVEST-ADS CTC 201109 -0.27 -0.16 3.45 20111117 BTO $0.54
INTUIT INC INTU 201110 -0.2 -0.19 -10 20111117 AMC $52.80
JIAYUAN.COM INT DATE 201109 0.08 999 -100 20111117 BTO $9.77
MARVELL TECH GP MRVL 201110 0.35 0.41 3.13 20111117 AMC $14.48
MENTOR GRAPHICS MENT 201110 0.12 0.17 214.29 20111117 AMC $11.14
MTS SYSTEMS MTSC 201109 0.66 0.54 -8 20111117 AMC $35.00
MULTIMEDIA GAME MGAM 201109 0.03 -0.05 300 20111117 BTO $6.60
NAVIOS MARITIME NM 201109 0.14 0.19 -21.43 20111117 BTO $3.62
NEW YORK & CO NWY 201110 -0.15 -0.03 -15.38 20111117 BTO $2.56
NOAH EDUCATION NED 201109 0.02 -0.09 -1700 20111117 AMC $1.51
PANDORA MEDIA P 201110 0 999 0 20111117 AMC $14.81
PENNANTPARK FRC PFLT 201109 0.2 999 -533.33 20111117 AMC $10.35
PERRY ELLIS INT PERY 201110 0.61 0.51 175 20111117 BTO $21.93
PVH CORP PVH 201110 1.8 1.55 12.63 20111117 AMC $68.57
ROSS STORES ROST 201110 1.26 1.02 0 20111117 BTO $88.07
SALESFORCE.COM CRM 201110 0.03 0.2 133.33 20111117 AMC $127.81
SEARS HLDG CP SHLD 201110 -2.14 -1.97 -76.56 20111117 BTO $72.80
SHIP FIN INTL SFL 201109 0.4 0.46 4.44 20111117 $14.32
SHOE CARNIVAL SCVL 201110 0.78 0.7 -33.33 20111117 AMC $25.91
SMUCKER JM SJM 201110 1.4 1.38 3.7 20111117 BTO $76.93
STAGE STORES SSI 201110 -0.33 -0.18 0 20111117 BTO $13.69
STEIN MART INC SMRT 201110 -0.01 0.05 -50 20111117 BTO $6.54
WESCO AIRCRAFT WAIR 201109 0.21 999 N/A 20111117 AMC $10.35
WET SEAL INC -A WTSLA 201110 0.05 0.03 50 20111117 AMC $3.18
WILLIAMS-SONOMA WSM 201110 0.38 0.35 2.78 20111117 BTO $36.86
ANN INC ANN 201110 0.57 0.42 4.44 20111118 BTO $25.02
BRADY CORP CL A BRC 201110 0.59 0.55 -3.33 20111118 BTO $30.06
CHINA MED TECH CMED 201109 0.49 0.27 16.67 20111118 BTO $4.00
COST PLUS INC CPWM 201110 -0.37 -0.34 12.5 20111118 BTO $7.81
CYBERONICS INC CYBX 201110 0.3 0.25 7.69 20111118 BTO $28.27
HEINZ (HJ) CO HNZ 201110 0.8 0.78 2.63 20111118 BTO $53.15
HIBBET SPORTS HIBB 201110 0.51 0.44 10.53 20111118 BTO $42.44
KIRKLANDS INC KIRK 201110 0.04 0.11 -200 20111118 BTO $12.40
SIRONA DENTAL SIRO 201109 0.62 0.44 6.85 20111118 BTO $44.48
TSAKOS EGY NAVG TNP 201109 -0.37 -0.13 -117.65 20111118 BTO $6.08
WGL HLDGS INC WGL 201109 -0.35 -0.29 70 20111118 AMC $42.34

 

Dirk van Dijk, CFA is the Chief Equity Strategist for Zacks.com. With more than 25 years investment experience he has become a popular commentator appearing in the Wall Street Journal and on CNBC. Dirk is also the Editor in charge of the market beating Zacks Strategic Investor service.

 

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THE WEEK AHEAD IN EARNINGS AND ECONOMIC DATA

By Dirk Van Dijk, CFA, Zacks Investment Research

If you thought the past week was a busy one for earnings, you ain’t seen nothing yet.  This coming week will be much busier. A total of 932 firms are scheduled to report, including 189 of the S&P 500. The table at the end of this report reads like a who’s who of American Industry.

The firms reporting next week include: Aflac (AFL – Analyst Report),Altria (MO – Analyst Report), Caterpillar (CAT – Analyst Report),Chevron (CVX – Analyst Report), ConocoPhillips (COP – Analyst Report), Dow Chemical (DOW – Analyst Report), DuPont (DD -Analyst Report), Ford (F – Analyst Report), Lockheed Martin(LMT – Analyst Report) and 3M (MMM – Analyst Report). And that’s just the first half of the alphabet!

It will also be a heavy week for economic data. We have two measures of consumer sentiment: the Consumer Confidence Index and the University of Michigan Survey. We also get more insight into the housing market with the Case-Schiller Housing Price Index and the numbers on New Home Sales. Along the way, we find out about both Durable Goods orders and Personal Income and Spending. Last but not least is the biggest number of all: the first look at GDP growth in the third quarter.

Monday

  • No numbers of particular significance. The direction of the market will probably be determined by the tone of statements coming out of the first of two European Summits held over the weekend.

Tuesday

  • The Case-Schiller Home Price Index, the gold standard of housing price indexes, is likely to show a year-over-year decline of 3.50% for August. In June the decline was 4.11%. On a month-to-month basis, the index was up on a non-seasonally adjusted basis, but flat when seasonally adjusted in both May and June. Given that there are now 8.5 months worth of used home inventories on the market, when normal is about six months, I think we are going to see a continuation of home price declines for the rest of the year. That is particularly true for the more widely reported non-seasonally adjusted figures (I prefer to work off of the seasonally adjusted numbers, since there is significant seasonality in home prices). However, given very high levels of affordability due to low mortgage rates, and normal — as opposed to wildly inflated — prices relative to rents and incomes, the declines should be relatively modest. Continued weakness in used home prices is a big part of the reason that new home sales have been so weak.
  • Consumer Confidence is expected to edge up to a reading of 46.0 from 45.4 in September. That is still a very weak reading, so don’t get too excited about the increase. Since the Consumer is 71% of the economy, this should be an important indicator. Unfortunately, what consumers say in the surveys and what they actually do are often very different. Mostly it is a coincident indicator reflecting gasoline prices and the unemployment rate. Political gridlock and the debt ceiling fiasco probably played a role in the very soft reading in August. I think that it, and the similar University of Michigan Survey, are very overrated data points. Still, that is a very low level, and is consistent with the other data we have been seeing.

Wednesday

  • New Home Sales are expected to rise ever so slightly to a 300,000 rate from a super-weak 295,000 in August. That is simply a pathetic level, even if it is slightly off the record low set in January. The records go back to the Kennedy administration. If we do come in at 300,000, that is still lower than any month prior to 2010. Unlike used home sales, each new home sold represents a lot of economic activity. Thus, this is a very important report. Normally, new home sales are what lead the economy out of recessions, but they have been a huge drag this time around.
  • New Orders for Durable Goods are expected to fall 1.0% September after falling 0.1% in July. Previous months are often revised significantly for this data, and those revisions can be just as important as the current month’s data.  Much of the strength last month came from the highly volatile transportation equipment segment. Since they are so high-priced, a few orders for jetliners can really push around the total number, but the orders tend to be lumpy. Excluding transportation equipment, new orders are expected to rise 0.4% after being unchanged last month.

Thursday 

  • Weekly Initial Claims for Unemployment Insurance come out. They had a very nice decline early in they year, but have been recently in a trading range above 400,000. Last week they fell by 6,000 to 403,000, but only after the previous week had been revised upward by 5,000, so it was really more like a 1,000 decline. I would expect a small decline this week, but nothing big enough to really change the story of very weak job growth. The consensus is looking for 403,000, or no change. The 400,000 level is important psychologically in that it has historically been the inflection point, below which we tend to create enough jobs to bring down the unemployment rate. The week-to-week numbers can be very volatile, so the four-week average is the thing to focus on. Keep an eye on the prior week’s revision as well as the change from the revised number.
  • Continuing Jobless Claims have been in a downtrend of late, but the road down has been bumpy. Last week they rose by 25,000 to 3.719 million. That is down 700,000 from a year ago. I would expect a small decline this week. The consensus is looking for 3.700 million, a very small decrease. Some (most?) of the longer-term decline is due to people simply exhausting their regular state benefits which run out after 26 weeks. Those, however, don’t last forever either. Federally paid extended claims dropped by 68,000 last week to 3.485 million, and are down 1.581 million over the last year. Looking at just the regular continuing claims numbers is a serious mistake. They only include a little over half of the unemployed now, given the unprecedentedly high duration of unemployment figures. A better measure is the total number of people getting unemployment benefits — currently at 6.697 million — which is down 124,000 from last week (there are some timing issues, so the change in continuing and existing claims does not match the change in the total). The total number of people getting benefits is now 2.200 million below year-ago levels. What is not known is how many people have left the extended claims via the road to prosperity — finding a new job — and how many have left on the road to poverty, having simply exhausted even the extended benefits. Unless the program is renewed, all extended benefits will end in January. Make sure to look at both sets of numbers!  Many of the press reports will not, but we will here at Zacks.
  • We get the first look at GDP growth in the third quarter. The consensus is looking for a significant acceleration from the anemic 1.3% pace of the second quarter and the downright pathetic 0.4% pace of the first quarter. Still, even if we get the 2.2% growth that the consensus is looking for, it is not exactly an economic boom, and that rate would, if sustained, only very gradually bring down unemployment and bring the economy back towards its potential output. The consensus has been rising and I suspect that we might do somewhat better than expected, perhaps more like 2.5%. The make-up of GDP growth can be as important as the overall level. Growth that comes only from rebuilding of inventories is of very low quality and should be significantly discounted. Growth that comes from business investment in new equipment and software or from an improved trade position is of much higher quality and is what we want to see. Growth from Consumer and Government spending is in the middle, and should be welcomed at this point in the cycle, but not what we want to see leading the way over the long term. Hopefully investment in construction, both residential and non-residential, will be less of a drag on growth than it has been over the last few years.

Friday

  • Personal Income is expected to rise 0.3%, after it fell 0.1% last month. Just as important as the total amount of personal income is the source of that income. Recently, growth in income from wages and salaries has been very weak, with most of the growth we have seen coming from government transfer payments, along with rental income and higher dividends. Personal Spending is expected to rise 0.6% after rising 0.2% in August. Of course, if spending rises by more than income, the savings rate will fall. Over the long term, the economy needs a higher savings rate. A falling savings rate tends to boost the economy.
  • The University of Michigan Consumer Sentiment Index is expected to remain at its very low level of 57.5. Like the Consumer Confidence number released earlier in the week, I think this is an overrated indicator, not because of the lack of theoretical significance, but because what consumers say in the survey is often very different from what they do. Still, any increase should be welcomed.
  • The Employment Cost index for the third quarter is expected to show and increase of 0.6 versus an increase of 0.7% in the second quarter. This is a broad measure of the cost of employing someone — not just wages, but benefits as well. It has very important implications for both net margins and for cost-push inflation.

Potential Positive or Negative Surprises

The best indicators of firms likely to report positive surprises are a recent history of positive surprises and rising estimates going into the report. The Zacks Rank is also a good indicator of potential surprises. Similarly, a recent history of earnings disappointments, cuts in the average estimate for the quarter in the month before the report is due and a poor Zacks Rank (#4 or #5) are often red flags pointing to a potential disappointing earnings report.

In the Earnings Calendar below, $999.00 should be read as N.A.

Potential Positive Surprises

Celgene (CELG – Analyst Report) is expected to earn $0.86 per share, up from $0.65 a year ago. Last time out it had a positive surprise of 1.30%, and over the last four weeks analysts have raised their estimates by 0.73% for the quarter. CELG is a Zacks #1 Ranked stock.

Goodyear Tire (GT – Analyst Report) is expected to earn $0.25 per share versus EPS of $0.13 a year ago. Last time out it had a positive surprise of 140.74%, and over the last four weeks analysts have raised their estimates by 15.15% for the quarter. GT is a Zacks #2 Ranked stock.

Aflac (AFL – Analyst Report) is expected to earn $1.60 per share versus EPS of $1.45 a year ago. Last time out it had a positive surprise of 1.30%, and over the last four weeks analysts have raised their estimates by 0.94% for the quarter. AFL is a Zacks #2 Ranked stock.

Potential Negative Surprises

Owens Illinois (OI – Analyst Report) is expected to earn $0.72 per share versus EPS of $0.90 a year ago. Last time out it had a negative surprise of 4.84%, and over the last four weeks analysts have cut their estimates by 0.59% for the quarter. OI is a Zacks #5 Ranked stock.

Masco (MAS – Analyst Report) is expected to earn $0.08 per share versus EPS of $0.11 a year ago. Last time out it had a negative surprise of 37.50%, and over the last four weeks analysts have cut their estimates by 3.17% for the quarter. MAS is a Zacks #5 Ranked stock.

Sherwin Williams (SHW – Analyst Report) is expected to earn $170 per share versus EPS of $1.60 a year ago.  Last time out it had a negative surprise of 6.21%, and over the last four weeks analysts have cut their estimates by 0.34% for the quarter. SHW is a Zacks #4 Ranked stock.

Earnings Calendar

 

Company Ticker Qtr End EPS Est Year Ago
EPS
Last EPS
Surprise %
Next EPS Report Date Time Daily Price
1ST UTD BC/NO FUBC 201109 $0.05 ($0.01) 50 20111024 AMC $4.86
AARONS INC AAN 201109 $0.38 $0.32 0 20111024 AMC $27.62
ADVENT SOFTWARE ADVS 201109 $0.16 $0.13 14.29 20111024 AMC $22.42
ALBEMARLE CORP ALB 201109 $1.18 $1.02 9.82 20111024 AMC $45.44
AMGEN INC AMGN 201109 $1.26 $1.36 3.85 20111024 AMC $57.27
ANAREN INC ANEN 201109 $0.16 $0.30 15.38 20111024 AMC $20.13
ASSOC ESTATES AEC 201109 $0.28 $0.24 3.85 20111024 AMC $15.90
BANCORPSOUTH BXS 201109 $0.16 $0.13 275 20111024 AMC $10.48
BANK OF HAWAII BOH 201109 $0.82 $0.91 -5.13 20111024 BTO $39.69
BANK OF MARIN BMRC 201109 $0.79 $0.63 -11.11 20111024 BTO $34.54
BCD SEMICON-ADR BCDS 201109 $0.17 $999.00 13.04 20111024 AMC $4.49
CATERPILLAR INC CAT 201109 $1.59 $1.22 -2.82 20111024 BTO $84.26
CHIMERA INVEST CIM 201109 $0.14 $0.16 N/A 20111024 AMC $2.98
COMP TASK CTGX 201109 $0.18 $0.13 0 20111024 AMC $10.89
COVENANT TRANS CVTI 201109 ($0.10) $0.13 22.22 20111024 AMC $2.92
CRANE CO CR 201109 $0.88 $0.69 2.41 20111024 AMC $41.52
CYBEROPTICS CYBE 201109 $0.21 $0.14 5.26 20111024 AMC $7.83
EAGLE BCP INC EGBN 201109 $0.31 $0.22 0 20111024 AMC $13.00
EATON CORP ETN 201109 $1.08 $0.80 2.11 20111024 BTO $41.45
ENCORE CAP GRP ECPG 201109 $0.60 $0.49 0 20111024 AMC $25.51
ETHAN ALLEN INT ETH 201109 $0.18 $0.11 0 20111024 AMC $17.21
FIRST DEFIANCE FDEF 201109 $0.31 $0.22 86.96 20111024 AMC $13.70
FIRST INTST MT FIBK 201109 $0.23 $0.18 5 20111024 AMC $12.03
FORTINET INC FTNT 201109 $0.08 $0.09 28.57 20111024 AMC $18.22
HANCOCK HLDG CO HBHC 201109 $0.53 $0.40 20 20111024 AMC $32.11
HEALTH MGT ASSC HMA 201109 $0.17 $0.14 5.26 20111024 AMC $8.09
HEALTHSTREAM HSTM 201109 $0.05 $0.04 33.33 20111024 AMC $13.38
HEALTHWAYS INC HWAY 201109 $0.27 $0.30 -5.56 20111024 AMC $10.34
HEARTLAND FINCL HTLF 201109 $0.32 $0.34 170 20111024 AMC $16.35
HELIX EGY SOLUT HLX 201109 $0.43 $0.25 116.67 20111024 AMC $16.70
HEXCEL CORP HXL 201109 $0.27 $0.20 14.29 20111024 AMC $23.99
HUB GROUP INC-A HUBG 201109 $0.46 $0.34 0 20111024 AMC $33.18
INTERACT INTELL ININ 201109 $0.27 $0.32 -7.14 20111024 AMC $32.55
INVESCO LTD IVZ 201109 $0.41 $0.39 2.33 20111024 BTO $18.09
KAISER ALUMINUM KALU 201109 $0.62 $0.32 18.87 20111024 AMC $44.08
KIMBERLY CLARK KMB 201109 $1.26 $1.14 2.61 20111024 BTO $71.70
LANDSTAR SYSTEM LSTR 201109 $0.62 $0.49 5.08 20111024 BTO $43.69
LORILLARD CO LO 201109 $2.04 $1.81 1.49 20111024 BTO $114.34
LUXOTTICA ADR LUX 201109 $0.35 $0.29 6.25 20111024 $28.54
MASCO MAS 201109 $0.08 $0.11 -37.5 20111024 AMC $8.65
METROCORP BANCS MCBI 201109 $0.05 $0.00 225 20111024 AMC $4.65
NAVIOS MARITIME NMM 201109 $0.34 $0.38 16.13 20111024 BTO $16.21
NETFLIX INC NFLX 201109 $0.96 $0.70 13.51 20111024 AMC $111.48
OWENS & MINOR OMI 201109 $0.51 $0.50 -6.12 20111024 AMC $30.20
PETMED EXPRESS PETS 201109 $0.14 $0.22 -8.33 20111024 BTO $9.29
PLUM CREEK TMBR PCL 201109 $0.30 $0.20 -3.57 20111024 AMC $35.22
PLX TECH INC PLXT 201109 ($0.04) $0.06 0 20111024 AMC $2.98
POTLATCH CORP PCH 201109 $0.55 $0.45 0 20111024 BTO $33.42
RADIOSHACK CORP RSH 201109 $0.36 $0.37 -21.05 20111024 BTO $13.17
REINSURANCE GRP RGA 201109 $1.89 $1.72 -5.49 20111024 AMC $51.51
RENT-A-CENTER RCII 201109 $0.58 $0.62 -5.56 20111024 AMC $30.51
RESMED INC RMD 201109 $0.35 $0.36 8.33 20111024 AMC $30.23
ROPER INDS INC ROP 201109 $1.08 $0.87 4.04 20111024 BTO $76.32
RUSH ENTERPRISE RUSHB 201109 $0.39 $0.21 75 20111024 AMC $13.97
RUSH ENTRPRS-A RUSHA 201109 $0.38 $0.21 14.29 20111024 AMC $17.12
S&T BANCORP INC STBA 201109 $0.33 $0.39 71.43 20111024 BTO $19.49
SEQUANS COMM SQNS 201109 ($0.01) $999.00 -44.44 20111024 AMC $5.65
SIERRA BANCORP BSRR 201109 $0.17 $0.08 33.33 20111024 $10.11
SILICOM LIMITED SILC 201109 $0.31 $0.21 -3.45 20111024 $14.73
STAAR SURGICAL STAA 201109 $0.02 ($0.03) 100 20111024 AMC $9.41
STANCORP FNL CP SFG 201109 $0.66 $1.39 -40.2 20111024 AMC $30.57
STMICROELECTRON STM 201109 $0.11 $0.23 -51.72 20111024 AMC $7.12
TEXAS INSTRS TXN 201109 $0.57 $0.71 5.66 20111024 AMC $29.95
TUESDAY MORNING TUES 201109 ($0.13) ($0.06) 25 20111024 AMC $3.63
ULTRA CLEAN HLD UCTT 201109 $0.17 $0.29 7.14 20111024 AMC $4.85
UNISYS UIS 201109 $0.70 $0.50 1262.5 20111024 AMC $18.75
UTD STATIONERS USTR 201109 $0.80 $0.73 -10 20111024 AMC $30.30
V F CORP VFC 201109 $2.55 $2.22 9.8 20111024 BTO $131.70
VEECO INSTRS-DE VECO 201109 $1.14 $1.39 0.75 20111024 AMC $26.04
VOLTERRA SEMI VLTR 201109 $0.26 $0.32 25 20111024 AMC $21.57
WASH TR BANCORP WASH 201109 $0.46 $0.39 4.55 20111024 AMC $22.80
WAUSAU PAPER CP WPP 201109 $0.12 $0.20 0 20111024 AMC $7.48
WILLIS GP HLDGS WSH 201109 $0.37 $0.37 5.17 20111024 AMC $37.91
ZIONS BANCORP ZION 201109 $0.32 ($0.47) 1700 20111024 AMC $16.59
3M CO MMM 201109 $1.61 $1.53 0 20111025 BTO $78.68
ABAXIS INC ABAX 201109 $0.14 $0.17 -37.5 20111025 AMC $23.62
ACADIA RLTY TR AKR 201109 $0.22 $0.26 -4.17 20111025 AMC $18.90
ACCURIDE CORP ACW 201109 ($0.03) ($0.12) -50 20111025 AMC $5.53
ACE LIMITED ACE 201109 $1.79 $2.01 19.64 20111025 AMC $67.97
ACTIVE POWER ACPW 201109 ($0.01) $0.00 -100 20111025 BTO $1.17
AFFIL MANAGERS AMG 201109 $1.52 $1.50 4.27 20111025 BTO $85.93
AGCO CORP AGCO 201109 $0.75 $0.66 19.47 20111025 BTO $38.81
AK STEEL HLDG AKS 201109 $0.00 ($0.54) -37.25 20111025 BTO $8.01
ALEXANDRIA REAL ARE 201109 $1.08 $1.11 0.88 20111025 AMC $66.13
ALLIANCE FIBER AFOP 201109 $0.16 $0.23 -12.5 20111025 AMC $7.62
AMAZON.COM INC AMZN 201109 $0.24 $0.51 2.7 20111025 AMC $233.61
AMEDISYS INC AMED 201109 $0.51 $0.89 -2.9 20111025 BTO $12.69
AMER CAMPUS CTY ACC 201109 $0.32 $0.34 2.44 20111025 AMC $38.67
AMER CAP AGENCY AGNC 201109 $1.36 $1.10 N/A 20111025 AMC $27.68
AMER FINL GROUP AFG 201109 $0.85 $1.07 39.29 20111025 AMC $34.31
AMETEK INC AME 201109 $0.59 $0.49 3.57 20111025 BTO $37.67
AMSURG CORP AMSG 201109 $0.44 $0.43 0 20111025 AMC $23.89
ANIXTER INTL AXE 201109 $1.42 $1.08 0.7 20111025 BTO $48.82
APPLD INDL TECH AIT 201109 $0.56 $0.48 8.33 20111025 BTO $30.45
ARBITRON INC ARB 201109 $0.44 $0.42 22.73 20111025 BTO $36.60
ARCH CAP GP LTD ACGL 201109 $0.63 $0.85 125 20111025 AMC $34.98
ARM HOLDNGS ADR ARMH 201109 $0.10 $0.05 37.5 20111025 BTO $26.81
ASTEC INDS INC ASTE 201109 $0.51 $0.32 1.67 20111025 BTO $31.55
AU OPTRONCS-ADR AUO 201109 ($0.14) $0.00 -82.61 20111025 BTO $3.84
AUTOLIV INC ALV 201109 $1.49 $1.51 20.31 20111025 BTO $54.76
AXCELIS TECH ACLS 201109 $0.00 ($0.06) 300 20111025 AMC $1.23
B&G FOODS CL-A BGS 201109 $0.25 $0.20 8.33 20111025 AMC $18.20
BARD C R INC BCR 201109 $1.60 $1.43 0 20111025 AMC $85.49
BARRETT BUS SVS BBSI 201109 $0.41 $0.36 17.24 20111025 AMC $13.90
BERKSHIRE HILLS BHLB 201109 $0.42 $0.25 2.94 20111025 AMC $20.10
BOSTON PPTYS BXP 201109 $1.24 $1.07 4.24 20111025 AMC $90.85
BOSTON PRIV FIN BPFH 201109 $0.10 ($0.10) 1600 20111025 AMC $6.80
BOYD GAMING CP BYD 201109 $0.01 $0.02 -50 20111025 BTO $5.98
BP PLC BP 201109 $1.67 $1.75 -4.06 20111025 BTO $41.32
BRIDGE CAP HLDG BBNK 201109 $0.12 $0.09 20 20111025 AMC $10.66
BROADCOM CORP-A BRCM 201109 $0.53 $0.60 25 20111025 AMC $36.37
BUCKEYE TECH BKI 201109 $0.67 $0.34 -4.23 20111025 AMC $27.23
CABOT CORP CBT 201109 $0.57 $0.66 16.85 20111025 AMC $27.16
CAPELLA EDUCATN CPLA 201109 $0.60 $0.80 10 20111025 BTO $29.07
CARLISLE COS IN CSL 201109 $0.82 $0.75 -5.43 20111025 BTO $38.31
CARPENTER TECH CRS 201109 $0.49 $0.17 19.61 20111025 BTO $47.02
CBRE GROUP INC CBG 201109 $0.24 $0.20 -12.5 20111025 AMC $14.59
CDN NATL RY CO CNI 201109 $1.34 $1.22 3.91 20111025 AMC $72.88
CDN PAC RLWY CP 201109 $1.18 $1.18 -7.79 20111025 BTO $56.57
CELANESE CP-A CE 201109 $1.11 $0.88 17.73 20111025 BTO $37.34
CENTENE CORP CNC 201109 $0.54 $0.48 18.52 20111025 BTO $27.84
CENTER FINL CP CLFC 201109 $0.13 $0.13 -16.67 20111025 $5.12
CENTURY ALUM CO CENX 201109 $0.18 $0.03 35.71 20111025 AMC $9.39
CERADYNE INC CRDN 201109 $0.73 $0.18 -7.14 20111025 BTO $27.43
CH ROBINSON WWD CHRW 201109 $0.70 $0.62 -2.9 20111025 AMC $73.64
CHEMED CORP CHE 201109 $1.07 $0.97 -5.61 20111025 AMC $51.30
CHEMICAL FINL CHFC 201109 $0.36 $0.32 21.21 20111025 $17.69
CHICAGO BRIDGE CBI 201109 $0.65 $0.52 5.08 20111025 AMC $33.74
CIT GROUP CIT 201109 ($0.18) $0.66 7.69 20111025 BTO $34.13
CNO FINL GRP CNO 201109 $0.17 $0.16 11.11 20111025 AMC $5.68
COACH INC COH 201109 $0.70 $0.63 4.62 20111025 BTO $59.02
COLUMBIA SPORTS COLM 201109 $1.60 $1.53 16.67 20111025 BTO $48.37
COMMNTY BK SYS CBU 201109 $0.54 $0.51 14.29 20111025 AMC $25.42
CONCEPTUS INC CPTS 201109 $0.02 $0.10 200 20111025 AMC $11.36
CROWN CASTLE CCI 201109 $0.12 $0.13 -10 20111025 AMC $42.69
CTS CORP CTS 201109 $0.17 $0.20 0 20111025 AMC $9.61
CUMMINS INC CMI 201109 $2.25 $1.33 19.9 20111025 BTO $91.84
CYNOSURE INC-A CYNO 201109 ($0.09) ($0.04) 66.67 20111025 BTO $11.56
DDI CORP DDIC 201109 $0.25 $0.31 -18.75 20111025 AMC $8.68
DELPHI FINL GRP DFG 201109 $0.88 $0.86 -5.49 20111025 AMC $24.42
DELTA AIR LINES DAL 201109 $0.91 $1.10 -2.27 20111025 BTO $8.70
DEVRY INC DV 201109 $0.96 $1.03 4.85 20111025 AMC $43.90
DHT HOLDINGS DHT 201109 $0.05 $0.07 0 20111025 AMC $1.80
DIGIMARC CORP DMRC 201109 $0.13 ($0.21) 400 20111025 AMC $25.72
DORMAN PRODUCTS DORM 201109 $0.76 $0.71 -4.11 20111025 BTO $33.56
DREAMWORKS ANIM DWA 201109 $0.20 $0.47 -4.76 20111025 AMC $18.44
DST SYSTEMS DST 201109 $0.99 $1.03 -0.94 20111025 AMC $46.24
DU PONT (EI) DE DD 201109 $0.56 $0.40 3.01 20111025 BTO $44.13
ECOLAB INC ECL 201109 $0.75 $0.67 0 20111025 BTO $53.20
EHEALTH INC EHTH 201109 $0.03 $0.12 100 20111025 AMC $14.43
EXAR CORP EXAR 201109 $0.03 ($0.03) 100 20111025 AMC $5.80
EXCEL MARITIME EXM 201109 ($0.20) $0.11 12.5 20111025 AMC $3.20
EXPRESS SCRIPTS ESRX 201109 $0.78 $0.65 0 20111025 AMC $38.42
F5 NETWORKS INC FFIV 201109 $0.77 $0.60 8.45 20111025 AMC $86.72
FIRST MERCHANTS FRME 201109 ($0.25) $0.02 12.5 20111025 $7.55
FIRSTMERIT CORP FMER 201109 $0.27 $0.27 -3.57 20111025 BTO $12.73
FLAGSTAR BANCP FBC 201109 ($0.03) ($0.15) -250 20111025 AMC $0.79
FMC TECH INC FTI 201109 $0.46 $0.33 0 20111025 AMC $42.59
FOSTER LB CO FSTR 201109 $0.74 $0.63 -8.96 20111025 BTO $24.27
GALLAGHER ARTHU AJG 201109 $0.44 $0.44 0 20111025 AMC $29.11
GETTY REALTY CP GTY 201109 $0.60 $0.45 -3.57 20111025 AMC $15.33
GRACE (WR) NEW GRA 201109 $1.06 $0.75 24.72 20111025 BTO $38.33
GROUP 1 AUTO GPI 201109 $0.99 $0.84 30.49 20111025 BTO $41.82
HATTERAS FIN CP HTS 201109 $1.02 $1.11 N/A 20111025 AMC $24.78
HEIDRICK & STRG HSII 201109 $0.32 $0.08 95.24 20111025 BTO $17.04
HUMAN GENOME HGSI 201109 ($0.39) ($0.22) 0 20111025 AMC $13.30
II-VI INCORP IIVI 201109 $0.32 $0.29 -2.86 20111025 BTO $19.37
ILL TOOL WORKS ITW 201109 $0.98 $0.83 -5.88 20111025 BTO $46.53
ILLUMINA INC ILMN 201109 $0.23 $0.30 5.56 20111025 AMC $26.90
IMATION CORP IMN 201109 ($0.03) $0.02 50 20111025 BTO $7.00
INSITUFORM TE-A INSU 201109 $0.25 $0.48 -4.76 20111025 AMC $13.80
IROBOT CORP IRBT 201109 $0.26 $0.18 38.1 20111025 AMC $27.96
JOURNAL COMM-A JRN 201109 $0.04 $0.11 -9.09 20111025 BTO $3.72
KONA GRILL INC KONA 201109 $0.05 ($0.05) 175 20111025 AMC $5.90
LCA-VISION INC LCAV 201109 ($0.20) ($0.36) -36.36 20111025 BTO $2.35
LENDER PROC SVC LPS 201109 $0.54 $0.89 1.82 20111025 AMC $15.27
LENNOX INTL INC LII 201109 $0.77 $0.83 -23.64 20111025 BTO $27.95
LEXMARK INTL LXK 201109 $1.02 $1.09 33.33 20111025 BTO $28.71
LIBERTY PPTY TR LRY 201109 $0.64 $0.69 0 20111025 BTO $28.96
LIFE TECHNOLOGS LIFE 201109 $0.88 $0.87 -5.32 20111025 AMC $37.68
LODGENET INTERA LNET 201109 ($0.04) ($0.12) 15 20111025 AMC $1.92
MANITOWOC INC MTW 201109 $0.17 $0.01 -11.11 20111025 AMC $8.10
MASIMO CORP MASI 201109 $0.27 $0.27 0 20111025 AMC $22.11
MATTSON TECH MTSN 201109 ($0.09) ($0.13) 0 20111025 AMC $1.43
MCKESSON CORP MCK 201109 $1.39 $1.03 11.4 20111025 AMC $72.85
MERCURY COMPUTR MRCY 201109 $0.11 $0.16 7.69 20111025 AMC $13.67
MERIT MEDICAL MMSI 201109 $0.18 $0.15 0 20111025 AMC $12.84
MICROVISION INC MVIS 201109 ($0.06) ($0.13) -28.57 20111025 BTO $0.75
MIDSOUTH BANCRP MSL 201109 $0.10 $0.09 0 20111025 AMC $12.10
MOLEX INC MOLX 201109 $0.42 $0.45 -4.35 20111025 BTO $21.94
MOLINA HLTHCR MOH 201109 $0.39 $0.38 5.56 20111025 AMC $15.87
NABORS IND NBR 201109 $0.40 $0.29 -8 20111025 AMC $15.21
NARA BCP INC NARA 201109 $0.16 $0.11 0 20111025 $6.63
NATL OILWELL VR NOV 201109 $1.17 $0.97 12.87 20111025 BTO $65.13
NOVARTIS AG-ADR NVS 201109 $1.48 $1.36 2.08 20111025 BTO $57.98
NU SKIN ENTERP NUS 201109 $0.61 $0.55 10.17 20111025 BTO $44.17
OFFICE DEPOT ODP 201109 $0.02 $0.03 50 20111025 BTO $2.15
OMNICARE INC OCR 201109 $0.52 $0.52 2.04 20111025 BTO $25.83
ORIENTAL FINL OFG 201109 $0.28 ($0.67) 143.48 20111025 BTO $10.54
OSI SYSTEMS INC OSIS 201109 $0.20 $0.19 3.13 20111025 BTO $41.34
PACCAR INC PCAR 201109 $0.70 $0.33 -4.41 20111025 BTO $40.01
PANERA BREAD CO PNRA 201109 $0.94 $0.75 0.85 20111025 AMC $105.85
PEABODY ENERGY BTU 201109 $0.89 $0.99 6.73 20111025 BTO $38.17
PENN VA RESRC PVR 201109 $0.40 $0.25 -11.11 20111025 AMC $25.88
PERVASIVE SOFTW PVSW 201109 $0.01 $0.03 33.33 20111025 AMC $6.16
POLYONE CORP POL 201109 $0.26 $0.28 10.71 20111025 BTO $11.28
PRIVATEBANCORP PVTB 201109 $0.07 $0.06 14.29 20111025 BTO $8.81
PROGRESSV WASTE BIN 201109 $0.32 $0.24 3.33 20111025 AMC $21.77
QEP RESOURCES QEP 201109 $0.38 $0.32 27.27 20111025 AMC $31.73
QUAKER CHEMICAL KWR 201109 $0.77 $0.76 5.33 20111025 AMC $29.95
QUEST DIAGNOSTC DGX 201109 $1.11 $1.05 0 20111025 BTO $48.80
QUESTAR STR 201109 $0.17 $0.16 10 20111025 AMC $19.31
QUESTCOR PHARMA QCOR 201109 $0.26 $0.18 16.67 20111025 AMC $32.58
QUIDEL CORP QDEL 201109 ($0.05) ($0.06) 11.11 20111025 AMC $15.91
RAILAMERICA INC RA 201109 $0.22 $0.18 0 20111025 AMC $13.68
RAMCO-GERSHENSN RPT 201109 $0.24 $0.27 18.18 20111025 AMC $8.59
RANGE RESOURCES RRC 201109 $0.24 $0.13 125 20111025 AMC $72.63
RAYONIER INC RYN 201109 $0.54 $0.51 -8.22 20111025 BTO $40.04
REGIONS FINL CP RF 201109 $0.04 ($0.17) 111.11 20111025 BTO $3.69
REYNOLDS AMER RAI 201109 $0.73 $0.68 -4.29 20111025 BTO $39.12
RF MICRO DEVICE RFMD 201109 $0.08 $0.16 20 20111025 AMC $7.04
RIGHTNOW TECH RNOW 201109 $0.00 $0.09 500 20111025 BTO $35.66
ROBT HALF INTL RHI 201109 $0.28 $0.14 13.64 20111025 AMC $24.47
RYDER SYS R 201109 $1.02 $0.76 2.6 20111025 BTO $46.10
SANGAMO BIOSCI SGMO 201109 ($0.16) ($0.19) -25 20111025 AMC $3.27
SEABRIGHT INSUR SBX 201109 $0.02 $0.07 -1975 20111025 AMC $6.58
SHARPS COMPLIAN SMED 201109 ($0.03) ($0.03) 25 20111025 BTO $4.55
SHERWIN WILLIAM SHW 201109 $1.70 $1.60 -6.21 20111025 BTO $79.52
SIGMA ALDRICH SIAL 201109 $0.91 $0.83 1.09 20111025 BTO $65.49
SIGNATURE BANK SBNY 201109 $0.80 $0.66 10.13 20111025 BTO $50.71
SILICON IMAGE SIMG 201109 $0.02 $0.12 200 20111025 AMC $6.21
SIMON PROPERTY SPG 201109 $1.67 $1.04 4.43 20111025 BTO $116.74
SOCKET MOBILE SCKT 201109 ($0.05) ($0.20) 12.5 20111025 AMC $2.28
SONIC AUTOMOTVE SAH 201109 $0.31 $0.27 2.78 20111025 BTO $13.48
SONOSITE INC SONO 201109 $0.06 $0.18 -233.33 20111025 AMC $33.40
STERLING FIN WA STSA 201109 $0.11 $1.32 100 20111025 AMC $13.45
SUN CMNTYS INC SUI 201109 $0.75 $0.69 -101.56 20111025 BTO $36.57
SUNOCO LOGISTIC SXL 201109 $1.60 $1.64 83.21 20111025 AMC $96.36
SUPER MICRO COM SMCI 201109 $0.21 $0.19 0 20111025 AMC $14.42
SUPERTEX INC SUPX 201109 $0.11 $0.29 -7.14 20111025 AMC $18.18
T ROWE PRICE TROW 201109 $0.74 $0.65 -1.3 20111025 BTO $52.78
TAL EDUCATN-ADR XRS 201108 $0.13 $999.00 50 20111025 BTO $9.03
TANGER FACT OUT SKT 201109 $0.37 $0.34 -3.03 20111025 AMC $27.00
TD AMERITRADE AMTD 201109 $0.30 $0.20 -6.9 20111025 BTO $15.56
TECHNE CORP TECH 201109 $0.82 $0.71 -2.56 20111025 BTO $70.88
TELEFLEX INC TFX 201109 $0.97 $1.11 -1.05 20111025 BTO $55.34
TELLABS INC TLAB 201109 ($0.02) $0.16 0 20111025 BTO $4.30
TENNANT CO TNC 201109 $0.51 $0.38 19.15 20111025 BTO $37.13
TOTAL SYS SVC TSS 201109 $0.29 $0.25 3.7 20111025 AMC $18.50
TRINITY INDS IN TRN 201109 $0.41 $0.29 -2.63 20111025 AMC $26.84
TRUSTMARK CP TRMK 201109 $0.41 $0.40 7.69 20111025 AMC $21.49
TWIN DISC TWIN 201109 $0.44 $0.24 22.22 20111025 BTO $26.63
UBS AG UBS 201109 ($0.19) $0.41 -26.09 20111025 BTO $11.99
ULTIMATE SOFTWR ULTI 201109 $0.09 $0.04 -50 20111025 AMC $52.23
UNDER ARMOUR-A UA 201109 $0.83 $0.68 33.33 20111025 BTO $71.67
USANA HLTH SCI USNA 201109 $0.75 $0.79 10 20111025 AMC $30.03
UTD PARCEL SRVC UPS 201109 $1.05 $0.93 0.96 20111025 BTO $69.20
UTD STATES STL X 201109 $0.55 ($0.35) 5.56 20111025 BTO $22.78
VASCULAR SOLUTN VASC 201109 $0.20 $0.09 8.33 20111025 AMC $11.61
VOCUS INC VOCS 201109 $0.03 $0.05 20 20111025 AMC $18.61
WABTECH WAB 201109 $0.88 $0.63 10.59 20111025 BTO $59.04
WADDELL&REED -A WDR 201109 $0.51 $0.47 1.75 20111025 BTO $24.84
WATERS CORP WAT 201109 $1.13 $0.98 -5.26 20111025 BTO $77.72
WEATHERFORD INT WFT 201109 $0.26 $0.18 13.33 20111025 BTO $14.74
WEBSENSE INC WBSN 201109 $0.32 $0.25 -14.29 20111025 AMC $18.26
WESBANCO INC WSBC 201109 $0.45 $0.34 18.42 20111025 AMC $19.72
WESTERN UNION WU 201109 $0.39 $0.37 13.51 20111025 AMC $16.70
WILSHIRE BCP WIBC 201109 $0.04 $0.14 157.14 20111025 BTO $2.83
WINTRUST FINL WTFC 201109 $0.56 $0.47 -13.79 20111025 AMC $28.92
XEROX CORP XRX 201109 $0.25 $0.22 12.5 20111025 BTO $7.61
ZIX CORP ZIXI 201109 $0.04 $0.03 33.33 20111025 AMC $2.79
ACCO BRANDS CP ABD 201109 $0.22 $0.18 87.5 20111026 BTO $5.44
ACXIOM CORP ACXM 201109 $0.17 $0.16 0 20111026 BTO $11.26
ADV AMER CASH AEA 201109 $0.21 $0.18 0 20111026 AMC $7.64
AFLAC INC AFL 201109 $1.60 $1.45 1.3 20111026 AMC $41.37
AGNICO EAGLE AEM 201109 $0.71 $0.29 -14.58 20111026 AMC $43.65
AKAMAI TECH AKAM 201109 $0.26 $0.23 3.7 20111026 AMC $23.48
ALERE INC ALR 201109 $0.52 $0.54 3.92 20111026 BTO $20.60
ALLEGHENY TECH ATI 201109 $0.61 $0.05 -4.11 20111026 BTO $38.72
ALLEGIANT TRAVL ALGT 201109 $0.46 $0.67 5.08 20111026 AMC $50.40
ALLERGAN INC AGN 201109 $0.90 $0.78 1.05 20111026 BTO $86.58
ALLIANCE HEALTH AIQ 201109 ($0.09) $0.00 -50 20111026 AMC $1.13
ALLIANCEBERNSTN AB 201109 $0.27 $0.36 -12.5 20111026 BTO $14.24
AMBASSADORS GRP EPAX 201109 $0.40 $0.37 -3.7 20111026 AMC $5.97
AMER CAP MTGE MTGE 201109 $0.22 $999.00 N/A 20111026 AMC $16.06
AMER ELEC PWR AEP 201109 $1.13 $1.15 -3.95 20111026 BTO $38.96
AMER RAILCAR ARII 201109 $0.10 ($0.29) 125 20111026 AMC $19.67
AMERIPRISE FINL AMP 201109 $1.24 $1.37 -1.5 20111026 AMC $41.70
AMPCO-PITTSBRGH AP 201109 $0.79 $0.73 25.71 20111026 $22.28
ANADIGICS CORP ANAD 201109 ($0.20) $0.03 10 20111026 BTO $2.44
ANCESTRY.COM ACOM 201109 $0.35 $0.24 10 20111026 AMC $22.21
APTARGROUP INC ATR 201109 $0.74 $0.68 -1.33 20111026 AMC $47.95
ARRIS GROUP INC ARRS 201109 $0.18 $0.16 50 20111026 AMC $11.08
ARROW ELECTRONI ARW 201109 $1.18 $1.08 0 20111026 BTO $31.18
ASBURY AUTO GRP ABG 201109 $0.46 $0.42 18.6 20111026 BTO $19.40
ASSURANT INC AIZ 201109 $0.82 $1.27 -13.64 20111026 AMC $38.48
AUTOMATIC DATA ADP 201109 $0.61 $0.56 0 20111026 BTO $51.16
AVERY DENNISON AVY 201109 $0.59 $0.62 4 20111026 BTO $25.55
AVX CORP AVX 201109 $0.33 $0.40 2.56 20111026 BTO $12.29
AXT INC AXTI 201109 $0.19 $0.13 50 20111026 AMC $5.23
BALLY TECH INC BYI 201109 $0.43 $0.40 1.82 20111026 AMC $31.80
BE AEROSPACE BEAV 201109 $0.55 $0.41 5.88 20111026 BTO $34.49
BEMIS BMS 201109 $0.58 $0.57 2 20111026 BTO $30.72
BERKLEY (WR) CP WRB 201109 $0.39 $0.67 6.98 20111026 AMC $31.72
BMC SOFTWARE BMC 201109 $0.71 $0.71 5.26 20111026 AMC $37.72
BOEING CO BA 201109 $1.11 $1.12 28.87 20111026 BTO $62.49
BOK FINL CORP BOKF 201109 $1.05 $0.94 2.04 20111026 $49.14
BRANDYWINE RT BDN 201109 $0.38 $0.32 3.23 20111026 AMC $8.09
BRINKER INTL EAT 201109 $0.27 $0.21 2.13 20111026 BTO $22.30
CA INC CA 201109 $0.47 $0.48 6.38 20111026 AMC $21.33
CABOT OIL & GAS COG 201109 $0.32 $0.31 25 20111026 AMC $68.87
CADENCE DESIGN CDNS 201109 $0.09 $0.09 0 20111026 AMC $9.91
CALIF WATER SVC CWT 201109 $0.61 $0.49 16 20111026 AMC $18.00
CAPSTEAD MTG CMO 201109 $0.45 $0.27 N/A 20111026 AMC $11.62
CBIZ INC CBZ 201109 $0.11 $0.11 16.67 20111026 BTO $6.67
CELADON GROUP CGI 201109 $0.23 $0.20 26.32 20111026 AMC $10.41
CENTL EUR MEDIA CETV 201109 ($0.50) $0.05 116.67 20111026 $9.93
CHARM COMM-ADR CHRM 201109 $0.33 $0.27 -13.33 20111026 AMC $8.69
CHOICE HTL INTL CHH 201109 $0.60 $0.68 2.22 20111026 AMC $32.70
CHURCHILL DOWNS CHDN 201109 $0.31 $0.22 10.28 20111026 AMC $42.12
COMML VEHICLE CVGI 201109 $0.21 $0.04 -13.04 20111026 AMC $8.53
COMMNTY HLTH SY CYH 201109 $0.79 $0.76 2.53 20111026 AMC $17.98
COMPASS MINERLS CMP 201109 $0.64 $0.58 -12.5 20111026 AMC $70.25
COMPLETE PRODUC CPX 201109 $0.78 $0.42 7.81 20111026 BTO $31.24
CONOCOPHILLIPS COP 201109 $2.15 $1.50 9.55 20111026 BTO $70.27
CORNING INC GLW 201109 $0.42 $0.51 2.13 20111026 BTO $13.18
COSTAMARE INC CMRE 201109 $0.47 $0.52 0 20111026 AMC $11.88
COSTAR GRP INC CSGP 201109 $0.00 $0.16 666.67 20111026 AMC $54.61
CROSS(AT)-A ATX 201109 $0.16 $0.13 9.09 20111026 AMC $11.90
CULLEN FROST BK CFR 201109 $0.89 $0.90 4.6 20111026 BTO $47.61
DELTEK INC PROJ 201109 $0.06 $0.02 0 20111026 AMC $6.62
DOLE FOOD CO DOLE 201109 ($0.10) $0.35 48.48 20111026 AMC $9.74
DR PEPPER SNAPL DPS 201109 $0.70 $0.60 0 20111026 BTO $39.44
DXP ENTERPRISES DXPE 201109 $0.52 $0.36 8.7 20111026 AMC $20.47
EDUCATION MANAG EDMC 201109 $0.21 $0.25 3.7 20111026 AMC $18.06
ELECTRO SCI IND ESIO 201109 $0.29 ($0.01) -11.11 20111026 AMC $12.65
ENCORE WIRE CP WIRE 201109 $0.32 $0.22 -18.37 20111026 AMC $23.25
ENERGEN CORP EGN 201109 $0.76 $0.73 12.82 20111026 AMC $47.22
ENTEGRIS INC ENTG 201109 $0.19 $0.18 0 20111026 AMC $7.73
EQUIFAX INC EFX 201109 $0.64 $0.60 1.67 20111026 AMC $33.31
EQUINIX INC EQIX 201109 $0.44 $0.27 36.17 20111026 AMC $94.14
EQUITY RESIDENT EQR 201109 $0.62 $0.55 0 20111026 AMC $54.60
EURONET WORLDWD EEFT 201109 $0.32 $0.47 16.13 20111026 BTO $17.29
EVEREST RE LTD RE 201109 $2.00 $2.67 0.82 20111026 AMC $82.65
EXACT SCIENCES EXAS 201109 ($0.15) ($0.08) -18.18 20111026 BTO $7.77
EXELON CORP EXC 201109 $1.09 $1.11 8.25 20111026 BTO $42.72
FAMOUS DAVES DAVE 201109 $0.17 $0.19 3.57 20111026 AMC $8.75
FINANCIAL INST FISI 201109 $0.40 $0.43 0 20111026 $15.69
FIRST COMM BCSH FCBC 201109 $0.24 $0.37 14.81 20111026 AMC $11.42
FIRST INDL RLTY FR 201109 $0.21 $0.34 15 20111026 AMC $8.95
FIRST MIDWST BK FMBI 201109 $0.12 $0.00 22.22 20111026 BTO $9.16
FIRSTSERVICE CP FSRV 201109 $0.81 $0.61 -12.96 20111026 BTO $25.77
FORD MOTOR CO F 201109 $0.45 $0.48 8.33 20111026 BTO $11.70
FOX CHASE BANCP FXCB 201109 $0.10 $0.05 28.57 20111026 AMC $12.74
GENL DYNAMICS GD 201109 $1.77 $1.70 3.47 20111026 BTO $63.15
GENL MARITIME GMR 201109 ($0.28) ($0.30) -26.92 20111026 AMC $0.25
GLAXOSMITHKLINE GSK 201109 $0.90 $0.87 5.19 20111026 $43.97
GOLDCORP INC GG 201109 $0.55 $0.31 -13.46 20111026 AMC $44.37
GRACO INC GGG 201109 $0.57 $0.50 -8.96 20111026 AMC $38.36
GRUPO TMM SAB TMM 201109 ($0.09) ($0.27) -87.5 20111026 AMC $1.55
HANESBRANDS INC HBI 201109 $0.82 $0.63 0 20111026 BTO $26.25
HANGER ORTHOPED HGR 201109 $0.45 $0.37 0 20111026 AMC $20.38
HARRIS CORP HRS 201109 $1.05 $1.28 0.81 20111026 AMC $36.22
HESS CORP HES 201109 $1.40 $1.31 -9.64 20111026 BTO $58.81
HILL-ROM HLDGS HRC 201109 $0.70 $0.67 -12.96 20111026 AMC $31.48
HORACE MANN EDS HMN 201109 $0.31 $0.30 -85.71 20111026 AMC $11.79
HOSPIRA INC HSP 201109 $0.66 $0.74 20.51 20111026 BTO $28.67
HUDSON CITY BCP HCBK 201109 $0.18 $0.25 5.56 20111026 BTO $6.05
HUDSON VLY HLDG HVB 201109 $0.39 $0.23 50 20111026 BTO $18.87
IBERIABANK CORP IBKC 201109 $0.57 $0.56 -37.74 20111026 AMC $49.60
ICAD INC ICAD 201109 ($0.07) ($0.03) 0 20111026 AMC $0.62
ICONIX BRAND GP ICON 201109 $0.40 $0.40 0 20111026 BTO $16.49
INPHI CORP IPHI 201109 ($0.04) $999.00 -11.11 20111026 AMC $9.64
INTEGR SILI SOL ISSI 201109 $0.25 $0.43 20 20111026 AMC $8.03
INTERDIGITL INC IDCC 201109 $0.41 $0.79 2.78 20111026 AMC $48.15
INTERFACE INC A IFSIA 201109 $0.24 $0.19 -4.76 20111026 AMC $13.53
INTERSIL CORP ISIL 201109 $0.08 $0.28 0 20111026 AMC $11.37
INVENTURE FOODS SNAK 201109 $0.03 $0.07 0 20111026 BTO $3.90
ITC HOLDINGS CP ITC 201109 $0.83 $0.75 2.47 20111026 AMC $71.74
ITRON INC ITRI 201109 $1.05 $1.06 15.38 20111026 BTO $31.09
JARDEN CORP JAH 201109 $1.10 $0.96 1.14 20111026 AMC $31.78
JETBLUE AIRWAYS JBLU 201109 $0.13 $0.18 -11.11 20111026 BTO $4.36
JMP GROUP INC JMP 201109 $0.11 $0.13 42.86 20111026 BTO $6.61
JONES GROUP INC JNY 201109 $0.45 $0.55 32 20111026 BTO $11.23
KADANT INC KAI 201109 $0.41 $0.30 16.98 20111026 AMC $16.88
KIRBY CORP KEX 201109 $0.92 $0.57 4.05 20111026 AMC $57.79
KNIGHT TRANSN KNX 201109 $0.21 $0.20 5.26 20111026 AMC $14.71
KVH INDUSTRIES KVHI 201109 $0.05 $0.11 -83.33 20111026 BTO $7.63
LAN CHILE-ADR LFL 201109 $0.23 $0.31 -64.29 20111026 BTO $22.15
LECROY CORP LCRY 201109 $0.14 ($0.07) 700 20111026 BTO $8.34
LITHIA MOTORS LAD 201109 $0.48 $0.37 57.14 20111026 BTO $18.24
LITTLEFIELD CP LTFD 201109 ($0.02) ($0.01) 0 20111026 $0.50
LOCKHEED MARTIN LMT 201109 $1.81 $1.55 6.19 20111026 BTO $75.70
LOGITECH INTL LOGI 201109 $0.09 $0.23 -950 20111026 AMC $8.20
LOGMEIN INC LOGM 201109 $0.11 $0.17 0 20111026 AMC $34.92
LOOPNET INC LOOP 201109 $0.06 $0.06 40 20111026 AMC $17.54
LPL INVESTMENT LPLA 201109 $0.44 $0.40 0 20111026 BTO $26.82
LSI CORP LSI 201109 $0.12 $0.10 -12.5 20111026 AMC $5.50
MAGNACHIP SEMI MX 201109 $0.40 $0.21 14.89 20111026 AMC $6.01
MARINE PRODUCTS MPX 201109 $0.02 $0.03 -25 20111026 BTO $4.31
MARKETAXESS HLD MKTX 201109 $0.28 $0.22 15.38 20111026 BTO $26.22
MEADWESTVACO CP MWV 201109 $0.65 $0.63 0 20111026 BTO $26.95
MEDCO HLTH SOL MHS 201109 $1.05 $0.91 2.13 20111026 BTO $47.24
MEDICINES CO MDCO 201109 $0.19 $0.40 5 20111026 BTO $18.47
MELLANOX TECH MLNX 201109 $0.13 $0.10 44.44 20111026 AMC $31.81
MEREDITH CORP MDP 201109 $0.46 $0.56 3.08 20111026 BTO $23.51
MERU NETWORKS MERU 201109 ($0.29) ($0.05) 17.65 20111026 AMC $6.33
METHANEX CORP MEOH 201109 $0.61 $0.11 -2.27 20111026 AMC $24.62
MONTPELIER RE MRH 201109 ($0.23) $0.86 -82.22 20111026 AMC $18.29
MSC INDL DIRECT MSM 201108 $0.86 $0.70 3.19 20111026 BTO $65.62
MYLAN INC MYL 201109 $0.51 $0.43 15.56 20111026 BTO $17.38
NASDAQ OMX GRP NDAQ 201109 $0.67 $0.50 3.33 20111026 BTO $25.10
NATL INSTRS CP NATI 201109 $0.22 $0.24 -4 20111026 AMC $24.77
NEWPORT CORP NEWP 201109 $0.33 $0.34 5.41 20111026 AMC $11.65
NORFOLK SOUTHRN NSC 201109 $1.42 $1.19 6.98 20111026 AMC $68.79
NORTHROP GRUMMN NOC 201109 $1.68 $1.64 -5.36 20111026 BTO $54.11
NORTHWESTERN CP NWE 201109 $0.42 $0.40 -3.23 20111026 BTO $34.17
NOVELLUS SYS NVLS 201109 $0.68 $0.88 3.95 20111026 AMC $31.12
NOVO-NORDISK AS NVO 201109 $1.33 $1.15 -3.5 20111026 $98.65
O REILLY AUTO ORLY 201109 $1.00 $0.86 0 20111026 AMC $70.74
OCEANEERING INT OII 201109 $0.57 $0.55 8.33 20111026 AMC $41.84
OPEN TEXT CORP OTEX 201109 $0.91 $0.82 -6.54 20111026 AMC $51.54
ORCHIDS PAPER TIS 201109 $0.20 $0.18 6.67 20111026 AMC $11.88
OWENS CORNING OC 201109 $0.77 $0.35 3.39 20111026 BTO $24.61
OWENS-ILLINOIS OI 201109 $0.72 $0.90 -4.84 20111026 AMC $18.81
PAC ETHANOL INC PEIX 201109 $0.02 ($1.12) N/A 20111026 AMC $0.30
PARAMETRIC TECH PMTC 201109 $0.36 $0.23 -8.7 20111026 AMC $17.66
PC-TEL INC PCTI 201109 $0.03 ($0.05) 100 20111026 AMC $6.49
PENTAIR INC PNR 201109 $0.58 $0.55 4.17 20111026 BTO $35.20
PLEXUS CORP PLXS 201109 $0.50 $0.65 7.41 20111026 AMC $27.00
PRAXAIR INC PX 201109 $1.39 $1.21 0.73 20111026 BTO $101.55
PROLOGIS INC PLD 201109 $0.39 $0.32 9.37 20111026 BTO $26.34
PZENA INVESTMNT PZN 201109 $0.08 $0.08 11.11 20111026 BTO $4.08
RADWARE LTD RDWR 201109 $0.27 $0.19 0 20111026 BTO $23.36
REGIS CORP/MN RGS 201109 $0.28 $0.30 23.33 20111026 BTO $15.93
ROCKY BRANDS RCKY 201109 $0.69 $0.63 50 20111026 AMC $11.40
ROGERS COMM CLB RCI 201109 $0.81 $0.81 1.19 20111026 $35.64
ROLLINS INC ROL 201109 $0.19 $0.17 0 20111026 BTO $20.29
ROYAL CARIBBEAN RCL 201109 $1.86 $1.64 -2.27 20111026 BTO $26.50
RPC INC RES 201109 $0.57 $0.21 0 20111026 BTO $17.81
RUTHS HOSPITLTY RUTH 201109 $0.01 ($0.01) 0 20111026 BTO $4.42
RYLAND GRP INC RYL 201109 ($0.08) ($0.43) 50 20111026 AMC $12.12
SAFEGUARD SCTFC SFE 201109 $0.16 $0.03 1130.61 20111026 BTO $16.09
SAIA INC SAIA 201109 $0.25 $0.16 -16 20111026 BTO $12.77
SAP AG ADR SAP 201109 $0.89 $0.71 7.59 20111026 BTO $57.39
SCANA CORP SCG 201109 $0.77 $0.79 -10.42 20111026 BTO $41.91
SCHULMAN(A) INC SHLM 201108 $0.45 $0.37 1.56 20111026 AMC $19.06
SEALED AIR CORP SEE 201109 $0.49 $0.43 5.26 20111026 BTO $17.02
SELECT INS GRP SIGI 201109 ($0.45) $0.35 -66.67 20111026 AMC $14.48
SERVICE CORP IN SCI 201109 $0.14 $0.13 7.14 20111026 AMC $9.86
SHUTTERFLY INC SFLY 201109 ($0.37) ($0.17) 89.74 20111026 AMC $45.90
SILGAN HOLDINGS SLGN 201109 $1.11 $0.89 -3.64 20111026 BTO $37.95
SILICON LAB INC SLAB 201109 $0.21 $0.40 7.14 20111026 BTO $33.77
SJW CORP SJW 201109 $0.54 $0.44 11.54 20111026 AMC $23.38
SKECHERS USA-A SKX 201109 $0.01 $0.74 8.82 20111026 AMC $13.78
SL GREEN REALTY SLG 201109 $1.00 $1.86 5.88 20111026 AMC $63.17
SOLUTIA INC SOA 201109 $0.42 $0.42 1.79 20111026 AMC $14.54
SOUTHN COMPANY SO 201109 $1.03 $0.98 10.94 20111026 BTO $43.27
SPARTAN MOTORS SPAR 201109 $0.03 $0.11 -250 20111026 BTO $4.52
SPECTRANETICS SPNC 201109 $0.00 $0.04 -100 20111026 BTO $7.05
SPRINT NEXTEL S 201109 ($0.22) ($0.30) 50 20111026 BTO $2.71
STEINER LEISURE STNR 201109 $0.84 $0.78 1.16 20111026 AMC $44.67
STERICYCLE INC SRCL 201109 $0.70 $0.65 0 20111026 AMC $82.45
STRATASYS INC SSYS 201109 $0.19 $0.15 4.76 20111026 BTO $22.90
SUCCESSFACTORS SFSF 201109 ($0.16) ($0.05) 25 20111026 AMC $23.73
SUPERIOR ENERGY SPN 201109 $0.68 $0.42 32.5 20111026 AMC $26.76
SUSQUEHANNA BSH SUSQ 201109 $0.11 $0.04 0 20111026 AMC $6.40
SYMANTEC CORP SYMC 201109 $0.34 $0.29 0 20111026 AMC $17.94
SYMETRA FINL CP SYA 201109 $0.34 $0.32 2.86 20111026 AMC $9.14
SYMMETRICOM INC SYMM 201109 $0.07 $0.12 -18.18 20111026 AMC $4.79
TAL INTL GRP TAL 201109 $0.97 $0.60 20.73 20111026 AMC $27.73
TC PIPELINES TCLP 201109 $0.82 $0.82 -8 20111026 AMC $47.20
TERADYNE INC TER 201109 $0.23 $0.82 21.95 20111026 AMC $13.35
TEREX CORP TEX 201109 $0.23 ($0.34) -41.18 20111026 AMC $13.50
THERMO FISHER TMO 201109 $1.07 $0.90 1.02 20111026 BTO $51.90
TORCHMARK CORP TMK 201109 $1.19 $1.03 0.88 20111026 AMC $38.88
TOWER BANCORP TOBC 201109 $0.43 $0.37 -10.81 20111026 $23.30
TOWN SPORTS INT CLUB 201109 $0.08 $0.00 45.45 20111026 AMC $8.03
TRANSATLAN HLDG TRH 201109 $1.19 $1.97 -8.57 20111026 AMC $51.99
TRIQUINT SEMICO TQNT 201109 $0.06 $0.24 -14.29 20111026 AMC $6.74
TRUEBLUE INC TBI 201109 $0.30 $0.23 11.11 20111026 AMC $12.17
TSAKOS EGY NAVG TNP 201109 ($0.30) ($0.13) -117.65 20111026 BTO $6.05
TUPPERWARE BRND TUP 201109 $0.83 $0.64 6.84 20111026 BTO $55.67
TYLER TECH INC TYL 201109 $0.20 $0.19 -5.56 20111026 AMC $27.96
UMB FINL CORP UMBF 201109 $0.65 $0.57 0 20111026 BTO $34.78
UNIVL AMERICAN UAM 201109 $0.09 $0.63 400 20111026 AMC $10.45
UNVL STAINLESS USAP 201109 $0.50 $0.60 3.8 20111026 BTO $32.45
USA MOBILITY USMO 201109 $0.65 $0.59 102.22 20111026 AMC $14.75
UTD MICROELECTR UMC 201109 $0.01 $0.11 -14.29 20111026 BTO $2.02
VALASSIS COMMS VCI 201109 $0.73 $0.52 -1.47 20111026 BTO $19.17
VISA INC-A V 201109 $1.24 $0.95 2.44 20111026 AMC $91.35
VITAMIN SHOPPE VSI 201109 $0.33 $0.27 5.26 20111026 BTO $37.69
WCA WASTE CORP WCAA 201109 $0.03 ($0.01) -200 20111026 AMC $3.75
WELLPOINT INC WLP 201109 $1.66 $1.74 2.23 20111026 BTO $65.25
WYNDHAM WORLDWD WYN 201109 $0.88 $0.68 14.29 20111026 BTO $30.25
1800FLOWERS.COM FLWS 201109 ($0.09) ($0.08) 42.86 20111027 BTO $2.65
3D SYSTEMS CORP DDD 201109 $0.16 $0.12 93.33 20111027 BTO $16.86
ABB LTD-ADR ABB 201109 $0.42 $0.34 5.41 20111027 BTO $18.49
ACI WORLDWIDE ACIW 201109 $0.16 $0.07 262.5 20111027 BTO $28.44
ADOLOR CORP ADLR 201109 $0.16 ($0.09) 71.43 20111027 BTO $1.86
ADV MICRO DEV AMD 201109 $0.10 $0.15 12.5 20111027 AMC $4.54
AEGERION PHARMA AEGR 201109 ($0.45) ($3.61) -22.5 20111027 BTO $13.58
AETNA INC-NEW AET 201109 $1.14 $0.84 26.17 20111027 BTO $37.34
AGENUS INC AGEN 201109 ($0.27) ($0.36) 0 20111027 $2.98
AIRGAS INC ARG 201109 $1.02 $0.83 3.13 20111027 BTO $67.98
AIXTRON AG-ADR AIXG 201109 $0.33 $0.72 -15.38 20111027 BTO $13.28
ALASKA COMM SYS ALSK 201109 $0.12 $0.08 37.5 20111027 AMC $6.35
ALIGN TECH INC ALGN 201109 $0.20 $0.25 5.26 20111027 AMC $16.52
ALMOST FAMILY AFAM 201109 $0.52 $0.85 -12.12 20111027 BTO $17.25
ALTISOURCE PORT ASPS 201109 $0.52 $0.37 N/A 20111027 $35.67
ALTRIA GROUP MO 201109 $0.56 $0.54 0 20111027 BTO $27.25
AMAG PHARMA INC AMAG 201109 ($1.02) ($0.81) 14.81 20111027 AMC $13.64
AMERIGON INC ARGN 201109 $0.10 $0.12 0 20111027 BTO $14.02
ANNALY CAP MGMT NLY 201109 $0.64 $0.60 N/A 20111027 AMC $16.11
APPLD MICRO CIR AMCC 201109 ($0.09) $0.10 25 20111027 AMC $5.87
ARCTIC CAT INC ACAT 201109 $1.08 $0.97 50 20111027 BTO $16.05
ARIBA INC ARBA 201109 $0.08 $0.07 20 20111027 AMC $31.51
ARTIO GLOBL INV ART 201109 $0.26 $0.40 -5.26 20111027 BTO $7.38
ASM INTL NV ASMI 201109 $0.77 $0.90 8.04 20111027 $27.39
ASPEN INS HLDGS AHL 201109 $0.58 $0.79 44 20111027 AMC $24.72
ASTRAZENECA PLC AZN 201109 $1.68 $1.07 -14.12 20111027 BTO $47.05
AVID TECH INC AVID 201109 ($0.01) ($0.05) -2300 20111027 AMC $7.15
AVNET AVT 201109 $0.91 $0.93 6.09 20111027 BTO $28.54
AVON PRODS INC AVP 201109 $0.46 $0.41 -2 20111027 BTO $22.61
BAIDU INC BIDU 201109 $0.83 $0.45 9.09 20111027 AMC $123.87
BALL CORP BLL 201109 $0.79 $0.70 -1.16 20111027 BTO $34.53
BANKRATE INC RATE 201109 $0.14 $999.00 9.09 20111027 AMC $16.20
BANKUNITED INC BKU 201109 $0.43 $999.00 2.33 20111027 BTO $20.03
BARRICK GOLD CP ABX 201109 $1.27 $0.83 1.82 20111027 BTO $44.33
BEL FUSE INC-B BELFB 201109 $0.19 $0.73 -41.94 20111027 BTO $17.54
BELDEN INC BDC 201109 $0.58 $0.43 20 20111027 BTO $28.49
BENCHMARK ELETR BHE 201109 $0.31 $0.38 -19.35 20111027 BTO $13.84
BERRY PETROLEUM BRY 201109 $0.74 $0.38 12.31 20111027 BTO $43.12
BGC PARTNRS INC BGCP 201109 $0.19 $0.07 10.53 20111027 BTO $6.71
BIOMARIN PHARMA BMRN 201109 ($0.11) ($0.03) 58.33 20111027 AMC $32.89
BOTTOMLINE TECH EPAY 201109 $0.17 $0.16 40 20111027 AMC $21.82
BRIGHTPOINT INC CELL 201109 $0.21 $0.20 33.33 20111027 AMC $10.12
BRINKS CO THE BCO 201109 $0.49 $0.44 -18.18 20111027 BTO $26.55
BRISTOL-MYERS BMY 201109 $0.58 $0.59 1.82 20111027 BTO $32.44
BRUKER CORP BRKR 201109 $0.22 $0.19 -9.52 20111027 BTO $13.31
BRUNSWICK CORP BC 201109 $0.07 $0.06 52.08 20111027 BTO $17.67
BRYN MAWR BK CP BMTC 201109 $0.40 $0.15 5.41 20111027 AMC $17.36
BUILD-A-BEAR WK BBW 201109 ($0.02) ($0.05) -6.67 20111027 BTO $5.47
BUNGE LTD BG 201109 $1.69 $2.26 21.09 20111027 BTO $56.78
CABELAS INC CAB 201109 $0.44 $0.31 18.52 20111027 BTO $24.81
CABOT MICROELEC CCMP 201109 $0.56 $0.66 -20.59 20111027 BTO $36.21
CAI INTL INC CAP 201109 $0.57 $0.39 7.84 20111027 AMC $12.84
CALIPER LIFE SC CALP 201109 $0.00 $0.01 200 20111027 BTO $10.48
CALLAWAY GOLF ELY 201109 ($0.24) ($0.28) 50 20111027 BTO $5.55
CALLIDUS SOFTWR CALD 201109 ($0.06) ($0.03) 14.29 20111027 AMC $5.06
CAMERON INTL CAM 201109 $0.74 $0.64 3.13 20111027 BTO $48.89
CAPITALSOURCE CSE 201109 $0.06 $0.13 66.67 20111027 $6.40
CARBO CERAMICS CRR 201109 $1.39 $0.87 1.57 20111027 BTO $113.93
CARDICA INC CRDC 201109 ($0.12) $0.24 15.38 20111027 AMC $1.83
CARDINAL HEALTH CAH 201109 $0.72 $0.64 1.72 20111027 BTO $42.42
CARTERS INC CRI 201109 $0.59 $0.83 76.92 20111027 BTO $34.15
CDI CORP CDI 201109 $0.15 $0.09 7.69 20111027 BTO $12.30
CELGENE CORP CELG 201109 $0.86 $0.65 1.3 20111027 BTO $65.95
CENOVUS ENERGY CVE 201109 $0.54 $0.28 30.23 20111027 BTO $34.53
CERNER CORP CERN 201109 $0.45 $0.35 2.44 20111027 AMC $65.70
CEVA INC CEVA 201109 $0.16 $0.13 21.43 20111027 BTO $25.92
CHART INDUSTRIE GTLS 201109 $0.57 $0.27 -8.89 20111027 BTO $50.00
CHEFS WAREHOUSE CHEF 201109 $0.20 $999.00 N/A 20111027 AMC $13.07
CINCINNATI FINL CINF 201109 $0.13 $0.34 10.94 20111027 AMC $27.45
CITIZENS BKNG CRBC 201109 $0.18 ($1.70) 300 20111027 AMC $7.65
CITRIX SYS INC CTXS 201109 $0.48 $0.46 6.52 20111027 BTO $64.01
CLEARWATER PAPR CLW 201109 $0.72 $0.71 -27.78 20111027 BTO $34.94
CLIFFS NATURAL CLF 201109 $3.66 $2.18 -19.35 20111027 AMC $59.05
CLOUD PEAK EGY CLD 201109 $0.46 $0.60 71.43 20111027 AMC $20.91
CMS ENERGY CMS 201109 $0.51 $0.52 0 20111027 BTO $20.72
CNH GLOBAL NV CNH 201109 $0.82 $0.43 34.34 20111027 BTO $30.09
COCA-COLA ENTRP CCE 201109 $0.69 $0.60 2.7 20111027 BTO $25.55
COCA-COLA FEMSA KOF 201109 $1.20 $0.92 0 20111027 BTO $90.14
COINSTAR INC CSTR 201109 $0.88 $0.66 3.16 20111027 AMC $49.73
COLGATE PALMOLI CL 201109 $1.31 $1.21 0 20111027 BTO $91.62
COLONIAL PPTYS CLP 201109 $0.28 $0.20 14.29 20111027 BTO $18.66
COLUMBIA BK SYS COLB 201109 $0.26 $0.06 15.79 20111027 BTO $16.99
COMPUTER PRGRMS CPSI 201109 $0.60 $0.45 30.91 20111027 AMC $70.79
CONMED CORP CNMD 201109 $0.31 $0.34 0 20111027 BTO $25.53
CONSOL ENERGY CNX 201109 $0.65 $0.44 0 20111027 BTO $40.40
CONSTANT CONTAC CTCT 201109 $0.13 $0.10 300 20111027 AMC $18.08
CORN PROD INTL CPO 201109 $1.10 $0.81 -2.65 20111027 BTO $44.27
CORP OFFICE PTY OFC 201109 $0.50 $0.58 1.79 20111027 BTO $23.07
CRA INTL INC CRAI 201108 $0.41 $0.30 26.32 20111027 BTO $21.91
CROCS INC CROX 201109 $0.32 $0.25 38.64 20111027 AMC $15.23
CRYOLIFE INC CRY 201109 $0.08 $0.09 100 20111027 BTO $4.65
CURIS INC CRIS 201109 ($0.07) ($0.02) 14.29 20111027 BTO $3.38
CURTISS WRIGHT CW 201109 $0.67 $0.60 15.25 20111027 AMC $30.35
CYTOKINETCS INC CYTK 201109 ($0.19) ($0.19) -109.09 20111027 $1.21
DANA HOLDING CP DAN 201109 $0.43 $0.22 21.62 20111027 BTO $12.76
DDR CORP DDR 201109 $0.24 ($0.11) 4.55 20111027 AMC $11.45
DECKERS OUTDOOR DECK 201109 $1.34 $1.07 20.83 20111027 AMC $101.82
DELTA APPAREL DLA 201109 $0.30 $0.19 4.3 20111027 AMC $16.80
DELUXE CORP DLX 201109 $0.75 $0.99 5.63 20111027 BTO $23.07
DENTSPLY INTL XRAY 201109 $0.43 $0.45 7.84 20111027 BTO $33.51
DFC GLOBAL CORP DLLR 201109 $0.48 $0.31 21.95 20111027 AMC $21.31
DIEBOLD INC DBD 201109 $0.60 $0.70 41.94 20111027 BTO $29.43
DIGITAL RIVER DRIV 201109 $0.13 $0.14 25 20111027 AMC $20.46
DIGITAL RLTY TR DLR 201109 $1.00 $0.81 3.03 20111027 BTO $59.42
DIME COMM BNCSH DCOM 201109 $0.35 $0.34 5.88 20111027 AMC $11.91
DOMTAR CORP UFS 201109 $2.45 $4.26 -11.57 20111027 BTO $76.63
DONEGAL GRP -A DGICA 201109 $0.27 $0.53 83.33 20111027 BTO $12.42
DOW CHEMICAL DOW 201109 $0.64 $0.54 6.25 20111027 BTO $26.43
DPL INC DPL 201109 $0.76 $0.74 -36.54 20111027 AMC $30.32
DRESSER-RAND GP DRC 201109 $0.47 $0.46 -69.57 20111027 AMC $48.90
DSP GROUP INC DSPG 201109 ($0.19) $0.18 -50 20111027 BTO $6.02
DTE ENERGY CO DTE 201109 $1.00 $0.96 27.45 20111027 BTO $51.32
DUFF&PHELPS CP DUF 201109 $0.19 $0.15 5.26 20111027 AMC $11.38
DUKE REALTY CP DRE 201109 $0.29 $0.30 3.57 20111027 $10.68
DUN &BRADST-NEW DNB 201109 $1.35 $1.21 6.3 20111027 AMC $63.40
EAGLE MATERIALS EXP 201109 $0.17 $0.22 -41.67 20111027 BTO $18.09
EARTHLINK INC ELNK 201109 $0.05 $0.22 533.33 20111027 BTO $6.54
EASTMAN CHEM CO EMN 201109 $1.11 $1.16 6.15 20111027 AMC $36.19
ECHO GLOBAL LOG ECHO 201109 $0.15 $0.12 0 20111027 AMC $14.18
EDUCATION RLTY EDR 201109 $0.03 $0.02 0 20111027 AMC $9.18
ELAN CP PLC ADR ELN 201109 $0.00 ($0.07) 33.33 20111027 BTO $10.43
ELECTR ARTS INC ERTS 201109 ($0.16) ($0.03) -6.67 20111027 AMC $23.41
EMCOR GROUP INC EME 201109 $0.48 $0.47 17.5 20111027 BTO $22.55
EMPIRE DISTRICT EDE 201109 $0.63 $0.55 15.79 20111027 AMC $19.14
EMULEX CORP ELX 201109 $0.04 $0.02 600 20111027 AMC $6.59
ENDO PHARMACEUT ENDP 201109 $1.18 $0.86 -0.94 20111027 BTO $27.94
ENDOLOGIX INC ELGX 201109 ($0.07) ($0.01) -28.57 20111027 AMC $10.44
ENDURANCE SPLTY ENH 201109 ($0.61) $2.14 1466.67 20111027 AMC $34.64
ENERGY XXI LTD EXXI 201109 $0.53 ($0.04) -4 20111027 AMC $27.62
ENTERPRISE FINL EFSC 201109 $0.37 $0.29 57.58 20111027 BTO $15.31
EPIQ SYS INC EPIQ 201109 $0.09 $0.12 111.11 20111027 AMC $13.01
EQT CORP EQT 201109 $0.43 $0.24 26.83 20111027 BTO $66.08
ERESEARCH TECH ERT 201109 $0.11 $0.11 -40 20111027 AMC $5.09
EVERCORE PARTNR EVR 201109 $0.36 $0.38 -2.27 20111027 BTO $24.07
EXPEDIA INC EXPE 201109 $0.70 $0.63 8.7 20111027 AMC $27.20
EXTRA SPACE STG EXR 201109 $0.30 $0.27 3.85 20111027 AMC $20.25
EXXON MOBIL CRP XOM 201109 $2.12 $1.44 -7.23 20111027 BTO $78.71
FBR & CO FBRC 201109 ($0.23) ($0.09) -233.33 20111027 BTO $2.40
FEDERAL MOGUL-A FDML 201109 $0.44 $0.30 10.34 20111027 BTO $17.04
FEDERATED INVST FII 201109 $0.37 $0.42 0 20111027 AMC $18.12
FEI COMPANY FEIC 201109 $0.55 $0.31 6.78 20111027 AMC $33.22
FERRO CORP FOE 201109 $0.28 $0.29 -20.59 20111027 AMC $6.04
FIRST AMER FINL FAF 201109 $0.36 $0.32 16.67 20111027 BTO $13.32
FIRST COMW FINL FCF 201109 $0.08 $0.11 -22.22 20111027 BTO $4.34
FIRST FINL HLDG FFCH 201109 $0.03 ($0.13) -122.52 20111027 AMC $5.34
FIRST POTOMAC FPO 201109 $0.27 $0.31 7.69 20111027 AMC $13.24
FIVE STAR QLTY FVE 201109 $0.13 $0.15 0 20111027 AMC $2.94
FLOWSERVE CORP FLS 201109 $1.86 $1.84 8.99 20111027 AMC $81.50
FLUSHING FINL FFIC 201109 $0.30 $0.31 0 20111027 $12.54
FORMFACTOR INC FORM 201109 ($0.16) ($0.63) 39.39 20111027 AMC $6.05
FORRESTER RESH FORR 201109 $0.23 $0.19 25 20111027 BTO $35.19
FRANKLIN RESOUR BEN 201109 $1.99 $1.65 4.63 20111027 BTO $100.03
GAIN CAP HLDGS GCAP 201109 $0.21 ($2.53) -12.12 20111027 AMC $6.69
GERON CORP GERN 201109 ($0.18) ($0.19) 0 20111027 AMC $2.20
GFI GROUP INC GFIG 201109 $0.08 $0.03 16.67 20111027 AMC $4.24
GILEAD SCIENCES GILD 201109 $0.96 $0.85 -1.04 20111027 AMC $41.01
GLACIER BANCORP GBCI 201109 $0.19 $0.13 6.25 20111027 AMC $11.23
GLIMCHER REALTY GRT 201109 $0.16 $0.16 0 20111027 AMC $7.96
GOLFSMITH INTL GOLF 201109 $0.10 $0.03 13.64 20111027 BTO $3.25
GOODRICH CORP GR 201109 $1.50 $1.25 13.53 20111027 BTO $121.86
GORMAN RUPP CO GRC 201109 $0.41 $0.30 10.53 20111027 $26.07
GRAFTECH INTL GTI 201109 $0.24 $0.33 26.32 20111027 BTO $14.99
GRAPHIC PKG HLD GPK 201109 $0.10 $0.07 -10 20111027 BTO $3.82
GREATBATCH INC GB 201109 $0.33 $0.34 0 20111027 AMC $19.94
GREEN DOT CP-A GDOT 201109 $0.35 $0.20 -25 20111027 AMC $31.21
GREEN PLN RENEW GPRE 201109 $0.28 $0.23 55.56 20111027 BTO $9.52
GSI TECHNOLOGY GSIT 201109 $0.08 $0.18 -8.33 20111027 AMC $4.75
GULF ISLAND FAB GIFI 201109 $0.27 $0.24 30 20111027 AMC $27.66
HARMONIC INC HLIT 201109 $0.06 $0.05 -28.57 20111027 AMC $4.44
HARSCO CORP HSC 201109 $0.40 $0.26 30.56 20111027 BTO $21.96
HARTE-HANKS INC HHS 201109 $0.20 $0.22 5.88 20111027 BTO $8.60
HEALTHSOUTH CP HLS 201109 $0.22 $0.43 15.38 20111027 AMC $16.56
HEARTLAND PAYMT HPY 201109 $0.29 $0.20 14.81 20111027 BTO $19.88
HERCULES OFFSHR HERO 201109 ($0.14) ($0.13) 26.67 20111027 BTO $3.35
HERITAGE OAKS HEOP 201109 $0.03 ($0.03) 0 20111027 AMC $3.16
HERSHEY CO/THE HSY 201109 $0.83 $0.79 1.82 20111027 BTO $59.57
HIGHWOODS PPTYS HIW 201109 $0.60 $0.57 -3.23 20111027 AMC $28.83
HOLLY EGY PTNRS HEP 201109 $0.66 $0.59 13.11 20111027 BTO $54.66
HOMEAWAY INC AWAY 201109 $0.10 $999.00 N/A 20111027 AMC $36.03
ICON PLC ICLR 201109 $0.01 $0.33 -4.55 20111027 BTO $15.53
IKANOS COMM INC IKAN 201109 ($0.04) ($0.11) 42.86 20111027 $0.85
IMAX CORP IMAX 201109 $0.18 $0.10 -70.59 20111027 BTO $16.01
IMMUNOGEN INC IMGN 201109 ($0.22) ($0.19) 4.17 20111027 AMC $13.45
INCYTE CORP INCY 201109 ($0.45) ($0.26) -13.89 20111027 BTO $13.54
INFOSPACE INC INSP 201109 $0.11 $0.07 77.78 20111027 AMC $8.67
INGRAM MICRO IM 201109 $0.35 $0.44 0 20111027 AMC $17.14
INSITE VISION INSV 201109 ($0.01) ($0.02) N/A 20111027 AMC $0.50
INTERMUNE INC ITMN 201109 ($0.73) ($0.44) -11.48 20111027 AMC $20.84
INTERNAP NETWRK INAP 201109 ($0.02) ($0.03) -50 20111027 AMC $5.42
INTL PAPER IP 201109 $0.80 $0.91 21.21 20111027 BTO $25.59
INVACARE CORP IVC 201109 $0.61 $0.56 26.09 20111027 BTO $23.08
INVESTORS BANCP ISBC 201109 $0.19 $0.15 5.88 20111027 AMC $13.23
IPC THE HOSPITL IPCM 201109 $0.42 $0.37 -9.3 20111027 AMC $40.42
IRON MOUNTAIN IRM 201109 $0.34 $0.35 0 20111027 BTO $32.17
ISTAR FINL INC SFI 201109 ($0.56) ($0.99) N/A 20111027 BTO $6.24
ITERIS INC ITI 201109 $0.00 $0.02 -100 20111027 AMC $1.22
JDA SOFTWARE GP JDAS 201109 $0.35 $0.44 9.76 20111027 AMC $25.94
JOHNSON CONTROL JCI 201109 $0.76 $0.60 5.66 20111027 BTO $31.57
KBR INC KBR 201109 $0.68 $0.62 22.64 20111027 $27.00
KBW INC KBW 201109 $0.07 $0.15 -207.69 20111027 BTO $14.40
KEMET CORP KEM 201109 $0.46 $0.66 27.78 20111027 $7.57
KENNAMETAL INC KMT 201109 $0.78 $0.47 14.43 20111027 BTO $35.97
KEY ENERGY SVCS KEG 201109 $0.31 ($0.01) 15 20111027 AMC $11.21
KLA-TENCOR CORP KLAC 201109 $1.17 $0.99 10.29 20111027 AMC $42.54
L-3 COMM HLDGS LLL 201109 $2.15 $2.07 1.9 20111027 BTO $68.81
LANCASTER COLON LANC 201109 $0.80 $0.81 -7.5 20111027 BTO $63.42
LAS VEGAS SANDS LVS 201109 $0.53 $0.34 22.73 20111027 AMC $41.76
LAZARD LTD LAZ 201109 $0.41 $0.45 4.08 20111027 BTO $24.06
LEGG MASON INC LM 201109 $0.38 $0.44 2.56 20111027 BTO $26.00
LEMAITRE VASCLR LMAT 201109 $0.08 $0.09 -33.33 20111027 AMC $5.86
LIBBEY INC LBY 201109 $0.38 $0.23 4.17 20111027 BTO $11.61
LINCOLN ELECTRC LECO 201109 $0.62 $0.40 23.64 20111027 BTO $32.72
LINN ENERGY LLC LINE 201109 $0.58 $0.38 -21.67 20111027 BTO $37.71
LKQ CORP LKQX 201109 $0.32 $0.25 -2.94 20111027 BTO $27.57
LO-JACK CORP LOJN 201109 $0.12 $0.15 200 20111027 BTO $3.41
LSI INDUSTRIES LYTS 201109 $0.09 $0.18 -45.45 20111027 BTO $6.63
LUMBER LIQUIDAT LL 201109 $0.22 $0.15 0 20111027 BTO $16.38
M/I HOMES INC MHO 201109 $0.08 ($0.13) -122.22 20111027 BTO $6.00
MACK CALI CORP CLI 201109 $0.67 $0.69 0 20111027 BTO $26.37
MAGELLAN HLTH MGLN 201109 $0.83 $1.31 24.42 20111027 BTO $51.68
MANNKIND CORP MNKD 201109 ($0.32) ($0.40) -19.35 20111027 BTO $3.00
MATERION CORP MTRN 201109 $0.66 $0.65 -1.47 20111027 BTO $25.36
MAXWELL TECH MXWL 201109 $0.04 $0.01 300 20111027 AMC $18.95
MEAD JOHNSON NU MJN 201109 $0.77 $0.57 4.35 20111027 BTO $72.17
MERITAGE HOMES MTH 201109 $0.07 $0.04 175 20111027 BTO $17.54
METLIFE INC MET 201109 $1.15 $0.99 11.71 20111027 AMC $32.10
MF GLOBAL HLDGS MF 201109 $0.05 $0.02 66.67 20111027 BTO $3.69
MICREL INC MCRL 201109 $0.14 $0.24 6.25 20111027 AMC $10.16
MICROS SYS MCRS 201109 $0.45 $0.39 17.02 20111027 AMC $47.20
MINE SAFETY APP MSA 201109 $0.52 $0.30 18.75 20111027 BTO $28.22
MINERAL TECH MTX 201109 $0.91 $0.90 0 20111027 AMC $50.92
MIPS TECH INC MIPS 201109 $0.01 $0.16 -80 20111027 AMC $5.02
MODINE MANUFACT MOD 201109 $0.21 $0.03 21.74 20111027 BTO $10.52
MONEYGRAM INTL MGI 201109 $0.03 ($0.30) -200 20111027 BTO $2.34
MONOLITHIC PWR MPWR 201109 $0.13 $0.35 0 20111027 AMC $11.23
MONSTER WWD INC MWW 201109 $0.12 $0.01 12.5 20111027 AMC $8.36
MOODYS CORP MCO 201109 $0.49 $0.58 38.6 20111027 BTO $30.93
MOTOROLA MOBLTY MMI 201109 ($0.10) $999.00 -75 20111027 AMC $38.80
MOTOROLA SOLUTN MSI 201109 $0.54 $0.84 29.55 20111027 BTO $44.56
NANOMETRICS INC NANO 201109 $0.31 $0.53 8.7 20111027 AMC $16.75
NATUS MEDICAL BABY 201109 $0.07 $0.17 -7.14 20111027 BTO $8.26
NAVIGANT CONSLT NCI 201109 $0.19 $0.15 16.67 20111027 BTO $10.53
NCR CORP-NEW NCR 201109 $0.48 $0.46 9.52 20111027 AMC $18.09
NET 1 UEPS TECH UEPS 201109 $0.34 $0.33 21.62 20111027 AMC $6.81
NETGEAR INC NTGR 201109 $0.57 $0.36 5.66 20111027 AMC $28.53
NETLOGIC MCRSYS NETL 201109 $0.20 $0.24 13.04 20111027 AMC $48.72
NEUROCRINE BIOS NBIX 201109 $0.09 $0.06 -33.33 20111027 AMC $6.16
NEWPARK RESOUR NR 201109 $0.20 $0.09 11.76 20111027 AMC $8.32
NEXEN INC NXY 201109 $0.32 $0.28 4.44 20111027 BTO $16.24
NIELSEN HOLDNGS NLSN 201109 $0.41 $999.00 7.89 20111027 BTO $28.81
NII HLDGS-CL B NIHD 201109 $0.60 $0.79 -12 20111027 BTO $29.29
NOVATEL WIRELES NVTL 201109 ($0.09) ($0.24) 30 20111027 AMC $3.31
NUVASIVE INC NUVA 201109 $0.13 $0.29 11.76 20111027 AMC $17.20
OCCIDENTAL PET OXY 201109 $1.96 $1.47 2.76 20111027 BTO $84.59
OCLARO INC OCLR 201109 ($0.23) $0.03 -60 20111027 BTO $3.45
OFFICEMAX INC OMX 201109 $0.24 $0.23 -51.85 20111027 BTO $5.14
OLD DOMINION FL ODFL 201109 $0.64 $0.44 25.45 20111027 BTO $34.22
OLD REP INTL ORI 201109 ($0.17) ($0.17) -150 20111027 BTO $9.86
OLD SECOND BCP OSBC 201109 ($0.11) ($0.09) 96.88 20111027 BTO $1.32
OLIN CORP OLN 201109 $0.58 $0.40 7.84 20111027 AMC $19.55
OMNICELL INC OMCL 201109 $0.08 $0.02 33.33 20111027 $15.20
ON ASSIGNMENT ASGN 201109 $0.18 $0.09 23.08 20111027 AMC $9.47
OPLINK COMMNCTN OPLK 201109 $0.06 $0.33 23.53 20111027 AMC $15.42
ORTHOFIX INTL OFIX 201109 $0.65 $0.48 9.52 20111027 AMC $32.03
OVERSTOCK.COM OSTK 201109 ($0.23) ($0.15) -100 20111027 BTO $10.17
PACER INTL INC PACR 201109 $0.10 $0.03 50 20111027 BTO $4.35
PACIFIC BIOSCI PACB 201109 ($0.58) ($39.70) 32.26 20111027 AMC $3.39
PALOMAR MED TEC PMTI 201109 ($0.17) ($0.06) -36.36 20111027 BTO $7.91
PATTERSON-UTI PTEN 201109 $0.60 $0.19 8.33 20111027 BTO $19.29
PEBBLEBROOK HTL PEB 201109 $0.31 $0.05 15 20111027 AMC $17.05
PENN RE INV TR PEI 201109 $0.37 $0.38 -8.33 20111027 BTO $8.09
PENNYMAC MORTGE PMT 201109 $0.53 $0.45 40.48 20111027 BTO $16.63
PERRIGO COMPANY PRGO 201109 $1.03 $0.87 3.03 20111027 BTO $96.31
PF CHANGS CHINA PFCB 201109 $0.32 $0.45 -27.27 20111027 BTO $27.44
PINNACLE ENTRTN PNK 201109 $0.17 $0.10 112.5 20111027 BTO $11.25
PMC-SIERRA INC PMCS 201109 $0.14 $0.16 16.67 20111027 AMC $6.18
PORTFOLIO RCVRY PRAA 201109 $1.48 $1.08 1.41 20111027 AMC $63.59
POTASH SASK POT 201109 $0.93 $0.44 11.63 20111027 BTO $48.45
POWER-ONE INC PWER 201109 $0.19 $0.40 -4.55 20111027 AMC $5.34
PRECISION CASTP PCP 201109 $2.04 $1.70 1.03 20111027 BTO $165.05
PRINCIPAL FINL PFG 201109 $0.72 $0.68 0 20111027 AMC $25.07
PROCTER & GAMBL PG 201109 $1.03 $1.02 2.44 20111027 BTO $65.09
PROVIDENT FINL PROV 201109 $0.20 $0.40 -21.74 20111027 BTO $9.15
PSS WORLD MED PSSI 201109 $0.37 $0.35 -10.71 20111027 BTO $20.66
PULTE GROUP ONC PHM 201109 $0.00 ($0.03) 0 20111027 BTO $4.67
QLIK TECHNOLOGS QLIK 201109 $0.00 $0.00 -200 20111027 AMC $25.62
QLOGIC CORP QLGC 201109 $0.26 $0.28 19.23 20111027 AMC $13.00
QUALITY SYS QSII 201109 $0.67 $0.46 4.84 20111027 BTO $88.03
QUANTUM CP-DSSG QTM 201109 $0.01 $0.05 -100 20111027 AMC $2.15
QUEST SOFTWARE QSFT 201109 $0.30 $0.36 -10.53 20111027 AMC $17.45
RADISYS CORP RSYS 201109 $0.11 $0.09 166.67 20111027 AMC $6.31
RADVISION LTD RVSN 201109 ($0.35) $0.06 6.06 20111027 BTO $5.58
RAYTHEON CO RTN 201109 $1.33 $1.26 6.03 20111027 BTO $42.76
REALTY INCOME O 201109 $0.51 $0.46 -4 20111027 BTO $32.55
REGAL ENTMNT GP RGC 201109 $0.15 $0.07 20 20111027 AMC $12.66
REGENERON PHARM REGN 201109 ($0.75) ($0.41) -68.29 20111027 BTO $60.82
RELIANCE STEEL RS 201109 $1.11 $0.65 0 20111027 BTO $39.41
REPUBLIC SVCS RSG 201109 $0.50 $0.45 2.08 20111027 AMC $28.38
REVLON INC-A REV 201109 $0.34 $0.23 -19.35 20111027 $14.09
RIMAGE CORP RIMG 201109 $0.18 $0.24 44.44 20111027 BTO $11.35
RTI BIOLOGICS RTIX 201109 $0.03 $0.03 33.33 20111027 BTO $3.67
SATCON TECH CRP SATC 201109 ($0.09) ($0.02) -41.67 20111027 BTO $1.11
SCANSOURCE INC SCSC 201109 $0.64 $0.58 9.23 20111027 AMC $34.04
SENECA FOODS-A SENEA 201109 ($0.04) $0.33 -933.33 20111027 AMC $19.63
SENIOR HOUSING SNH 201109 $0.44 $0.42 -2.22 20111027 BTO $21.71
SHORETEL INC SHOR 201109 ($0.08) ($0.08) 0 20111027 AMC $5.48
SIMPSON MFG INC SSD 201109 $0.33 $0.37 5.41 20111027 AMC $29.79
SIX FLAGS ENTMT SIX 201109 $2.47 $2.61 24 20111027 BTO $29.40
SOLARWINDS INC SWI 201109 $0.20 $0.17 11.76 20111027 BTO $24.09
SONUS NETWORKS SONS 201109 $0.01 ($0.08) -300 20111027 AMC $2.27
SOUTHWESTRN ENE SWN 201109 $0.51 $0.46 11.63 20111027 AMC $39.97
SPANSION INC CODE 201109 $0.60 $0.65 0 20111027 AMC $12.84
SPIRIT AIRLINES SAVE 201109 $0.27 $999.00 122.73 20111027 $14.19
SPS COMMERCE SPSC 201109 $0.00 $0.07 0 20111027 AMC $19.01
STAMPS.COM INC STMP 201109 $0.23 $0.19 116.67 20111027 AMC $24.48
STANDARD PAC SPF 201109 $0.02 $0.02 -100 20111027 AMC $3.01
STANDEX INTL CO SXI 201109 $0.88 $0.80 16 20111027 BTO $35.78
STARTEK INC SRT 201109 ($0.19) ($0.27) -92.86 20111027 BTO $2.49
STARWOOD HOTELS HOT 201109 $0.39 $0.25 8.7 20111027 BTO $46.49
STELLARONE CORP STEL 201109 $0.15 $0.13 7.69 20111027 BTO $11.12
STEWART INFO SV STC 201109 $0.29 $0.10 100 20111027 BTO $9.27
STONERIDGE INC SRI 201109 $0.18 $0.03 -26.32 20111027 BTO $6.73
STRATTEC SEC CP STRT 201109 $0.58 $0.43 118.92 20111027 $22.72
SUPPORT.COM INC SPRT 201109 ($0.15) ($0.08) 12.5 20111027 AMC $2.06
SUREWEST COMM SURW 201109 $0.06 $0.10 -50 20111027 BTO $11.75
SYNOVUS FINL CP SNV 201109 ($0.03) ($0.25) 14.29 20111027 BTO $1.31
TASER INTL INC TASR 201109 $0.01 ($0.04) 100 20111027 BTO $4.66
TECK RESOURCES TCK 201109 $1.45 $0.79 8.18 20111027 BTO $33.77
TELECOMMUN SYS TSYS 201109 $0.09 $0.08 25 20111027 AMC $3.59
TELEDYNE TECH TDY 201109 $0.85 $0.79 35.06 20111027 BTO $54.20
TELENAV INC TNAV 201109 $0.17 $0.27 11.11 20111027 AMC $8.73
THERAVANCE INC THRX 201109 ($0.33) ($0.29) -19.23 20111027 AMC $20.90
TIME WARNER CAB TWC 201109 $1.14 $0.96 2.61 20111027 BTO $69.79
TIMKEN CO TKR 201109 $1.08 $0.80 7.02 20111027 BTO $39.56
TITAN INTL INC TWI 201109 $0.37 $0.11 25.64 20111027 $17.82
TRANSCEND SVCS TRCR 201109 $0.34 $0.25 0 20111027 BTO $26.07
TRIMAS CORP TRS 201109 $0.47 $0.37 12 20111027 BTO $16.50
TRUE RELIGION TRLG 201109 $0.49 $0.48 15.15 20111027 AMC $30.53
UNIFI INC UFI 201109 $0.35 $0.51 214.29 20111027 BTO $8.78
UNISOURCE ENRGY UNS 201109 $1.36 $1.36 1.43 20111027 BTO $37.38
UNITED CONT HLD UAL 201109 $2.08 $2.12 4.93 20111027 BTO $20.72
UNIVL HLTH SVCS UHS 201109 $0.86 $0.55 0.97 20111027 AMC $37.20
UNIVL TRUCKLOAD UACL 201109 $0.26 $0.18 4.17 20111027 AMC $13.08
UROPLASTY INC UPI 201109 ($0.08) ($0.05) 14.29 20111027 AMC $5.24
US AIRWAYS GRP LCC 201109 $0.49 $1.23 -5.08 20111027 BTO $6.01
UTD CMNTY BK/GA UCBI 201109 ($0.16) ($1.50) -33.33 20111027 BTO $7.35
UTD THERAPEUTIC UTHR 201109 $0.73 $0.66 124.53 20111027 BTO $40.60
VALIDUS HOLDING VR 201109 $0.85 $1.51 -8.24 20111027 AMC $26.99
VALLEY NATL BCP VLY 201109 $0.21 $0.19 4.76 20111027 BTO $11.98
VARIAN MEDICAL VAR 201109 $0.97 $0.87 0 20111027 AMC $55.88
VARIAN SEMI VSEA 201109 $0.74 $0.79 3 20111027 AMC $62.70
VASCO DATA SEC VDSI 201109 $0.04 $0.06 0 20111027 BTO $5.70
VCA ANTECH INC WOOF 201109 $0.37 $0.37 2.27 20111027 AMC $17.52
VERISIGN INC VRSN 201109 $0.33 $0.23 6.67 20111027 AMC $30.04
VERTEX PHARM VRTX 201109 $0.15 ($0.99) 11.83 20111027 AMC $42.28
VIEWPOINT FINL VPFG 201109 $0.14 $0.17 15.38 20111027 AMC $12.53
VIRGIN MEDIA VMED 201109 $0.15 $0.15 -5.88 20111027 $26.31
VIROPHARMA VPHM 201109 $0.32 $0.52 -28.21 20111027 BTO $19.10
VISTAPRINT NV VPRT 201109 $0.12 $0.24 0 20111027 AMC $29.20
WABCO HOLDINGS WBC 201109 $1.14 $0.71 12.84 20111027 BTO $44.00
WASHINGTON BNKG WBCO 201109 $0.24 $0.11 4.17 20111027 AMC $11.14
WASHINGTON REIT WRE 201109 $0.50 $0.49 2 20111027 AMC $28.58
WASTE MGMT-NEW WM 201109 $0.61 $0.60 -7.27 20111027 BTO $33.26
WEST MARINE INC WMAR 201109 $0.50 $0.32 0 20111027 BTO $8.58
WEST PHARM SVC WST 201109 $0.55 $0.46 -7.46 20111027 BTO $37.47
WESTINGHOUSE SL WEST 201109 ($0.14) ($0.20) 0 20111027 BTO $0.76
WILLIAMS(C)ENGY CWEI 201109 $1.21 $1.17 48.15 20111027 BTO $56.85
WISC ENERGY CP WEC 201109 $0.48 $0.47 5.13 20111027 BTO $32.37
WORLD ACCEPTANC WRLD 201109 $1.45 $1.21 0 20111027 BTO $60.92
WRIGHT MEDICAL WMGI 201109 $0.16 $0.14 11.76 20111027 AMC $17.29
XCEL ENERGY INC XEL 201109 $0.65 $0.67 3.13 20111027 BTO $25.43
YANDEX NV-A YNDX 201109 $0.13 $999.00 0 20111027 BTO $25.08
ZIMMER HOLDINGS ZMH 201109 $1.03 $0.96 1.68 20111027 BTO $53.13
ADV SEMICON ADR ASX 201109 $0.10 $0.13 0 20111028 $4.14
ALLIANCE HLDGS AHGP 201109 $0.82 $0.66 3.49 20111028 BTO $46.68
ALLIANCE RES ARLP 201109 $1.90 $1.48 6.81 20111028 BTO $69.64
AMCOL INTL CP ACO 201109 $0.50 $0.61 -23.21 20111028 BTO $28.86
AMER AXLE & MFG AXL 201109 $0.42 $0.52 54.55 20111028 BTO $8.63
AMERIGROUP CORP AGP 201109 $0.69 $1.68 -24.55 20111028 BTO $43.39
AON CORP AON 201109 $0.73 $0.61 1.22 20111028 BTO $47.31
APARTMENT INVT AIV 201109 $0.41 $0.40 -6.9 20111028 BTO $23.93
ARCH COAL INC ACI 201109 $0.15 $0.35 -29.03 20111028 BTO $16.37
ARCOS DORADOS-A ARCO 201109 $0.27 $999.00 0 20111028 BTO $21.70
ARKANSAS BEST ABFS 201109 $0.33 ($0.03) 300 20111028 BTO $18.26
BARNES GRP B 201109 $0.38 $0.27 11.11 20111028 BTO $21.35
BIOGEN IDEC INC BIIB 201109 $1.51 $1.33 -2.88 20111028 BTO $101.67
BORG WARNER INC BWA 201109 $1.05 $0.71 14.29 20111028 BTO $69.42
BUENAVENTUR-ADR BVN 201109 $1.09 $0.68 -16.67 20111028 AMC $37.93
CABLEVISION SYS CVC 201109 $0.32 $0.37 -46.67 20111028 BTO $16.96
CALPINE CORP CPN 201109 $0.38 $0.57 -450 20111028 BTO $14.05
CENTRAL PAC FIN CPF 201109 $0.18 ($49.20) 53.85 20111028 BTO $11.03
CHEVRON CORP CVX 201109 $3.40 $1.87 8.45 20111028 BTO $103.39
COLUMBUS MCKINN CMCO 201109 $0.27 $0.24 -16.67 20111028 BTO $12.48
COMMERCIAL METL CMC 201108 $0.11 $0.07 60 20111028 BTO $11.22
CONSTELLATN EGY CEG 201109 $0.89 $0.48 -7.32 20111028 BTO $38.11
COVENTRY HLTHCR CVH 201109 $0.82 $1.24 9.21 20111028 BTO $29.04
DOMINION RES VA D 201109 $0.95 $1.03 0 20111028 BTO $51.04
ENBRIDGE EGY PT EEP 201109 $0.39 $0.38 -17.95 20111028 AMC $29.05
ENBRIDGE ENERGY EEQ 201109 $0.37 ($1.05) -10.53 20111028 AMC $29.71
ENCORE BANCSHRS EBTX 201109 $0.13 ($0.79) 85.71 20111028 BTO $11.68
GLEACHER&CO INC GLCH 201109 $0.01 $0.00 -33.33 20111028 AMC $1.28
GOODYEAR TIRE GT 201109 $0.25 $0.13 140.74 20111028 BTO $12.13
GRAHAM CORP GHM 201109 $0.25 $0.16 36.36 20111028 BTO $17.68
HERITAGE FIN CP HFWA 201109 $0.13 $0.13 -8.33 20111028 BTO $11.98
HMS HLDGS CP HMSY 201109 $0.16 $0.13 -60 20111028 BTO $26.49
INTERPUBLIC GRP IPG 201109 $0.10 $0.08 -5 20111028 BTO $8.30
ITT CORP ITT 201109 $1.18 $1.08 1.72 20111028 BTO $43.70
LEAR CORPORATN LEA 201109 $1.14 $1.14 21.26 20111028 BTO $46.87
LEGGETT & PLATT LEG 201109 $0.36 $0.31 -5.41 20111028 BTO $22.37
LIFEPOINT HOSP LPNT 201109 $0.71 $0.72 2.67 20111028 BTO $37.15
LYONDELLBASEL-A LYB 201109 $1.27 $1.14 23.14 20111028 BTO $27.39
MERCK & CO INC MRK 201109 $0.91 $0.85 0 20111028 BTO $32.80
NATL PENN BCSHS NPBC 201109 $0.14 $0.08 36.36 20111028 BTO $7.77
NEWELL RUBBERMD NWL 201109 $0.43 $0.42 9.52 20111028 BTO $13.11
NEWMONT MINING NEM 201109 $1.24 $1.06 -10 20111028 BTO $61.64
NEXTERA ENERGY NEE 201109 $1.43 $1.45 8.26 20111028 BTO $55.08
NISOURCE INC NI 201109 $0.10 $0.04 21.43 20111028 BTO $22.39
NUSTAR ENERGY NS 201109 $0.70 $0.90 21.82 20111028 BTO $54.16
NUSTAR GP HLDGS NSH 201109 $0.40 $0.42 8.33 20111028 BTO $30.57
ONEBEACON INSUR OB 201109 $0.26 $0.56 -60.87 20111028 BTO $14.02
OPPENHEIMER HLD OPY 201109 $0.10 $0.25 -104.08 20111028 BTO $16.73
PILGRIMS PRIDE PPC 201109 ($0.43) $0.28 -160.87 20111028 BTO $4.65
PROVIDNT FIN SV PFS 201109 $0.27 $0.24 0 20111028 BTO $12.56
RAIT FINL TRUST RAS 201109 $0.01 ($0.03) N/A 20111028 BTO $4.05
ROCKWELL COLLIN COL 201109 $1.13 $0.94 -2.88 20111028 BTO $53.86
SCBT FINL CP SCBT 201109 $0.35 $0.14 123.53 20111028 BTO $27.01
SHIRE PLC-ADR SHPGY 201109 $1.31 $1.16 6.4 20111028 BTO $95.00
STANDARD REGIST SR 201109 ($0.01) $0.05 -233.33 20111028 $2.64
STILLWATER MNG SWC 201109 $0.34 $0.06 -7.14 20111028 BTO $8.84
TENNECO INC TEN 201109 $0.67 $0.36 8 20111028 BTO $31.38
TOTAL FINA SA TOT 201109 $1.76 $1.42 -15.31 20111028 $51.79
TRANSALTA CORP TAC 201109 $0.24 $0.17 93.75 20111028 BTO $21.77
WEST BANCORP WTBA 201109 $0.24 $0.19 20 20111028 BTO $9.29
WEST CST BCP/OR WCBO 201109 $0.27 $0.25 -21.43 20111028 $15.31
WEYERHAEUSER CO WY 201109 $0.11 $0.25 -33.33 20111028 BTO $16.42
WHIRLPOOL CORP WHR 201109 $2.79 $2.22 0 20111028 BTO $55.08

 

Dirk van Dijk, CFA is the Chief Equity Strategist for Zacks.com. With more than 25 years investment experience he has become a popular commentator appearing in the Wall Street Journal and on CNBC. Dirk is also the Editor in charge of the market beating Zacks Strategic Investor service.

 

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WHAT TO EXPECT THIS EARNINGS SEASON

By Dirk Van Dijk, CFA, Zacks Investment Research

Key Points:

  • Attention now shifts to the third quarter. Just 28 reports in. Total reported earnings growth of 10.5%. Ex-financials, growth is 6.5% year over year. Total revenue growth 11.22%, 11.23% ex-financials. Median earnings surprise 3.00% and median sales surprise 1.64%.
  • For the vast majority (472) yet to report 9.7% growth expected, 12.6% ex-financials. Down from growth of 10.1%, 19.5% ex-financials growth in the second quarter. For revenues, 6.31% expected and 10.04% ex-financials.
  • Second quarter earnings beats top misses by 3.43 ratio, sales beats top misses by 2.48 ratio, 69.3% of firms report earnings beats, 70.5% beat on revenues. Growing earnings firms outpaced declining earnings by 3.16 ratio, revenues 5.16 growth ratio.
  • Full-year total earnings for the S&P 500 jumps 46.3% in 2010, expected to rise 14.2% further in 2011. Growth to continue in 2012 with total net income expected to rise 13.4%. Financials major earnings driver in 2010. Excluding financials growth was 28.1% in 2010, and expected to be 17.7% in 2011 and 10.2% in 2012. 
  • Total revenues for the S&P 500 rise 7.73% in 2010, expected to be up 6.78% in 2011, and 6.12% in 2012. Excluding financials, revenues up 9.10% in 2010, expected to rise 12.10% in 2011 and 4.84% in 2012.
  • Annual net margins marching higher, from 5.88% in 2008 to 6.36% in 2009 to 8.64% for 2010, 9.13% expected for 2011 and 9.87% in 2012. Margin expansion major source of earnings growth. Net margins ex-financials 7.79% in 2008, 7.03% in 2009, 8.26% for 2010, 8.67% expected in 2011, and 9.11% in 2012.
  • Revisions ratio for full S&P 500 at 0.46 for 2011, at 0.30 for 2012 (both very bearish). Ratio of firms with rising to falling mean estimates at 0.43 for 2011, 0.31 (both also very bearish) for 2012. Total revisions activity past lows.
  • S&P 500 earned $543.6 billion in 2009, rising to $795.1 billion in 2010, expected to climb to $907.7 billion in 2011. In 2012, the 500 are collectively expected to earn $1.029 Trillion. 
  • S&P 500 earned $56.97 in 2009: $83.87 in 2010 and $95.18 in 2011 expected bottom up. For 2012, $107.87 expected. Puts P/Es at 13.89x for 2010, and 12.24x for 2011 and 10.80x for 2012, very attractive relative to 10-year T-note rate of 1.99%. Top-down estimates — $96.66 for 2011 and $105.34 for 2012.

What to Expect from 3Q Earnings

Attention now shifts to third quarter earnings season. We just have 28, or 5.6%, of the S&P 500 firms reporting so far, so it is way too early draw any firm conclusions.

We will need another season where positive earnings surprises far outpace disappointments if we are going to match the second quarter growth rate. On the top line, growth is expected to slow sharply, to 6.31% in total from 11.01% in the second quarter, and excluding the financials to 10.04% from 13.25%.

In light of the generally downbeat economic news overall, it is not surprising that we are not seeing a lot of estimate increases without the catalyst of positive earnings surprises. The strong earnings performances we have seen — particularly in large multinational company earnings — are the single most important argument in the bulls’ favor (along with the low valuations based on those earnings). Thus if that starts to crack in a big way, it is a very big concern.

Against the poor macro backdrop one has to look at the valuations that stocks are currently have. Those to me look wildly attractive, particularly if the current earnings expectations (or anything close to them) can be achieved.

If it turns out that we avoid an outright recession, and the decline in profits that usually comes with one, then the market should rally from here. Expectations are starting to come down, particularly for 2012, but the vast majority of stocks, and every economic sector is expected to earn more in 2012 than in 2011.

Those are not my forecasts, or even Zacks’ forecasts. They are the collected wisdom of the individual analysts who cover the 500 individual stocks in the S&P 500. From my big picture point of view, it is hard to see how those forecasts don’t come down. However, there is still a fair amount of room to work with.

The total earnings for the S&P 500 are currently expected to be 13.4% above 2011 levels next year. Some of that growth is due to the assumption of few write-offs at the banks. The timing of those can be hard to forecast, but I’m not sure it is a good assumption that the write-offs will fall dramatically.

However, even excluding the Financial sector, 10.2% growth is now expected. We have started to see the estimates fall, but it has been happening at a very seasonally slow time for estimate revisions. Still, when you see more than three times as many estimate cuts than increases for next year, it is time to get a bit nervous.

Recapping Key Data and Events of Last Week

The economic news last week was mostly, but not entirely, on the upbeat side. Or to be more exact, it was better than expected, the absolute levels were mediocre at best.

We got both of the ISM surveys, manufacturing and the non-manufacturing, or service, index. Both came in slightly better than expected and pointed to slow but positive growth. The manufacturing survey was at 51.6, up a full point from August when a slight decline was expected. The service index dropped to 53.0 from 53.3, a smaller-than-expected decline.

Any reading over 50 indicates expansion. On the manufacturing side, though, the backlog of orders sub-index dropped sharply, and the new orders index was below 50, both of which are warning signs that things might be slowing in the near future.

Initial claims for jobless benefits rose to 401,000. That was a rise of 6,000 for the week, but still slightly below the expected level. The significance was that it showed that the previous week’s massive decline was not a fluke.

We really want to see the level decline well below the 400,000 level and stay there, but at least we are in the right zip code. That is s a positive sign that the jobs market might just be getting a bit better. Not quite “happy days are here again,” but a very encouraging sign.

Given the severity of the jobs crisis, it will take a long time (many years) to heal. Still, it is the level that would indicate that the economy is producing enough jobs on balance to start bringing down the unemployment rate. It comes too late to have much of an effect on the unemployment rate for September (the reference week is in the middle of the month), but if it can be sustained (a BIG “if”) it could be signaling a lower unemployment rate in October.

The big news of the week — the one that everyone was focused on — came on Friday. The jobs report showed that the total number of people employed rose by 103,000 in September. That is much better than consensus expectations for a gain of 60,000.

This report was also better than the ADP report on Wednesday, which was also an upward surprise, but not a big enough one. That report showed 91,000 private sector jobs created, and the expectations were for the BLS to show 83,000 new private sector jobs. The “actual” BLS number of private sector jobs was 137,000. Government payrolls declined by 34,000. The Federal government employment fell by 1,000 jobs. The State level added 2,000 but the Local levels laid off 35,000.

The pace of government lay offs rose sharply from last month when a total of 15,000 government jobs were actually added (revised from a loss of 17,000). The unemployment rate, which is derived from a separate survey was also unchanged at 9.1%. That was in line with what the consensus was looking for.

The household survey was noticeably more upbeat than the establishment survey, pointing to a gain of 398,000 jobs. The civilian participation rate rose to 64.2% from 64.0%, but is down from 64.7% a year ago.

In other words, the unemployment rate was unchanged even though people were coming back into the labor force. This is the second month in a row that has happened, and it is a very encouraging sign. The percentage of people over the age of 16 who actually have jobs rose slightly to 58.3% from 58.2% (employment to population ratio, or the employment rate).

However, July’s levels of both the participation rate and the employment rate were the lowest since 1983, so the small increases hardly mean that happy days are here again. While it was good news overall, there were some dark parts of it as well. Most notably the duration of unemployment figures.

The number of people out of work for more than six months rose by 188,000. The average length of time an unemployed person has been looking for a job rose to a new record, 40.5 weeks. Half of all unemployed have been out of work for 22.2 weeks, up from 21.8 weeks in August. That is 6.242 million people, or 44.6% of all the unemployed.

Falling Commodity Prices

The recent weakness in the price of oil is an offset to the otherwise weak outlook going forward. That should help to offset some, but certainly not all, or close to all, of the current economic headwinds.

In the Great Recession oil prices plunged from almost $150 per barrel to the low $30’s. That helped cushion the blow, but far from prevented the Great Recession from happening. The cliff that commodities fell off of last week makes it even clearer that inflation is not a big problem. If anything, deflation is a bigger risk right now (another reason for more monetary easing by the Fed).

I found the decline in copper prices particularly alarming. While we got some rebound last week, rising by 5.8% on the week, the longer term decline is very troubling to me.

Copper is sometimes referred to as the metal with a Ph.D. in economics. It is now just $3.28 per pound, off from a record high of $4.55 back in February. The good doctor is pretty much screaming about a coming economic slowdown, not just here, but around the world.

It is important to note that the collapse in commodities prices took place very late in the quarter, and for the most part even now are still somewhat higher than they were a year ago. The commodity-driven sectors, Energy and Materials, are the ones that are expected to have the best year over year growth rates for the third quarter. I would not assume that the earnings growth for firms likeFreeport McMoRan (FCX – Analyst Report), U.S. Steel (X -Analyst Report) or Anadarko Petroleum (APC – Analyst Report) can come close to being repeated anytime soon.

Cautiously Take Advantage of Valuations

Long term investors should start to take advantage of the current valuations. However, I would not be shooting fro the stars. Look for those companies with solid dividends (say over 2.5%), low payout ratios, solid balance sheets, and a history of rising dividends, which are still seeing analysts raise their estimates for 2012, or are at least not cutting them aggressively. I don’t know if you will be happy doing so next week or even next month, but I am pretty sure that you will be quite satisfied five years from now if you do so.

People tend to extrapolate the results of the previous decade or so when looking at what to expect from the stock market, and that is almost always a mistake. It led most people to be excessively bullish around 2000, and extremely bearish in the early 1980’s. The analysts who track the individual companies are still looking for solid growth in earnings next year, so unless we see the current trend towards cutting estimates continue or even accelerate, it is unlikely that the gap gets closed through falling earnings alone.

It might well be a better case against investing in long-term government bonds than it is in making the case for investing in stocks. From the point of view of the long-term investor, this still looks like one of the best times to invest in my lifetime.

Scorecard & Earnings Surprise

  • Just 28 firms have reported third quarter results. Total growth at 10.52%. We have a 3.00 surprise ratio, and 3.00% median surprise, both around normal. Positive surprises for 64.3% of all firms reporting.
  • Positive year-over-year growth for 15, falling EPS for 5 firms, 2.75 ratio, 73.9% of all firms reporting have higher EPS than last year.
  • Sample size is extremely small and unrepresentative, all the numbers are likely to change significantly from week to week.
  • Pay close attention to the % reported column in assessing the significance of sector level data.

Historically, a “normal earnings season” will have a surprise ratio of about 3:1 and a median surprise of about 3.0%. Thus in the early going we are doing about average on the ratio front. Early on the ratios and medians can be very volatile, but it looks like an OK start to things. Pay attention to the percent reporting in evaluating the significance of the sector numbers.

Scorecard & Earnings Surprise 3Q Reported
Income Surprises Yr/Yr
Growth
%
Reported
Surprise
Median
EPS
Surp
Pos
EPS
Surp
Neg
#
Grow
Pos
#
Grow
Neg
Finance 148.84% 1.27% 29.67 1 0 1 0
Industrial Products 13.11% 4.55% 10.64 1 0 1 0
Consumer Discretionary 6.75% 9.68% 7.41 3 0 3 0
Basic Materials 65.32% 8.70% 5.33 1 1 1 1
Business Service 31.89% 10.53% 5.07 2 0 2 0
Consumer Staples -3.74% 8.33% 3.23 2 1 2 1
Computer and Tech -4.00% 6.94% 2.27 3 1 3 2
Retail/Wholesale 6.47% 19.15% 1.22 5 3 7 2
Construction -30.00% 9.09% 0.00 0 0 0 1
Transportation 22.11% 11.11% -0.68 0 1 1 0
Auto NA 0.00% NA NA NA NA NA
Conglomerates NA 0.00% NA NA NA NA NA
Aerospace NA 0.00% NA NA NA NA NA
Oils and Energy NA 0.00% NA NA NA NA NA
Utilities NA 0.00% NA NA NA NA NA
Medical NA 0.00% NA NA NA NA NA
S&P 500 10.52% 5.60% 3.00 18 7 21 7

Sales Surprises

  • Strong revenue growth of 11.22% among the 28 that have reported, median surprise 1.60 (strong), surprise ratio of 8.33. Positive surprise for 89.3%.
  • Growing revenues outnumber falling revenues by ratio of 13.0, 92.9% have higher sales than last year.
  • The ratios and medians are likely to change significantly as more firms report.
  • Pay close attention to the % reported column in assessing significance of sector data.

 

Sales Surprises 3Q Reported
Sales Surprises Yr/Yr
Growth
%
Reported
Surprise
Median
Sales
Surp
Pos
Sales
Surp
Neg
#
Grow
Pos
#
Grow
Neg
Finance 9.89% 1.27% 14.377 1 0 1 0
Basic Materials 28.71% 8.70% 7.622 2 0 2 0
Consumer Staples 9.71% 8.33% 4.427 3 0 3 0
Consumer Discretionary 14.40% 9.68% 2.876 3 0 3 0
Business Service 21.82% 10.53% 2.188 2 0 2 0
Industrial Products 10.06% 4.55% 1.947 1 0 1 0
Transportation 11.25% 11.11% 1.885 1 0 1 0
Construction -0.61% 9.09% 1.165 1 0 0 1
Retail/Wholesale 9.87% 19.15% 0.57 7 2 9 0
Computer and Tech 6.78% 6.94% 0.385 4 1 4 1
Auto NA 0.00% NA NA NA NA NA
Conglomerates NA 0.00% NA NA NA NA NA
Aerospace NA 0.00% NA NA NA NA NA
Oils and Energy NA 0.00% NA NA NA NA NA
Utilities NA 0.00% NA NA NA NA NA
Medical NA 0.00% NA NA NA NA NA
S&P 500 11.22% 5.60% 1.601 25 3 26 2

Reported Quarterly Growth: Total Net Income

  • The total net income for the 28 that have reported so far is 10.52% above what was reported in the second quarter of 2010, down sharply from 23.93% growth the same 28 firms reported in the second quarter. Excluding financials, growth of 6.94%, down sharply from 19.84% reported in the second quarter.
  • Sequential earnings fall 10.32% for the 28 that have reported, 11.36% ex-financials.
  • Growth expected to slow further in the fourth quarter, to 4.17%, 2.68% ex-financials.
  • Total net income reported (28 firms) $10.01 billion, vs. $9.08 billion year ago, $11.25 billion in the second quarter.
  • Very small and unrepresentative samples, pay more attention to “Expected Tables.”

 

Quarterly Growth: Total Net Income Reported
Income Growth “Sequential Q4/Q3 E” “Sequential Q3/Q2 A” Year over Year 3Q 11 A Year over Year 4Q 11 E Year over Year 2Q 11 A
Finance -23.50% 8.26% 148.84% 40.32% 220.54%
Basic Materials 8.25% -69.15% 65.32% -4.76% 58.21%
Business Service -2.05% 1.87% 31.89% 11.42% 23.06%
Transportation 3.02% -16.85% 22.11% 29.90% 33.17%
Industrial Products -9.11% -2.82% 13.11% 11.99% 31.48%
Consumer Discretionary -61.61% 124.81% 6.75% -5.63% 4.70%
Retail/Wholesale -11.38% 9.37% 6.47% 6.15% 17.23%
Consumer Staples 27.46% 4.38% -3.74% -2.55% 18.23%
Computer and Tech 22.43% -38.60% -4.00% -0.04% 14.96%
Construction 64.72% 50.00% -30.00% 8.10% -65.00%
Auto na na na na na
Conglomerates na na na na na
Aerospace na na na na na
Oils and Energy na na na na na
Utilities na na na na na
Medical na na na na na
S&P -9.19% -10.32% 10.52% 4.17% 23.93%
Excluding Financial -8.22% -11.36% 6.49% 2.68% 19.84%

Expected Quarterly Growth: Total Net Income

  • Total net income is expected (for the 472) to be 9.70% above what was reported in the third quarter of 2010, down from 10.12% growth in the second quarter. Excluding financials, growth of 12.62%, down from 19.48% reported in the second quarter.
  • Relative to the second quarter total net income to rise 0.74%, ex-financials to fall 3.74%.
  • Construction to lead the way (low base in 2010), followed by Energy and Materials.
  • Five sectors see earnings accelerate from second quarter, 11 see slowing growth.
  • Total expected net income of $222.4 billion versus $198.9 billion year ago, $221.5 billion in second quarter (472 firms).

 

Quarterly Growth: Total Net Income Expected
Income Growth Sequential Q4/Q3 E Sequential Q3/Q2 E Year over Year 3Q 11 E Year over Year 4Q 11 E Year over Year 2Q 11 A
Construction -23.15% 13.92% 64.86% 56.26% -10.21%
Oils and Energy 1.82% -6.79% 48.12% 29.94% 41.07%
Basic Materials -0.41% -18.98% 28.42% 13.40% 50.12%
Industrial Products -5.55% -1.86% 19.36% 15.76% 26.01%
Retail/Wholesale -7.85% -1.74% 17.69% -24.09% 9.05%
Business Services 11.11% 4.21% 16.20% 15.15% 13.65%
Consumer Discretionary 19.91% -2.26% 11.88% 9.73% 18.55%
Auto -15.58% -22.70% 10.66% 27.35% 15.57%
Transportation 4.03% 2.67% 9.11% 13.20% 14.06%
Conglomerates 11.56% -3.27% 8.43% -4.99% 18.87%
Computer and Tech 17.28% -5.04% 5.22% 4.83% 25.75%
Utilities -28.98% 19.33% 2.81% 4.65% 5.14%
Finance 14.91% 28.26% 2.25% 21.09% -23.55%
Medical -2.08% -5.06% 0.71% 2.55% 4.57%
Consumer Staples -3.11% -2.49% 0.36% 3.08% 11.96%
Aerospace 8.31% -6.06% 0.03% -0.95% 3.07%
S&P 500 3.54% 0.74% 9.70% 8.41% 10.12%
Excluding Financial 1.43% -3.74% 12.62% 6.21% 19.48%

Quarterly Growth: Total Revenues Reported

  • Revenue growth (for the 28 that have reported) strong at 11.22%, but down up from the 11.62% growth posted in the second quarter. Growth ex-financials 11.23%, down from 11.39%.
  • Sequentially revenues 5.08% higher than in the second quarter, up 5.49% ex-financials.
  • Energy, Materials, Tech, Industrials and Transports all reporting revenue growth over 10%.
  • Revenue growth expected to slow in fourth quarter falling to 7.32%, 7.82% ex-financials. Still a healthy level.

 

Quarterly Growth: Total Revenues Reported
Sales Growth “Sequential Q4/Q3 E” “Sequential Q3/Q2 A” Year over Year 3Q 11 A Year over Year
4Q 11 E
Year over Year 2Q 11 A
Finance -23.50% 8.26% 148.84% 40.32% 220.54%
Basic Materials 8.25% -69.15% 65.32% -4.76% 58.21%
Business Service -2.05% 1.87% 31.89% 11.42% 23.06%
Transportation 3.02% -16.85% 22.11% 29.90% 33.17%
Industrial Products -9.11% -2.82% 13.11% 11.99% 31.48%
Consumer Discretionary -61.61% 124.81% 6.75% -5.63% 4.70%
Retail/Wholesale -11.38% 9.37% 6.47% 6.15% 17.23%
Consumer Staples 27.46% 4.38% -3.74% -2.55% 18.23%
Computer and Tech 22.43% -38.60% -4.00% -0.04% 14.96%
Construction 64.72% 50.00% -30.00% 8.10% -65.00%
Auto na na na na na
Conglomerates na na na na na
Aerospace na na na na na
Oils and Energy na na na na na
Utilities na na na na na
Medical na na na na na
S&P -3.87% 5.08% 11.22% 7.32% 11.62%
Excluding Financial -3.78% 5.49% 11.23% 7.82% 11.39%

Quarterly Growth: Total Revenues Expected

  • Revenue growth for the 472 yet to report expected to fall to 6.31% from the 11.01% growth posted in the second quarter. Growth ex-financials 10.04%, down from 13.25%.
  • Sequentially revenues 3.84% lower than in the second quarter, down 2.36% ex-financials.
  • Seven sectors expecting revenue growth over 10%, Finance and Staples to see year-over-year drop in revenues.
  • Revenue growth expected to slow sharply in fourth quarter falling to 2.75%, 4.98% ex-financials.

 

Quarterly Growth: Total Revenues Expected
Sales Growth Sequential Q4/Q3 E Sequential Q3/Q2 E Year over Year 3Q 11 E Year over Year 4Q 11 E Year over Year
2Q 11 A
Oils and Energy -2.39% -7.94% 22.64% 10.79% 28.47%
Industrial Products 0.24% 0.10% 14.70% 13.91% 18.79%
Transportation 2.97% 1.43% 13.18% 12.81% 13.27%
Consumer Discretionary 8.20% 1.37% 13.11% 11.18% 14.52%
Basic Materials 4.26% -8.50% 12.61% 9.81% 23.73%
Auto 4.93% -7.10% 11.44% 8.56% 11.95%
Computer and Tech 9.15% -0.11% 10.08% 8.26% 16.45%
Construction -3.38% 4.55% 9.38% 11.45% 2.52%
Retail/Wholesale 1.98% -1.05% 8.13% -2.02% 7.02%
Business Services 5.36% 0.51% 6.92% 6.15% 8.33%
Medical 2.64% -1.06% 5.83% 4.15% 6.14%
Utilities -7.65% 10.38% 5.58% 3.65% 6.28%
Conglomerates 7.86% -0.66% 4.84% 1.28% 2.89%
Aerospace 8.64% 5.05% 0.68% 4.89% -1.83%
Consumer Staples 5.25% -10.40% -1.24% -2.90% 12.07%
Finance 13.02% -13.71% -15.35% -10.29% -1.94%
S&P 500 3.53% -3.84% 6.31% 2.75% 11.01%
Excluding Financial 2.27% -2.36% 10.04% 4.98% 13.25%

Quarterly Net Margins Reported

  • Sector and S&P net margins are calculated as total net income for the sector divided by total revenues for the sector.
  • Net margins for the 28 that have reported fall to 7.34% from 7.39% a year ago, and down from 8.60% in the first quarter. Net margins ex-financials fall to 6.96% from 7.27% a year ago and 8.28% in the first quarter.
  • Net margins will swing significantly as more firms report and mix shifts.
  • Margin expansion the key driver behind earnings growth. Due to seasonality, it is best to compare to a year ago, particularly at the individual company and sector levels. Mix of companies reporting will lead to big changes in both the reported and expected net margin tables from week to week.

 

Quarterly: Net Margins Reported
Net Margins Q4 2011 Estimated Q3 2011 Reported Q2 2011 Reported 1Q 2011 Reported 4Q 2010 Reported 3Q 2010 Reported
Finance 32.65% 38.01% 28.01% 27.39% 17.76% 16.79%
Computer and Tech 18.25% 15.98% 22.72% 18.86% 19.49% 17.78%
Consumer Discretionary 6.08% 15.00% 7.57% 6.88% 7.14% 16.07%
Business Service 10.02% 9.84% 9.67% 9.02% 9.57% 9.09%
Consumer Staples 9.10% 8.20% 7.97% 8.77% 10.25% 9.35%
Basic Materials 8.37% 7.69% 20.60% 24.53% 10.34% 5.99%
Industrial Products 6.25% 6.78% 7.02% 6.29% 5.98% 6.60%
Transportation 4.52% 4.41% 5.29% 2.65% 3.82% 4.02%
Retail/Wholesale 3.23% 3.32% 3.45% 4.34% 3.24% 3.43%
Construction 3.82% 2.56% 1.83% -1.97% 3.72% 3.64%
Auto na na na na na na
Conglomerates na na na na na na
Aerospace na na na na na na
Oils and Energy na na na na na na
Utilities na na na na na na
Medical na na na na na na
S&P 500 6.93% 7.34% 8.60% 8.03% 7.14% 7.39%
Excluding Financial 6.64% 6.96% 8.28% 7.77% 6.97% 7.27%

Quarterly Net Margins Expected

  • Sector and S&P net margins are calculated as total net income for the sector divided by total revenues for the sector.
  • Net margins expected to rise to 9.55% from 9.16% a year ago, and up from 9.15% in the second quarter. Net margins ex-financials rise to 9.03% from 8.82% a year ago but down from 9.16% in the second quarter.
  • Eight sectors see year-over-year margin expansion, eight expected to see contraction.
  • Margin expansion the key driver behind earnings growth. Due to seasonality, it is best to compare to a year ago, particularly at the individual company and sector levels. Mix of companies reporting will lead to big changes in both the reported and expected net margin tables from week to week.

 

Quarterly: Net Margins Expected
Net Margins Q4 2011 Expected Q3 2011 Expected 2Q 2011 Reported 1Q 2011 Reported 4Q 2010 Reported 3Q 2010 Reported
Computer and Tech 16.85% 15.68% 16.50% 16.16% 17.40% 16.41%
Finance 13.67% 13.45% 9.05% 12.46% 10.13% 11.13%
Medical 12.42% 13.02% 13.57% 13.85% 12.62% 13.68%
Business Service 13.26% 12.58% 12.13% 11.65% 12.23% 11.57%
Consumer Staples 11.26% 12.24% 11.24% 10.56% 10.61% 12.04%
Conglomerates 10.07% 9.74% 10.00% 8.94% 10.73% 9.41%
Transportation 9.63% 9.53% 9.41% 8.03% 9.60% 9.89%
Consumer Discretionary 10.32% 9.31% 9.66% 9.48% 10.46% 9.41%
Utilities 6.77% 8.80% 8.14% 7.96% 6.70% 9.04%
Oils and Energy 9.06% 8.68% 8.57% 8.38% 7.72% 7.19%
Industrial Products 8.05% 8.54% 8.71% 8.73% 7.92% 8.21%
Basic Materials 7.06% 7.39% 8.34% 8.50% 6.83% 6.48%
Aerospace 6.13% 6.15% 6.88% 6.14% 6.49% 6.19%
Auto 4.41% 5.48% 6.59% 6.64% 3.76% 5.52%
Retail/Wholesale 3.18% 3.51% 3.54% 3.24% 4.10% 3.23%
Construction 2.73% 3.44% 3.16% 1.27% 1.95% 2.28%
S&P 500 9.56% 9.55% 9.15% 9.39% 9.04% 9.16%
Excluding Financial 8.96% 9.03% 9.16% 8.89% 8.85% 8.82%

Annual Total Net Income Growth

  • Following rise of just 2.0% in 2009, total earnings for the S&P 500 jumps 46.3% in 2010, 14.2% further expected in 2011. Growth ex-financials 28.1% in 2010, 17.7% in 2011.
  • For 2012, 13.4% growth expected. 10.2% ex-financials.
  • Fourteen sectors expected to see total net income rise in 2011 and all in 2012. Utilities only (small) decliner in 2010. Nine sectors expected to post double-digit growth in 2011 and eleven in 2012. No sector expected to grow less than 5% in 2012.
  • Cyclical/Commodity sectors expected to lead in earnings growth again in 2011 and into 2012. Materials and Energy expected to grow almost 40% for second year.
  • Sector dispersion of earnings growth narrows dramatically between 2010 and 2012, only Construction (low base) expected to grow more than 20% in 2012, ten grew more than 30% in 2010.

 

Annual Total Net Income Growth
Net Income Growth 2009 2010 2011 2012
Basic Materials -48.29% 61.86% 39.59% 13.41%
Oils and Energy -54.95% 49.75% 39.36% 9.43%
Industrial Products -35.12% 36.60% 32.42% 18.12%
Computer and Tech -4.61% 46.67% 21.63% 10.33%
Consumer Discretionary -15.46% 24.73% 18.34% 14.39%
Business Service 1.46% 13.61% 17.93% 13.56%
Auto - to + 1470.14% 17.37% 7.83%
Conglomerates -23.61% 11.25% 11.55% 12.24%
Retail/Wholesale 2.62% 14.66% 11.31% 13.16%
Consumer Staples 5.82% 11.71% 9.09% 8.61%
Medical 2.53% 10.37% 6.44% 5.23%
Aerospace -17.10% 21.38% 4.47% 12.14%
Utilities -14.20% -0.64% 3.99% 5.28%
Construction - to - - to + 1.84% 49.87%
Finance - to + 316.22% -1.91% 31.00%
Transportation -30.21% 81.24% -5.07% 19.29%
S&P 2.03% 46.29% 14.17% 13.36%

Annual Total Revenue Growth

  • Total S&P 500 revenue in 2010 rises 7.73% above 2009 levels, a rebound from a 6.19% 2009 decline.
  • Total revenues for the S&P 500 expected to rise 6.78% in 2011, 6.12% in 2012.
  • Energy to lead revenue race in 2011. Six other sectors (all cyclical) also expected to show double-digit revenue growth in 2011.
  • All sectors but Staples and Finance expected to show positive top line growth in 2011, but five sectors expected to show positive growth below 5%. All sectors see 2012 growth, but only Construction, Tech and Industrials seen in double digits.
  • Aerospace the only sector to post lower top line for 2010. Revenues for Financials, Construction, and Conglomerates were virtually unchanged.
  • The widespread revenue gains are not consistent with the idea of a double-dip recession, particularly in a low inflation environment.
  • Revenue growth significantly different if financials are excluded, down 10.56% in 2009 but growth of 9.10% in 2010, 12.10% in 2011 and 4.84% in 2012.

 

Annual Total Revenue Growth
Sales Growth 2009 2010 2011 2012
Oils and Energy -34.41% 23.15% 25.16% 3.31%
Basic Materials -16.96% 11.22% 18.68% 7.55%
Industrial Products -20.96% 12.34% 17.99% 11.37%
Auto -21.40% 8.53% 14.73% 9.29%
Consumer Discretionary -10.99% 3.93% 13.40% 8.58%
Computer and Tech -3.19% 15.56% 13.27% 11.50%
Transportation 7.25% 10.70% 13.12% 9.72%
Business Service -3.61% 4.81% 8.94% 7.13%
Retail/Wholesale 1.40% 4.08% 6.41% 6.63%
Medical 6.25% 11.45% 4.88% 2.87%
Utilities -6.24% 2.13% 4.58% 2.83%
Construction -15.92% 0.47% 4.57% 13.04%
Conglomerates -13.30% 0.94% 4.07% 4.79%
Aerospace 6.51% -0.34% 0.37% 6.10%
Consumer Staples -0.36% 4.77% -1.16% 5.85%
Finance 21.57% 0.11% -16.33% 4.86%
S&P 500 -6.19% 7.73% 6.78% 6.12%
Excluding Financial -10.56% 9.10% 12.10% 4.84%

Annual Net Margins

  • Net margins marching higher, from 5.88% in 2008 to 6.36% in 2009 to 8.64% for 2010, 9.13% expected for 2011. Trend expected to continue into 2012 with net margins of 9.87% expected. Major source of earnings growth.
  • Financials significantly distort overall net margins. Net margins ex-financials 7.78% in 2008, 7.03% in 2009, 8.26% for 2010, 8.67% expected in 2011. Expected to grow to 9.11% in 2012.
  • Financials net margins soar from -8.42% in 2008 to 16.03% expected for 2012.
  • All sectors but Medical and Utilities saw higher net margins in 2010 than in 2009. Thirteen sectors expected to post higher net margins in 2011 than in 2010. Widespread margin expansion currently expected for 2012 as well, with all sectors expected to post expansion in margins.
  • Six sectors to boast double-digit net margins in 2012, up from just three in 2009.
  • Sector net margins are calculated as total net income for sector divided by total revenues. However, there are generally fewer revenue estimates than earnings estimates for individual companies.

 

Annual Net Margins
Net Margins 2009A 2010E 2011E 2012E
Computer and Tech 11.91% 15.12% 15.57% 16.07%
Medical 13.09% 12.96% 13.12% 13.46%
Finance 2.63% 10.95% 12.83% 16.03%
Business Service 10.07% 10.92% 11.65% 12.53%
Consumer Staples 9.80% 10.45% 11.30% 11.84%
Conglomerates 8.17% 9.00% 9.63% 10.34%
Consumer Discretionary 7.41% 8.89% 9.06% 9.78%
Oils and Energy 6.26% 7.61% 8.47% 8.97%
Industrial Products 6.08% 7.40% 8.15% 8.81%
Basic Materials 4.72% 6.86% 7.94% 8.51%
Transportation 5.80% 9.50% 7.82% 8.67%
Utilities 8.07% 7.85% 7.80% 7.99%
Aerospace 4.93% 6.00% 6.24% 6.60%
Auto 0.36% 5.23% 5.26% 5.28%
Retail/Wholesale 3.00% 3.31% 3.41% 3.68%
Construction -0.51% 2.67% 2.56% 3.45%
S&P 500 6.36% 8.64% 9.13% 9.87%
Excluding Financial 7.03% 8.26% 8.67% 9.11%

Earnings Estimate Revisions: Current Fiscal Year
The Zacks Revisions Ratio: 2011 

  • Revisions ratio for full S&P 500 at 0.46, down from 0.47 last week, still very bearish. Past seasonal low in activity, change in revisions ratio driven more by new estimates being added, not old ones falling out (higher significance to revisions ratio).
  • Just three sectors with revisions ratio at or above 1.0. Eleven sectors with two or more cuts per increase. Sample sizes still thin.
  • Ratio of firms with rising to falling mean estimates at 0.43, down from 0.49 last week, a very bearish reading.
  • Total number of revisions (4 week total) climbing off of seasonal lows at 1,809, down from 1,575 last week (14.9%). Increases at 570 up from 501 (13.8%), cuts at 1,239, up from 1,074 (15.4%).

 

The Zacks Revisions Ratio: 2011
Sector %Ch
Curr Fiscal Yr
Est – 4 wks
#
Firms
Up
#
Firms
Down
#
Ests
Up
#
Ests
Down
Revisions
Ratio
Firms
up/down
Aerospace -0.02 4 4 14 5 2.80 1.00
Consumer Discretionary 0.32 15 12 53 36 1.47 1.25
Business Service -0.01 9 6 30 24 1.25 1.50
Retail/Wholesale -0.36 19 26 96 141 0.68 0.73
Medical -0.4 15 24 37 68 0.54 0.63
Finance -2.04 18 55 127 287 0.44 0.33
Auto -0.69 2 4 4 10 0.40 0.50
Computer and Tech -1.92 13 43 76 196 0.39 0.30
Oils and Energy -2.19 9 31 59 156 0.38 0.29
Utilities -0.52 9 17 15 41 0.37 0.53
Conglomerates -0.58 2 6 4 12 0.33 0.33
Basic Materials -2.43 3 19 17 60 0.28 0.16
Construction -0.62 1 8 3 11 0.27 0.13
Industrial Products -1.49 4 18 14 58 0.24 0.22
Consumer Staples -0.3 7 25 15 80 0.19 0.28
Transportation -0.47 1 7 6 54 0.11 0.14
S&P 500 -1.09 131 305 570 1239 0.46 0.43

Earnings Estimate Revisions: Next Fiscal Year
The Zacks Revisions Ratio: 2012

  • Revisions ratio for full S&P 500 at 0.31, down from 0.34 from last week, deep in bearish territory, but sample size still thin for many sectors.
  • Lowest FY2 revisions ratio since early in 2009.
  • All sectors have negative revisions ratio (below 1.0). Fourteen sectors with more than two cuts per increase. Auto and Transports more than 10 to 1.
  • Ratio of firms with rising estimate to falling mean estimates at 0.31, down from 0.38, still deep in bearish territory.
  • Total number of revisions (4 week total) at 1,822, up from 1,709 last week (6.6%).
  • Increases at 424 down from 434 last week (-2.3%), cuts rise to 1,398 from 1,275 last week (9.6%).

 

The Zacks Revisions Ratio: 2012
Sector %Ch
Next Fiscal Yr Est – 4 wks
#
Firms Up
#
Firms Down
#
Ests Up
#
Ests Down
Revisions
Ratio
Firms up/down
Consumer Discretionary -0.82 7 21 35 55 0.64 0.33
Retail/Wholesale -0.56 18 27 69 122 0.57 0.67
Medical -0.51 14 27 41 85 0.48 0.52
Business Service -0.71 6 9 13 27 0.48 0.67
Basic Materials -2.23 5 15 22 57 0.39 0.33
Oils and Energy -2.79 8 32 58 163 0.36 0.25
Utilities -0.60 7 20 16 52 0.31 0.35
Aerospace -0.69 0 9 9 34 0.26 0.00
Consumer Staples -0.55 8 25 21 82 0.26 0.32
Computer and Tech -2.09 10 45 45 201 0.22 0.22
Industrial Products -2.46 5 16 13 63 0.21 0.31
Finance -2.05 15 59 69 348 0.20 0.25
Construction -2.22 0 9 3 16 0.19 0.00
Conglomerates -1.12 1 7 4 23 0.17 0.14
Transportation -1.58 0 9 5 57 0.09 0.00
Auto -2.00 1 5 1 13 0.08 0.20
S&P 500 -1.45 105 335 424 1398 0.30 0.31

Total Income and Share

  • S&P 500 earned $543.6 billion in 2009, rising to earn $795.1 billion in 2010, $907.7 billion expected in 2011.
  • The S&P 500 total earnings expected to hit the $1 Trillion mark in 2012 at $1.029 Trillion.
  • Finance share of total earnings moves from 5.9% in 2009 to 17.9% in 2010, dip to 15.4% expected for 2011; rebound to 17.8% in 2012, but still well below 2007 peak of over 30%. Energy share also rising going from 11.9% in 2009 to 14.4% in 2012.
  • Medical share of total earnings far exceeds market cap share (index weight), but earnings share expected to shrink from 17.3% in 2009 to 11.0% in 2012, down each year.
  • Market Cap shares of Construction, Staples, Retail, Transportation and Business Service sectors far exceed earnings shares of any of the years from 2010 through 2012.
  • Earnings shares of Energy, Finance, Autos Materials and Medical well above market cap shares.
  • As a general rule, one should try to overweight sectors with rising earnings shares, underweight falling earnings shares, but also over weight sectors where earnings shares exceed market cap shares.

 

Total Income and Share
Income ($ Bill) Total
Net
Income
$ 2010
Total
Net
Income
$ 2011
Total
Net
Income
$ 2012
% Total
S&P Earn
2010
% Total
S&P Earn
2011
% Total
S&P
Earn
2012
% Total
S&P Mkt
Cap
Computer and Tech $134,690 $163,824 $180,754 16.94% 18.05% 17.57% 18.84%
Finance $142,515 $139,798 $183,131 17.93% 15.40% 17.80% 14.10%
Oils and Energy $96,873 $135,003 $147,738 12.18% 14.87% 14.36% 11.21%
Medical $100,818 $107,306 $112,922 12.68% 11.82% 10.97% 10.68%
Consumer Staples $62,488 $68,168 $74,039 7.86% 7.51% 7.20% 9.20%
Retail/Wholesale $58,305 $64,900 $73,443 7.33% 7.15% 7.14% 9.25%
Utilities $47,911 $49,821 $52,451 6.03% 5.49% 5.10% 6.45%
Basic Materials $23,781 $33,195 $37,647 2.99% 3.66% 3.66% 3.22%
Conglomerates $28,602 $31,905 $35,812 3.60% 3.52% 3.48% 3.47%
Consumer Discretionary $26,593 $31,471 $35,998 3.34% 3.47% 3.50% 4.00%
Industrial Products $16,694 $22,106 $26,113 2.10% 2.44% 2.54% 2.40%
Business Service $14,288 $16,850 $19,134 1.80% 1.86% 1.86% 2.44%
Aerospace $13,874 $14,494 $16,254 1.75% 1.60% 1.58% 1.39%
Transportation $14,604 $13,863 $16,538 1.84% 1.53% 1.61% 1.85%
Auto $11,087 $13,013 $14,032 1.39% 1.43% 1.36% 1.00%
Construction $1,932 $1,968 $2,949 0.24% 0.22% 0.29% 0.49%
S&P 500 $795,056 $907,686 $1,028,955 100.00% 100.00% 100.00% 100.00%

P/E Ratios

  • Trading at 13.89x 2010, 12.24x 2011 earnings, or earnings yields of 7.20% and 8.17%, respectively.  P/E for 2012 at 10.80x or earnings yield of 9.26%.
  • Earnings yields still very attractive relative to 10-year T-Note rate of 1.99%.
  • Autos and Energy have lowest P/E based on 2011 and 2012 earnings. Materials, Aerospace and Finance also have single digit P/Es for 2012.
  • Construction has highest P/E for all three years by wide margin.
  • S&P 500 earned $56.97 in 2009 rising to $83.87 in 2010. Currently expected to earn $95.18 in 2011 and $107.87 for 2012.

 

P/E Ratios
P/E 2009 2010 2011 2012
Auto 157.90 10.06 8.57 7.95
Oils and Energy 19.26 12.86 9.23 8.43
Aerospace 13.55 11.16 10.69 9.53
Basic Materials 24.38 15.06 10.79 9.51
Medical 13.00 11.77 11.06 10.51
Finance 45.78 11.00 11.21 8.56
Industrial Products 21.82 15.97 12.06 10.21
Conglomerates 14.98 13.47 12.07 10.76
Computer and Tech 22.80 15.54 12.78 11.58
Consumer Discretionary 20.83 16.70 14.11 12.34
Utilities 14.87 14.97 14.39 13.67
Transportation 25.56 14.10 14.86 12.45
Consumer Staples 18.27 16.35 14.99 13.80
Retail/Wholesale 20.22 17.63 15.84 14.00
Business Service 21.53 18.95 16.07 14.15
Construction NM 28.14 27.63 18.44
S&P 500 20.45 13.98 12.24 10.80

Data in this report, unless stated otherwise, is through the close on Thursday 10/6/2011.

Dirk van Dijk, CFA is the Chief Equity Strategist for Zacks.com. With more than 25 years investment experience he has become a popular commentator appearing in the Wall Street Journal and on CNBC. Dirk is also the Editor in charge of the market beating Zacks Strategic Investor service.

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EARNINGS EXPECTATIONS ARE STARTING TO FALL

By Dirk Van Dijk, CFA, Zacks Investment Research

Key Points:

  • Almost done with earnings season, with 499 or 99.8% of second-quarter results in. Total earnings growth low at 11.9%, but mostly due to one stock (BAC – Analyst Report). Ex-financials growth is 19.4% year over year. Total revenue growth 11.0%, 11.3% ex-financials. Median earnings surprise 3.01% and median sales surprise 1.80%.
  • At start of earnings season 9.65% growth expected, 12.18% ex-financials. Current year-over-year earnings growth of 12.0% expected for EPS in the third quarter, 11.7% ex-financials. For revenues, 5.85% and 6.04% ex-financials.
  • Earnings beats top misses by a 3.43 ratio; sales beats top misses by 2.48 ratio, 69.3% of all firms report positive earnings surprise, 70.5% beat on revenues. Growing earnings firms outpace declining earnings by 3.16 ratio, revenues 5.16 growth ratio.
  • Full-year total earnings for the S&P 500 jumps 45.9% in 2010, expected to rise 15.5% further in 2011. Growth to continue in 2012 with total net income expected to rise 10.1%. Financials major earnings driver in 2010. Excluding financials, growth was 27.7% in 2010, and expected to be 18.6% in 2011 and 9.4% in 2012.
  • Total revenues for the S&P 500 rise 7.88% in 2010, expected to be up 6.68% in 2011 and 6.14% in 2012. Excluding financials, revenues up 9.16% in 2010, expected to rise 11.30% in 2011 and 5.37% in 2012.
  • Annual Net Margins marching higher, from 5.88% in 2008 to 6.37% in 2009 to 8.62% for 2010, 9.27% expected for 2011 and 9.69% in 2012. Margin expansion major source of earnings growth. Net margins ex financials 7.79% in 2008, 7.04% in 2009, 8.23% for 2010, 8.77% expected in 2011 and 9.11% in 2012.
  • Revisions ratio for full S&P 500 at 0.65 for 2011 (bearish), at 0.42 for 2012 (very bearish). Ratio of firms with rising to falling mean estimates at 0.71 for 2011 (bearish), 0.41 (very bearish) for 2012. Total revisions activity past peak and plunging.
  • S&P 500 earned $543.6 billion in 2009, rising to $793.0 billion in 2010, expected to climb to $916.1 billion in 2011. In 2012, the 500 are collectively expected to earn $1.009 Trillion. 
  • S&P 500 earned $56.90 in 2009: $83.12 in 2010 and $96.02 in 2011 expected, bottom up. For 2012, $105.79 expected. Puts P/Es at 14.27x for 2010, and 12.35x for 2011 and 11.21x for 2012, very attractive relative to 10-year T-note rate of 1.92%. Top-down estimates, $95.91 for 2011 and $104.59 for 2012.


The Earnings Picture

Second quarter earnings season is effectively over with 499 or 99.8% of S&P 500 reports in. With the exception of a handful of financials, most notably Bank of America (BAC – Analyst Report), which had a $12 billion negative swing in net income from last year, this is another great earnings season.

The year-over-year growth rate for the S&P 500 is 11.9%, way off the 17.1% pace those same 499 firms posted in the first quarter. However, it you exclude the Financial sector, growth is 19.3%, actually up slightly from the 19.1% pace of the first quarter. At the beginning of earnings season, growth of 9.7% was expected; 12.2% ex-Financials.

Attention will now start to shift to the expected growth in the third quarter. Things are expected to slow a bit, with 12.0% growth expected overall, and 11.7% if the financials are excluded. While that is down fairly significantly from the second quarter, especially ex-financials, it is roughly in-line with what the expectations for the second quarter were before companies started to report.

Top-line results were also very strong, with 10.00% year-over-year growth for the 499, actually up from the 8.84% growth they posted in the first quarter. The top-line results are even more impressive if the financials are excluded, rising to 10.32% from the 9.58% pace of the first quarter.

Top-line surprises have been almost as good as than the bottom-line surprises, with a median surprise of 1.80% and a 2.48 surprise ratio. The revenue growth in the first half is remarkable, given only 0.4% GDP growth in the first quarter and just 1.0% in the second, with low overall inflation. High commodity prices helped revenues among the Energy and Materials sectors, and higher growth abroad and currency translation effects from a weak dollar have also helped.

Looking ahead to the third quarter, year-over-year growth of 5.85% is expected for the full S&P 500, and 6.04% growth if financials are excluded. At the very start of reporting season, revenue growth of 9.62% total growth was expected, and 8.94% excluding the financials.

Net Margins Growing but Slowing

Net margins have been one of the keys to earnings growth, but cracks in the story are starting to appear. The 499 that have reported have net margins of 9.17%, up from 9.10% a year ago. That, however, is due to the financials, especially BAC. Excluding financials, next margins have come in at 8.53%, up from 7.95% a year ago. In the third quarter, overall net margins are expected to expand to 9.67%, and 8.56% excluding the financials.

On an annual basis, net margins continue to march northward. In 2008, overall net margins were just 5.88%, rising to 6.37% in 2009. They hit 8.62% in 2010 and are expected to continue climbing to 9.27% in 2011 and 9.69% in 2012. The pattern is a bit different, particularly during the recession, if the financials are excluded, as margins fell from 7.78% in 2008 to 7.04% in 2009, but have started a robust recovery and rose to 8.23% in 2010. They are expected to rise to 8.77% in 2011 and 9.11% in 2012.

Full-Year Expectations – And Beyond

The expectations for the full year are very healthy, with total net income for 2010 rising to $793.0 billion in 2010, up from $543.6 billion in 2009. In 2011, the total net income for the S&P 500 should be $916.1 billion, or increases of 45.9% and 15.5%, respectively. The expectation is for 2012 to have total net income passing the $1 Trillion mark to $1.009 Trillion, for growth of 9.4%.

That will also put the “EPS” for the S&P 500 over the $100 “per share” level for the first time at $105.79. That is up from $56.90 for 2009, $83.12 for 2010 and $96.02 for 2011. In an environment where the 10-year T-note is yielding 1.92%, a P/E of 14.3x based on 2010 and 12.4x based on 2011 earnings looks attractive. The P/E based on 2012 earnings is 11.2x. Those P/Es are based on the Thursday close, so are even lower after Friday’s fall.

Estimate Revisions Slowing

Estimate revisions activity has past its seasonal peak. During the last seasonal decline in revisions activity, the ratio of increases to cuts also declined sharply, from over 2.0 at the height of the last earnings season, but dropped sharply after earnings season was over. It is happening again. The revisions ratio for 2011 dropped to 0.65, which is a bearish reading, and for 2012, it is down to a very bearish reading of 0.42.

The number of estimate increases has plunged, as many of the increases that came right on the heels of earnings beats are now over 4 weeks old, and very few new estimate increases are being made. This is a less worrisome situation than if the revisions ratios were plunging due to a flood of new estimate cuts, but it can hardly be considered a good sign.

The numbers are also confirmed by the ratio of firms with rising mean estimates to those with falling mean estimated dropping to 0.71 for 2011 and 0.41 for 2012. Given the weakness in the economy, and the reduced economic forecasts for 2012, the lack of estimate increases, and the relative abundance of estimate cuts is not exactly shocking. Still, it is an important thing to keep an eye on.

Recap of Key Data and Events of Last Week

It was a relatively light week for economic data. While it is hard to call the numbers we got “strong,” at least they were generally better than expected.

The ISM non-manufacturing (or service) survey actually rose to 53.3 from 52.7, much better than the expected drop to 51.0. That means that the service sector of the economy actually expanded faster in August than in July, but still not what would call robust growth. Still, it is a positive.

That comes on top of the ISM manufacturing survey the week before, which also surprised to the upside, although it fell to 50.6 from 50.9, meaning very slow — but still positive — growth and much better than the expected level of 48.5. With both measures above the magic 50 mark, it is very unlikely that we are currently in a double dip, but there is not a lot of margin for error.

The best news of the week came from a sharp drop in the Trade Deficit, to $44.81 billion in July from a downwardly revised $51.57 billion in June. Most of the decline was due to lower oil prices as the oil deficit dropped to $25.6 billion from $29.4 billion. The non-oil goods deficit also fell, to $34.08 billion from $36.58 billion.

The surplus we run in Services expanded slightly to $15.82 billion from $15.46 billion. The decline is extremely welcome, but the level of the trade deficit is an ongoing national disaster. It is the trade deficit — not the budget deficit — that is responsible for our being deeply in debt to the rest of the world, most notably China. The trade deficit lowers the level of GDP on essentially a dollar-for-dollar basis.

The reduced drag from the trade deficit, if it continues in August and September, is one thing that could well cause GDP growth to be higher in the third quarter than it was in the second. Getting rid of the trade deficit is probably the single most promising path to a restoration of prosperity, and resolving global economic imbalances.

For that to happen, two things need to occur: The dollar will have to become significantly weaker against all other major currencies and we have to find a way to end our addiction to foreign oil. Unfortunately, the governments and central banks of the other major currencies have a vote on the value of the dollar, and every president since Nixon has promised to end our oil addiction, with no success.

Initial claims for jobless benefits rose again, to 414,000. Remaining above the 400,000 is not a good sign. That is the level that would indicate that the economy is producing enough jobs on balance to start to bring down the unemployment rate.

The major “event” of the week was Obama’s speech of jobs. He proposed a $447 billion stimulus package to get the economy moving again. Not all of that is incremental spending over what is being spent this year, but it does prevent the cutbacks that were scheduled to happen at the end of this year.

The biggest part of the program was an extension and expansion of the payroll tax cut. In 2011, the individual side was cut to 4.2% from 6.2% and for 2012 he is proposing that it come down to 3.2%, and that the employer side also be cut. I’m not sure how much the cut on the employer side will cause them to increase employment, especially since it only lasts for a year, but at the margin it should help. The typical worker will get about $1,500 more in their pocket to spend than they would if the program were allowed to expire, and $500 more than they had in 2011.

Since the payroll tax ends for earnings over $106,800, the maximum after-tax spending boost from the cut will be $3,204, or $1,068 more in 2012 than 2011. The incremental spending power in people’s pockets should help increase demand, and thus put people back to work. There were also parts of the program designed to help State and Local governments avoid having to lay off teachers, cops and fire fighters, as well as significant public works programs. The details of how this would be paid for are due out this week.

The program is pretty much of a textbook answer as to what to do when the economy is in a deep slump. Here is a passage from Lord Maynard Keynes that sort of illustrates where the program is coming from:

“If it is impracticable materially to increase investment, obviously there is no means of securing a higher level of employment except by increasing consumption…Moreover, I should readily concede that the wisest course is to advance on both fronts at once. Whilst aiming at a socially controlled rate of investment with a view to a progressive decline in the marginal efficiency of capital, I should support at the same time all sorts of policies for increasing the propensity to consume. For it is unlikely that full employment can be maintained, whatever we may do about investment, with the existing propensity to consume.

“There is room, therefore, for both policies to operate together — to promote investment and, at the same time, to promote consumption, not merely to the level which with the existing propensity to consume would correspond to the increased investment, but to a higher level still.”

The General Theory of Employment, Interest and Money

If the program were to be passed, it should, based on some back-of-the-envelope-type calculations result in economic growth of between 1% and 2% more than it would have been. That should be more than enough to avoid a double dip. It might lead to significant progress on bringing down unemployment. I don’t think it would be enough to get us down to anything like full employment, but might shave a full percentage point or more off the current 9.1% rate.

The program was more ambitious and larger than I was expecting. The details of how it will be paid for could be very significant, as they would have the potential to offset the good that the program would do. However, in one very important sense, it really doesn’t matter. It is highly unlikely that this can pass Congress, particularly the House.

The speech is best seen as the opening of the 2012 re-election campaign. One thing I would have liked to have seen in the program that was not there is a crash program to start to use cheap, abundant, and domestic natural gas as a transportation fuel. That is the single most promising path towards ending our oil addiction.

At the micro level, earnings and valuations, provide plenty of reason to be bullish. This is particularly true when one looks at the prevailing level of interest rates. Currently, 242 S&P 500 (48.4%) firms have dividend yields higher than the Friday yield on the 10-year T-note (1.91%), and over two thirds (345, or 69.0%) yield more than the five year note (0.80%). Heck, 104 or 20.8% yield more than even the 30 year bond (3.25%).

Keep in mind that 114 or 22.8% of the S&P 500 stocks pay no dividend at all, so no matter how far the market falls, they will still have a 0.0% dividend yield. Many of those companies, such asApple (AAPL – Analyst Report) with its $76 billion cash hoard, could easily pay a dividend if they wanted to. Of the 386 dividend-paying stocks, 62.7% yield more than the 10-year and 89.3% yield more than the five year. Those sorts of numbers have not been seen since the early 1950’s.

One thing is absolutely certain, the coupon payment on those notes will never go up, while companies have been raising their dividends at a rapid pace of late. Nearly one quarter of the firms (124) in the S&P 500 (and almost a third of those paying a dividend) have raised their dividend at more than a 10% per year rate over the last five years, and those five years include the worst economic downturn since the 1930’s. Only 72 have lower dividends than they had five years ago, and 34 of those are Financials.

Market Pricing-In a New Recession

At these levels it is clear to me that the market is pricing in not just slower growth, but an outright recession, either underway or just about to get underway. If it turns out that we avoid an outright recession, and the decline in profits that usually comes with one, then the market should rally from here. As I noted above, the expectations are starting to come down, particularly for 2012, but the vast majority of stocks, and every economic sector is expected to earn more in 2012 than in 2011.

The decline in the revisions ratio is mostly driven right now by the drying op of new estimate increases, rather than a flood of new estimate cuts. It is entirely normal at this point seasonally for overall revisions activity to slow down dramatically. The decline in activity lessens the significance of the drop in the revisions ratio, but it remains something to be concerned about. If it continues to drop, or even stays at the current depressed levels, it starts to cut into one of the most important bullish arguments.

Europe a Major Debacle In Waiting

The economy remains very fragile, and is thus very susceptible to any outside shocks. There is a potential 8.5 on the Richter scale looming in Europe’s problems. There is a very real chance that the Euro will not even exist in a few years. If it does, it could well be a diminished version where the common currency only applies to Germany and the Netherlands, and perhaps France. The Greeks and the Italians would go back to having Drachma and Lira.

A top official at the European Central Bank resigned this week, and the Greek bailout seemed to run into yet more trouble, even though the German equivalent of the Supreme Court ruled that it was OK for Germany to participate in the bailout.

Getting from here to there has the potential for enormous dislocations, and hence big damage to the European economy. That would inevitably spill over to the U.S. The Greek bailout is in very serious trouble, and the yield on the Greek two-year note soared to new highs, hitting over 55%. That is way beyond junk and in the realm of radioactive waste.

The economy of Greece in particular — but also for the rest of the periphery of Europe — continue to weaken, and with that weakness tax revenues are drying up even more, and the country is missing the fiscal targets it agreed to just a few months ago.

Fiscal policy may have to be consolidated in Europe as a whole (meaning the individual countries will have to give up most of their sovereignty, though given historical, cultural and language differences, that seems unlikely to happen). This would also mean that people in Germany and the Netherlands would see a big part of their tax dollars flowing to Greece and Spain, just like people in Connecticut and New Jersey see a big part of their tax dollars flowing to Mississippi and Alaska.

If that doesn’t happen, the common Euro currency has to fall apart. Italy and Greece, unlike the U.S., do not have their own printing press (hence when they get downgraded, their interest rates soar, not sink like here). They have to rely on the printing press of the ECB, and that is largely controlled by the Germans. The process of unscrambling the Euro egg and going back to Drachmas and Lira would be a very messy one, and will result in huge dislocations, and thus potentially cause economic collapse.

Most of the proposals that would integrate Europe fiscally would take a long time, and would probably require not just passage by each of the 17 parliaments that use the Euro, but probably changes in their constitutions as well. That is not going to happen overnight. It also means that it is highly unlikely that the Euro, the second most important currency in the world, is going to strengthen dramatically against the dollar.

European banks are heavily invested in the bonds of the PIIGS, and there is a real threat to the stability of the European banking system. If the European banking system goes down, ours will follow as night follows day (or at the very least we will need to see “Son of TARP”). This is not a problem caused here, and is not the fault of Obama, or Bush, or Congress or even the Tea Party, for that matter. It is a mess of the Europeans’ own making, but its effects will be felt here, just as the effects of the mortgage mess of our making were felt there.

Stay Invested, but Don’t Shoot for the Stars

On balance I remain bullish. I am, however, pulling back on my year-end target price for the S&P 500. I had been looking for about 1400 by the end of the year (since December). With the slower economy, and the turmoil on both sides of the Atlantic, something more on the order of 1325 now looks more realistic.

Getting there is going to be a bumpy ride. Strong earnings should trump a dicey international situation and the dramas in DC. Valuations on stocks look very compelling, with the S&P trading from just 12.3x 2011, and 11.2x 2012 earnings.

Put in terms of earnings yields, we are looking at 8.10% and 8.92%, while T-notes are only at 1.91%. The old “Fed Model” suggested that the forward earnings yield (call it 8.45%) should be in line with the 10-year note. Instead we have the dividend yield on the S&P 500 higher than the 10-year note. Since the early 1950’s that has happened only twice, in early November of 2008 and in March of 2009. The second incident was followed by a doubling of the S&P 500. From a long-term perspective, stocks look extremely undervalued to me.

Long-term investors should start to take advantage of the current valuations. However, I would not be shooting fro the stars. Look for those companies with solid dividends (say, over 2.5%), low payout ratios, solid balance sheets and a history of rising dividends, which are still seeing analysts raise their estimates for 2012. I don’t know if you will be happy doing so next week or even next month, but I am pretty sure that you will be quite satisfied five years from now.

Scorecard & Earnings Surprise

  • Another great earnings season about done. So far, 499 (99.8%) reports in. Total growth looks low at 11.85% but that is entirely due to a handful of financials). We have a 3.43 surprise ratio, and 3.01% median surprise. Positive Surprises for 69.3% of all firms reporting.
  • Positive year-over-year growth for 376, falling EPS for 119 firms, 3.16 ratio, 75.4% of all firms reporting have higher EPS than last year.
  • Only one stock — Kroger’s (KR – Analyst Report) — left to report.
  • Autos, Discretionary and Tech lead in surprise; Transports, Industrials lag, but every sector has more positive surprises than disappointments.
Scorecard & Earnings Surprise 4Q Reported
Income Surprises Yr/Yr
Growth
%
Reported
Surprise
Median
EPS
Surp
Pos
EPS
Surp
Neg
#
Grow
Pos
#
Grow
Neg
Auto 15.57% 100.00% 8.33 6 1 6 1
Consumer Discretionary 16.72% 100.00% 6.85 21 7 23 7
Computer and Tech 24.53% 100.00% 5.21 51 16 54 18
Retail/Wholesale 10.34% 97.87% 4.86 39 3 36 8
Oils and Energy 41.07% 100.00% 4.17 28 11 33 8
Finance -22.35% 100.00% 4.17 59 12 58 21
Aerospace 3.07% 100.00% 3.47 6 3 4 5
Utilities 5.14% 100.00% 3.39 24 11 27 13
Basic Materials 50.34% 100.00% 3.01 15 6 21 2
Conglomerates 18.87% 100.00% 2.84 7 1 9 0
Business Service 15.22% 100.00% 1.92 12 3 16 3
Consumer Staples 12.16% 100.00% 1.79 24 5 26 10
Medical 4.57% 100.00% 1.69 30 7 34 11
Construction -13.36% 100.00% 1.43 6 4 3 8
Transportation 16.55% 100.00% 0.96 6 3 8 1
Industrial Products 26.08% 100.00% 0.81 12 8 18 3
S&P 500 11.85% 99.80% 3.01 346 101 376 119

Sales Surprises

  • Strong revenue growth of 11.00% among the 499 that have reported, median surprise 1.80 (very strong), surprise ratio of 2.48. Positive surprise for 70.5%.
  • Growing revenues outnumber falling revenues by ratio of 5.16; 83.8% have higher sales than last year.
  • Autos and Energy have biggest median surprises, but Energy surprise ratio is below average.
  • Aerospace only sector with more disappointments than positive surprises.

 

Sales Surprises
Sales Surprises Yr/Yr
Growth
%
Reported
Surprise
Median
Sales
Surp
Pos
Sales
Surp
Neg
#
Grow
Pos
#
Grow
Neg
Auto 11.95% 100.00% 7.768 7 0 7 0
Oils and Energy 28.47% 100.00% 5.101 28 13 36 5
Conglomerates 2.89% 100.00% 3.217 7 1 8 1
Finance -1.79% 100.00% 2.77 57 19 54 25
Basic Materials 23.64% 100.00% 2.656 19 4 23 0
Construction 2.15% 100.00% 2.135 7 4 5 6
Industrial Products 18.68% 100.00% 2.067 14 8 22 0
Consumer Discretionary 14.13% 100.00% 2.057 24 7 26 5
Medical 6.14% 100.00% 1.625 34 10 40 5
Business Service 10.53% 100.00% 1.597 13 6 17 2
Consumer Staples 11.66% 100.00% 1.576 27 9 30 6
Transportation 12.95% 100.00% 1.371 6 3 9 0
Computer and Tech 16.11% 100.00% 1.261 49 23 62 10
Retail/Wholesale 7.15% 97.87% 0.84 34 12 42 4
Utilities 6.28% 100.00% 0.757 22 18 32 8
Aerospace -1.83% 100.00% -0.03 4 5 5 4
S&P 500 11.00% 99.80% 1.8 352 142 418 81

Reported Quarterly Growth: Total Net Income

  • The total net income is 11.85% above what was reported in the second quarter of 2010, down from 17.05% growth the same 499 firms reported in the first quarter. Excluding financials, growth of 19.42%, up slightly from 19.08% reported in the first quarter. Financials hit by a $12 billion negative swing at Bank of America for mortgage settlement.
  • Sequential earnings growth is 2.48% for the 499 that have reported, 9.52% ex-financials.
  • Materials, Energy, Industrials and Tech all report over 20% growth; Construction and Finance only sectors with negative growth.
  • Eight sectors see earnings accelerate from first quarter, 8 see slowing growth.
  • Final net income $231.9 billion versus $207.4 billion.

 

Quarterly Growth: Total Net Income Reported
Income Growth “Sequential Q3/Q2 E” “Sequential Q2/Q1 A” Year over Year 2Q 11 A Year over Year 3Q 11 E Year over Year 1Q 11 A
Basic Materials -23.50% 2.64% 50.34% 31.99% 48.26%
Oils and Energy -5.99% 15.84% 41.07% 49.40% 40.52%
Industrial Products -0.75% 6.89% 26.08% 20.64% 65.09%
Computer and Tech -7.93% 9.75% 24.53% 4.91% 24.48%
Conglomerates -3.39% 13.39% 18.87% 8.30% 29.30%
Consumer Discretionary 8.09% 9.39% 16.72% 6.00% 13.68%
Transportation 1.21% 37.05% 16.55% 12.17% 23.82%
Auto -22.04% 7.21% 15.57% 11.61% 46.88%
Business Service 3.15% 9.84% 15.22% 17.94% 13.86%
Consumer Staples -0.68% 17.84% 12.16% 1.83% 3.78%
Retail/Wholesale -9.33% 7.12% 10.34% 5.24% 5.69%
Utilities 18.93% -1.13% 5.14% 2.47% -0.75%
Medical -4.90% 0.46% 4.57% 0.88% 5.90%
Aerospace -6.12% 18.01% 3.07% -0.03% 5.04%
Construction 14.92% 214.06% -13.36% 58.58% -34.25%
Finance 40.54% -29.16% -22.35% 13.55% 8.72%
S&P 1.19% 2.48% 11.85% 12.04% 17.05%
Excluding Financial -4.47% 9.52% 19.42% 11.73% 19.08%

Quarterly Growth: Total Revenues Reported

  • Revenue growth very strong at 11.00%, up from the 8.84% growth posted (499 firms) in the first quarter. Growth ex-financials 11.32%, up from 9.58%.
  • Sequentially revenues 5.03% higher than in the first quarter, up 5.61% ex-financials.
  • Energy, Materials, Tech and Industrials all reporting revenue growth over 15%, five more in double digits.
  • Revenue growth expected to slow sharply in third quarter falling to 5.85%, 6.04% ex-financials. Still a healthy level.

 

Quarterly Growth: Total Revenues Reported
Sales Growth “Sequential Q3/Q2 E” “Sequential Q2/Q1 A” Year over Year 2Q 11 A Year over Year
3Q 11 E
Year over Year 1Q 11 A
Oils and Energy -7.74% 13.19% 28.47% 22.91% 25.06%
Basic Materials -8.79% 8.19% 23.64% 13.50% 19.48%
Industrial Products 0.60% 6.97% 18.68% 15.19% 25.14%
Computer and Tech -0.07% 5.86% 16.11% 10.87% 17.02%
Consumer Discretionary 1.38% 6.61% 14.13% 11.39% 10.05%
Transportation 1.29% 9.66% 12.95% 13.03% 11.75%
Auto -7.11% 8.00% 11.95% 11.44% 13.96%
Consumer Staples -8.84% 11.25% 11.66% 0.39% 5.59%
Business Service -0.68% 5.20% 10.53% 8.58% 9.24%
Retail/Wholesale -1.68% 3.67% 7.15% 5.35% 5.61%
Utilities 8.00% -3.32% 6.28% 3.31% -0.63%
Medical -1.04% 2.55% 6.14% 5.86% 4.33%
Conglomerates -0.98% 1.37% 2.89% 4.51% 7.40%
Construction 5.01% 17.54% 2.15% 9.30% 0.84%
Finance -14.78% -3.09% -1.79% -16.24% -2.19%
Aerospace 4.99% 5.40% -1.83% 0.63% -3.24%
S&P -4.00% 5.03% 11.00% 5.85% 8.84%
Excluding Financial -4.77% 5.61% 11.32% 6.04% 9.58%

Quarterly Net Margins Reported

  • Sector and S&P net margins are calculated as total net income for the sector divided by total revenues for the sector.
  • Net margins for the 499 that have reported rise to 9.17% from 9.10% a year ago, but down from 9.40% in the first quarter. Net margins ex-financials rise to 8.53% from 7.95% a year ago and 8.23% in the first quarter.
  • Thirteen sectors see year-over-year margin expansion, only three see contraction.
  • Margin expansion the key driver behind earnings growth. Due to seasonality, it is best to compare to a year ago, particularly at the individual company and sector levels. Mix of companies reporting will lead to big changes in both the reported and expected net margin tables from week to week.

Net Margins Already Reported

Quarterly: Net Margins Reported
Net Margins Q3 2011 Estimated Q2 2011 Reported 1Q 2011 Reported 4Q 2010 Reported 3Q 2010 Reported 2Q 2010 Reported
Computer and Tech 15.62% 16.95% 16.35% 17.54% 16.51% 15.81%
Medical 13.04% 13.57% 13.85% 12.62% 13.68% 13.77%
Business Service 12.05% 11.60% 11.11% 11.70% 11.09% 11.13%
Consumer Staples 12.09% 11.09% 10.47% 10.59% 11.91% 11.04%
Conglomerates 9.75% 10.00% 8.94% 10.73% 9.41% 8.65%
Consumer Discretionary 9.97% 9.35% 9.11% 9.98% 10.48% 9.14%
Finance 15.13% 9.17% 12.55% 10.17% 11.16% 11.60%
Basic Materials 7.30% 8.70% 9.17% 6.71% 6.27% 7.15%
Industrial Products 8.57% 8.69% 8.69% 7.89% 8.18% 8.18%
Oils and Energy 8.74% 8.57% 8.38% 7.72% 7.19% 7.81%
Transportation 8.43% 8.43% 6.75% 8.24% 8.49% 8.17%
Utilities 8.96% 8.14% 7.96% 6.70% 9.04% 8.23%
Aerospace 6.15% 6.88% 6.14% 6.49% 6.19% 6.55%
Auto 5.53% 6.59% 6.64% 3.76% 5.52% 6.38%
Retail/Wholesale 3.35% 3.64% 3.52% 4.10% 3.36% 3.53%
Construction 3.40% 3.10% 1.16% 2.04% 2.34% 3.66%
S&P 500 9.67% 9.17% 9.40% 9.00% 9.13% 9.10%
Excluding Financial 8.56% 8.53% 8.23% 8.06% 8.12% 7.95%

Annual Total Net Income Growth

  • Following rise of just 2.0% in 2009, total earnings for the S&P 500 jumps 45.9% in 2010, 15.5% further expected in 2011. Growth ex-financials 27.7% in 2010, 18.6% in 2011.
  • For 2012, 10.1% growth expected. 9.4% ex-Financials.
  • All sectors expected to see total net income rise in 2011 and in 2012. Utilities only (small) decliner in 2010. Ten sectors expected to post double-digit growth in 2011 and eleven in 2012. Health Care only sector expected to grow less than 5% in 2012.
  • Cyclical/Commodity sectors expected to lead in earnings growth again in 2011 and into 2012. Matterials expected to grow over 40% for second year.
  • Sector dispersion of earnings growth narrows dramatically between 2010 and 2012, only two sectors expected to grow more than 20% in 2012, seven grew more than 35% in 2010.

 

Annual Total Net Income Growth
Net Income Growth 2009 2010 2011 2012
Basic Materials -50.38% 72.43% 40.11% 10.61%
Oils and Energy -55.04% 49.92% 39.94% 8.76%
Industrial Products -35.15% 36.55% 33.89% 9.54%
Computer and Tech -4.86% 46.67% 21.85% 9.87%
Consumer Discretionary -15.45% 22.56% 20.56% 12.86%
Transportation -30.21% 44.44% 19.71% 20.05%
Auto - to + 1469.69% 18.83% 9.46%
Business Service 1.47% 13.62% 17.83% 12.42%
Conglomerates -23.61% 11.25% 12.54% 13.96%
Retail/Wholesale 2.64% 14.68% 11.21% 11.77%
Consumer Staples 5.81% 11.73% 9.41% 8.81%
Medical 2.54% 10.37% 6.45% 4.51%
Utilities -14.20% -0.64% 4.45% 7.17%
Aerospace -17.10% 21.38% 4.40% 7.36%
Construction - to - - to + 1.68% 47.27%
Finance - to + 313.18% 1.60% 13.92%
S&P 500 1.99% 45.89% 15.53% 10.13%

Annual Total Revenue Growth

  • Total S&P 500 revenue in 2010 rises 7.78% above 2009 levels, a rebound from a 6.33% 2009 decline.
  • Total revenues for the S&P 500 expected to rise 6.68% in 2011, 6.14% in 2012.
  • Energy to lead revenue race in 2011. Six other sectors (all cyclical) also expected to show double-digit revenue growth in 2011.
  • All sectors but Staples and Finance expected to show positive top-line growth in 2011, but five sectors expected to show positive growth below 5%. All sectors see 2012 growth.
  • Aerospace the only sector to post lower top line for 2010. Revenues for Financials, Construction, and Conglomerates were virtually unchanged.
  • Three sectors expected to post double-digit top-line growth in 2012, led by Construction and Industrials. No sector expected to post falling revenues.
  • Revenue growth significantly different if Financials are excluded, down 10.56% in 2009 but growth of 9.16% in 2010, 11.30% in 2011, and 5.37% in 2012.

 

Annual Total Revenue Growth
Sales Growth 2009 2010 2011 2012
Oils and Energy -34.41% 23.15% 23.91% 5.13%
Basic Materials -19.30% 12.78% 18.65% 6.77%
Industrial Products -20.96% 12.34% 17.72% 11.15%
Auto -21.40% 8.53% 14.68% 7.87%
Consumer Discretionary -4.95% 3.93% 13.64% 7.53%
Computer and Tech -6.24% 15.53% 13.37% 9.68%
Transportation 7.25% 10.83% 13.13% 10.11%
Business Service -3.61% 4.81% 7.74% 7.67%
Retail/Wholesale 1.40% 4.08% 6.31% 6.66%
Medical 6.25% 11.37% 4.92% 2.77%
Utilities -6.24% 2.13% 4.70% 2.87%
Construction -15.92% 0.47% 4.53% 11.53%
Conglomerates -13.30% 0.94% 3.87% 4.17%
Aerospace 6.51% -0.34% 0.38% 6.03%
Consumer Staples -0.36% 4.77% -1.03% 5.92%
Finance 21.57% 0.11% -15.61% 5.07%
S&P 500 -6.33% 7.78% 6.68% 6.14%
Excluding Financial -10.56% 9.16% 11.30% 5.37%

Annual Net Margins

  • Net Margins marching higher, from 5.88% in 2008 to 6.37% in 2009 to 8.62% for 2010, 9.27% expected for 2011. Trend expected to continue into 2012 with net margins of 9.69% expected. Major source of earnings growth.
  • Financials significantly distort overall net margins. Net margins ex-financials 7.78% in 2008, 7.04% in 2009, 8.23% for 2010, 8.77% expected in 2011. Expected to grow to 9.11% in 2012.
  • Financials net margins soar from -8.42% in 2008 to 14.35% expected for 2012.
  • All sectors but Medical and Utilities saw higher net margins in 2010 than in 2009. All sectors but Utilities and Construction expected to post higher net margins in 2011 than in 2010. Widespread margin expansion currently expected for 2012 as well, with all sectors expected to post expansion in margins.
  • Six sectors to boast double-digit net margins in 2012, up from just three in 2009.
  • Sector net margins are calculated as total net income for sector divided by total revenues. However, there are generally fewer revenue estimates than earnings estimates for individual companies.

 

Annual Net Margins
Net Margins 2009A 2010E 2011E 2012E
Computer and Tech 11.98% 15.20% 16.08% 16.37%
Finance 2.66% 10.99% 13.23% 14.35%
Medical 13.09% 12.97% 13.15% 13.39%
Business Service 10.09% 10.93% 11.69% 12.48%
Consumer Staples 9.80% 10.45% 11.36% 11.87%
Conglomerates 8.17% 9.00% 9.76% 10.67%
Consumer Discretionary 7.41% 8.74% 9.16% 9.73%
Oils and Energy 6.23% 7.59% 8.57% 8.87%
Industrial Products 6.11% 7.43% 8.37% 8.33%
Basic Materials 4.46% 6.82% 7.96% 8.34%
Transportation 5.80% 7.56% 7.85% 8.72%
Utilities 8.07% 7.85% 7.83% 8.16%
Aerospace 4.93% 6.00% 6.24% 6.32%
Auto 0.36% 5.23% 5.42% 5.50%
Retail/Wholesale 3.03% 3.34% 3.44% 3.66%
Construction -0.51% 2.67% 2.60% 3.43%
S&P 500 6.37% 8.62% 9.27% 9.69%
Excluding Financial 7.04% 8.23% 8.77% 9.11%

Earnings Estimate Revisions: Current Fiscal Year
The Zacks Revisions Ratio: 2011 

  • Revisions ratio for full S&P 500 at 0.65, down from 0.97 last week, now bearish. Past seasonal high in activity, change in revisions ratio driven more by old estimates falling out, not new ones being added (lower significance to revisions ratio).
  • Only Auto sector with revisions ratio at or above 2.0. Retail and Utilities only other sectors with positive revisions ratios, Thirteen negative (below 1.0). Five sectors with more than three cuts per increase. Sample sizes getting thin.
  • Ratio of firms with rising to falling mean estimates at 0.71, down from 0.85 last week, now a bearish reading.
  • Total number of revisions (4-week total) passed peak at 1,624, down from 2,166 last week (-25.0%). Increases at 640 down from 1,067 (-40.0%), cuts at 984, down from 1,099 (-10.5%).

 

The Zacks Revisions Ratio: 2011
Sector %Ch
Curr Fiscal Yr
Est – 4 wks
#
Firms
Up
#
Firms
Down
#
Ests
Up
#
Ests
Down
Revisions
Ratio
Firms
up/down
Auto 0.38 6 0 6 3 2.00 999.99
Retail/Wholesale -1.53 20 25 193 133 1.45 0.80
Utilities -0.34 19 19 29 25 1.16 1.00
Medical -0.01 21 20 32 41 0.78 1.05
Consumer Staples -1.02 9 14 32 42 0.76 0.64
Industrial Products 0.07 10 9 18 26 0.69 1.11
Consumer Discretionary -0.84 14 13 39 60 0.65 1.08
Finance -0.67 29 46 120 206 0.58 0.63
Oils and Energy -1.01 14 27 64 122 0.52 0.52
Basic Materials -1.25 7 12 11 23 0.48 0.58
Computer and Tech -1.59 16 46 78 227 0.34 0.35
Business Service -0.13 8 7 8 26 0.31 1.14
Conglomerates -0.96 2 7 3 11 0.27 0.29
Construction -3.01 7 4 2 9 0.22 1.75
Transportation 0.20 2 7 5 24 0.21 0.29
Aerospace -0.04 3 6 0 6 0.00 0.50
S&P -0.85 187 262 640 984 0.65 0.71

Earnings Estimate Revisions: Next Fiscal Year
The Zacks Revisions Ratio: 2012

  • Revisions ratio for full S&P 500 at 0.42, down from 0.67 from last week, deep in bearish territory, but sample size is getting thin for many sectors.
  • Only Retail has more increases than cuts.
  • Fifteen sectors have negative revisions ratio (below 1.0). Nine sectors with more than three cuts per increase. Construction, Auto and Conglomerates 10 to 1 or more.
  • Ratio of firms with rising estimate to falling mean estimates at 0.41, down from 0.52, deep in bearish territory.
  • Total number of revisions (4-week total) at 1,819, down from 2,289 last week (-20.5%).
  • Increases at 541 down from 918 last week (-41.1%), cuts fall to 1,278 from 1,371 last week (-6.8%).

 

The Zacks Revisions Ratio: 2012
Sector %Ch
Next Fiscal Yr Est – 4 wks
#
Firms Up
#
Firms Down
#
Ests Up
#
Ests Down
Revisions
Ratio
Firms up/down
Retail/Wholesale -0.41 22 23 150 134 1.12 0.96
Medical 0.02 22 19 49 53 0.92 1.16
Consumer Staples -1.00 8 18 23 29 0.79 0.44
Consumer Discretionary -0.98 12 15 40 55 0.73 0.80
Utilities -0.44 11 24 28 51 0.55 0.46
Oils and Energy -1.72 16 24 78 161 0.48 0.67
Industrial Products -0.64 6 13 16 36 0.44 0.46
Basic Materials -1.11 6 15 12 39 0.31 0.40
Aerospace -0.30 1 8 4 15 0.27 0.13
Finance -1.83 14 65 80 337 0.24 0.22
Computer and Tech -2.42 9 54 48 239 0.20 0.17
Transportation -0.78 0 9 5 29 0.17 0.00
Business Service -0.64 2 15 4 32 0.13 0.13
Construction -4.72 3 8 2 20 0.10 0.38
Auto -2.14 1 5 1 15 0.07 0.20
Conglomerates -9.32 0 9 1 33 0.03 0.00
S&P -1.40 133 324 541 1278 0.42 0.41

Total Income and Share

  • S&P 500 earned $543.6 billion in 2009, rising to earn $793.0 billion in 2010, $916.1 billion expected in 2011.
  • The S&P 500 total earnings expected to hit the $1 Trillion mark in 2012 at $1.009 Trillion.
  • Finance share of total earnings moves from 5.9% in 2009 to 18.1% in 2010, dip to 15.9% expected for 2011; rebound to 16.4% in 2012, but still well below 2007 peak of over 30%. Energy share also rising going from 11.9% in 2009 to 14.6% in 2012.
  • Medical share of total earnings far exceeds market cap share (index weight), but earnings share expected to shrink from 17.3% in 2009 to 11.1% in 2012, down each year.
  • Market cap shares of Construction, Staples, Retail, Transportation, Industrials and Business Service sectors far exceed earnings shares of any of the years from 2010 through 2012.
  • Earnings shares of Energy, Finance, Autos and Medical well above market-cap shares.
  • As a general rule, one should try to overweight sectors with rising earnings shares, underweight falling earnings shares, but also overweight sectors where earnings shares exceed market-cap shares.

 

Total Income and Share
Income ($ Bill) Total
Net
Income
$ 2010
Total
Net
Income
$ 2011
Total
Net
Income
$ 2012
% Total
S&P Earn
2010
% Total
S&P Earn
2011
% Total
S&P
Earn
2012
% Total
S&P Mkt
Cap
Computer and Tech $135,634 $165,265 $181,581 17.10% 18.04% 18.00% 18.19%
Finance $143,120 $145,409 $165,655 18.05% 15.87% 16.42% 14.30%
Oils and Energy $96,665 $135,270 $147,120 12.19% 14.77% 14.58% 11.75%
Medical $100,841 $107,343 $112,183 12.72% 11.72% 11.12% 10.77%
Consumer Staples $62,481 $68,364 $74,386 7.88% 7.46% 7.37% 9.23%
Retail/Wholesale $58,831 $65,426 $73,130 7.42% 7.14% 7.25% 9.22%
Utilities $47,911 $50,043 $53,632 6.04% 5.46% 5.32% 6.34%
Basic Materials $23,164 $32,455 $35,898 2.92% 3.54% 3.56% 3.26%
Conglomerates $28,602 $32,189 $36,684 3.61% 3.51% 3.64% 3.46%
Consumer Discretionary $26,144 $31,519 $35,571 3.30% 3.44% 3.53% 3.92%
Industrial Products $16,760 $22,441 $24,581 2.11% 2.45% 2.44% 2.52%
Business Service $14,307 $16,858 $18,951 1.80% 1.84% 1.88% 2.41%
Aerospace $13,874 $14,484 $15,550 1.75% 1.58% 1.54% 1.34%
Transportation $11,639 $13,933 $16,726 1.47% 1.52% 1.66% 1.81%
Auto $11,084 $13,170 $14,417 1.40% 1.44% 1.43% 0.97%
Construction $1,932 $1,964 $2,893 0.24% 0.21% 0.29% 0.50%
S&P 500 $792,987 $916,132 $1,008,958 100.00% 100.00% 100.00% 100.00%

P/E Ratios

  • Trading at 14.27x 2010, 12.35x 2011 earnings, or earnings yields of 7.07% and 8.10%, respectively (As of Thursday close, lower after Friday). P/E for 2012 at 11.21x or earnings yield of 8.92%.
  • Earnings yields still very attractive relative to 10-year T-Note rate of 1.91% (Friday).
  • Autos and Energy have lowest P/E based on 2011 and 2012 earnings. Aerospace, Materials and Finance also have low P/Es for 2012.
  • Construction has highest P/E for all three years by wide margin.
  • S&P 500 earned $56.90 in 2009 rising to $83.12 in 2010. Currently expected to earn $96.02 in 2011 and $105.79 for 2012.

 

P/E Ratios
P/E 2009 2010 2011 2012
Auto 155.91 9.93 8.36 7.64
Oils and Energy 20.63 13.76 9.83 9.04
Aerospace 13.22 10.89 10.44 9.72
Finance 46.70 11.30 11.12 9.77
Medical 13.34 12.09 11.36 10.87
Basic Materials 27.46 15.93 11.37 10.28
Conglomerates 15.22 13.68 12.16 10.67
Computer and Tech 22.26 15.18 12.45 11.34
Industrial Products 23.25 17.03 12.72 11.61
Consumer Discretionary 20.79 16.96 14.07 12.47
Utilities 14.87 14.96 14.33 13.37
Transportation 25.41 17.59 14.70 12.24
Consumer Staples 18.68 16.72 15.28 14.04
Retail/Wholesale 20.34 17.74 15.95 14.27
Business Service 21.63 19.04 16.16 14.37
Construction NM 29.33 28.85 19.59
S&P 500 20.81 14.27 12.35 11.21


Data in this report, unless stated otherwise, is through the close on Thursday 9/8/2011.

Dirk van Dijk, CFA is the Chief Equity Strategist for Zacks.com. With more than 25 years investment experience he has become a popular commentator appearing in the Wall Street Journal and on CNBC. Dirk is also the Editor in charge of the market beating Zacks Strategic Investor service.

More about Zacks Strategic Investor >>

THE FLOODGATES OPEN

By Dirk Van Dijk, CFA, Zacks Investment Research

Second quarter earnings season is now under way, but things really start to move into high gear next week. There will be 348 firms reporting, and 108 of those are in the S&P 500. By next Friday we should have a very good handle on how the overall earnings season will go.

The firms reporting this week are sort of like a who’s who of U.S. industry including: Apple (AAPL – Analyst Report), American Express (AXP – Analyst Report), Bank of America (BAC – Analyst Report), Caterpillar (CAT – Analyst Report), General Electric (GEAnalyst Report), International Business Machines (IBM -Analyst Report), Intel (INTC – Analyst Report), McDonald’s (MCD -Analyst Report), Schlumberger (SLB – Analyst Report) andVerizon (VZ – Analyst Report). That is an interesting cross section of U.S. business.

We have a relatively light economic data calendar, so earnings should be front and center, along with the sovereign debt situations on both sides of the Atlantic. The theme of the economic data will be housing, starting on Monday with the Homebuilder’s index, moving on to Housing Starts and Building Permits on Tuesday and Existing Home Sales on Wednesday. We finish up on Thursday with the Philly Fed index, and of course the weekly initial jobless claims numbers.

Monday

  • The National Association of Homebuilder’s index was at just 13 in June, when the break even between expansion and contraction is 50. No consensus expectations exist, but I would expect a slight uptick to 14 or 15, but that is still an absolutely awful level.

Tuesday

  • Housing Starts are expected to rebound slightly, rising to an annual rate of 570,000 in June from just 560,000 in May. What “strength” there is in the number is likely to come from the extremely volatile multi-family apartment and condo sector. Single family starts are a better gage of the overall pace of housing activity. Single family starts were only running at an annual rate of 419,000. This is an extremely low level, the bubble peak was over 1.8 million. The good news is that the low level of housing starts means that less housing is being added to the current bloated inventory. The bad news is that normally homebuilding is one of the main forces pulling the economy out of a recession and that is simply not happening this time. The very low level of housing starts is one of the key reasons job growth is so sluggish. Given the record low level of new home sales in February, I suspect that the hopes of a rebound, however slight, are just that, hopes, particularly when it comes to single family starts.
  • The bad news for the homebuilders is likely to continue into the fall. Building permits, the best indicator of future housing starts, are expected to edge down to 605,000 from 612,000. Eventually the housing market will rebound, and we will start to build new houses in the country, but there is no evidence of it happening soon.

Wednesday

  • Existing Home Sales are expected to rise to a seasonally adjusted annual rate of 4.95 million from 4.81 million in May. What is more significant will be the level of inventories, and if the May months of supply rate of 9.3 months will continue to trend up. While down from last summer, the level is still extremely high and has been rising again in recent months (it was 8.3 in March) and indicates strong downward pressure on home prices. That really is what to watch in the existing home sales numbers, since the amount of economic activity generated by an existing home changing hands is not really that big a deal. Home prices are a very big deal. Unfortunately it looks like they are falling again, despite a recent increase on a non seasonally adjusted basis, but still slightly down on a seasonally adjusted basis.

Thursday

  • Weekly initial claims for unemployment insurance come out. They had a very nice decline early in they year, but then had a rough few months. Last week they fell by 22,000 to 405,000 (but only after an upward revision to the prior week of 10,000). A slight increase is expected next week, rising to 411,000. The four week moving average will stay well above the 400,000 level, where it has been for the three months. The sharp rise in initial claims were an early warning of the weak jobs report for June. Robust job expansion is generally associated with initial claims below the 400,000 level.
  • Continuing claims have also been in a downtrend of late, but the road down has been bumpy. Last week they rose by 15,000 to 3.727 million. That is down 928,000 from a year ago. I would expect a small decline this week. The consensus is looking for a small increase to 3.700 million. Some of the longer term decline due to people simply exhausting their regular state benefits which run out after 26 weeks. Those however, don’t last forever either. Federally paid extended claims fell by 16,000 to 3.831 million, and are down by 502,000 over the last year. Looking at just the regular continuing claims numbers is a serious mistake. They only include a little over half of the unemployed now given the unprecedentedly high duration of unemployment figures. A better measure is the total number of people getting unemployment benefits, currently at 7.485 million, which is up 25,000 from last week (there are some timing issues so the change in continuing and existing claims does not match the change in the total). The total number of people getting benefits is now 1.267 million below year ago levels. What is not known is how many people have left the extended claims via the road to prosperity, finding a new job, and how many have left on the road to poverty, having simply exhausted even the extended benefits. Given the differential between job growth and the decline in total people getting benefits, it looks like about 1 million people have simply run out of benefits, and have not found new work. Make sure to look at both sets of numbers! Many of the press reports will not, but we will here at Zacks.
  • The Philly Fed index, one of the regional Mini-ISM’s is expected to rise to 0.0 from -7.70 in June. Any reading above zero indicates expansion, so the expected level means manufacturing activity in the Mid Atlantic would be stalled, neither expanding nor contracting. The May reading was shockingly weak, April was at 18.8.

Friday

  • Nothing of particular significance.

Potential Positive or Negative Surprises

Historically the best indicators of firms which are likely to report positive surprises are a recent history of positive surprises and rising estimates going into the report. The Zack’s Rank is also a good indicator of potential surprises. Similarly a recent history of earnings disappointments, cuts in the average estimate for the quarter in the month before the report is due and a poor Zacks Rank (4 or 5) are often red flags pointing to a potential disappointing earnings report.

Potential Positive Surprises

  • Honeywell (HON – Analyst Report) is expected to report EPS of $0.98 versus $0.60 a year ago. Last time out HON reported 8.69% above expectations and over the last month, the estimates for this quarter have risen by 0.17%. HON is a #1 ranked stock.
  • Olin (OLN – Snapshot Report) is expected to report EPS of $0.51 versus $0.31 a year ago. Last time out OLN reported 16.67% above expectations and over the last month, the estimates for this quarter have risen by 0.33%. OLN is a #1 ranked stock.
  • Select Comfort Sleep Systems (SCSS – Snapshot Report) is expected to report EPS of $0.17 versus $0.11 a year ago. Last time out SCSS reported 57.89% above expectations and over the last month, the estimates for this quarter have risen by 0.84%. SCSS is a #1 ranked stock.

Potential Negative Surprises

  • Morgan Stanley (MS – Analyst Report) is expected to report a loss of $0.62 versus EPS of $0.87 a year ago. Last time out MS reported 35.29% above expectations but over the last month, the estimates for this quarter have plunged by 308.6%, moving from an expected profit to an expected loss. MS is a #5 ranked stock.
  • Piper Jaffrey (PJC – Snapshot Report) is expected to report EPS of $0.49 versus $0.36 a year ago. Last time out PJC reported 28.3% below expectations and over the last month, the estimates for this quarter have dropped by 7.9%. PJC is a #4 ranked stock.
  • Petmed (PETS – Analyst Report) is expected to report EPS of $0.24 versus $0.32 a year ago. Last time out PETS reported 13.64% below expectations and over the last month, the estimates for this quarter have fallen by 2.38%. PETS is a #4 ranked stock.

    Earnings Calendar

    Company Ticker Qtr End EPS Est Year Ago
    EPS
    Last EPS
    Surprise %
    Next EPS Report Date Time Daily Price
    BROWN & BROWN BRO 201106 $0.30 $0.29 -3.03 20110718 AMC $24.81
    CHECK PT SOFTW CHKP 201106 $0.63 $0.53 3.45 20110718 BTO $56.59
    EQUITY LIFESTYL ELS 201106 $0.80 $0.76 1.79 20110718 BTO $65.23
    GANNETT INC GCI 201106 $0.57 $0.61 -2.38 20110718 BTO $13.32
    HALLIBURTON CO HAL 201106 $0.72 $0.52 5.17 20110718 BTO $51.83
    HASBRO INC HAS 201106 $0.38 $0.29 29.41 20110718 BTO $41.31
    ICU MEDICAL INC ICUI 201106 $0.56 $0.56 -2.13 20110718 AMC $45.79
    INTL BUS MACH IBM 201106 $3.01 $2.61 0.87 20110718 AMC $174.23
    LINCARE HLDGS LNCR 201106 $0.51 $0.47 0 20110718 AMC $29.04
    MGIC INVSTMT CP MTG 201106 $0.05 ($0.04) -185.71 20110718 BTO $6.04
    MOSAIC CO/THE MOS 201105 $1.38 $0.89 12.04 20110718 AMC $66.08
    NEW ORIENTAL ED EDU 201105 $0.22 $0.15 25 20110718 BTO $116.15
    PACKAGING CORP PKG 201106 $0.34 $0.38 -4.88 20110718 AMC $27.59
    PARK NATIONAL PRK 201106 $0.72 $1.30 31.63 20110718 $63.55
    PETMED EXPRESS PETS 201106 $0.24 $0.32 -13.64 20110718 BTO $11.69
    SCHWAB(CHAS) SCHW 201106 $0.20 $0.17 5.26 20110718 BTO $15.20
    STANLEY B&D INC SWK 201106 $1.27 $1.24 8 20110718 BTO $68.99
    STEEL DYNAMICS STLD 201106 $0.41 $0.22 9.52 20110718 AMC $15.64
    WYNN RESRTS LTD WYNN 201106 $0.98 $0.52 89.04 20110718 AMC $158.78
    ZIONS BANCORP ZION 201106 ($0.01) ($0.84) 147.06 20110718 AMC $22.97
    AB ELECTROLUX ELUXY 201106 $0.40 $0.98 N/A 20110719 $45.51
    ALTERA CORP ALTR 201106 $0.64 $0.58 4.62 20110719 AMC $42.58
    AMERISERV FINL ASRV 201106 $0.02 $0.01 66.67 20110719 BTO $2.07
    APPLE INC AAPL 201106 $5.73 $3.51 19.63 20110719 $357.77
    APTARGROUP INC ATR 201106 $0.75 $0.67 0 20110719 AMC $52.52
    BANCFIRST OKLA BANF 201106 $0.69 $0.71 -5.8 20110719 AMC $38.73
    BANK OF AMER CP BAC 201106 ($0.91) $0.27 -37.04 20110719 BTO $10.07
    BANK OF NY MELL BK 201106 $0.56 $0.59 -5.26 20110719 BTO $25.09
    CHIPOTLE MEXICN CMG 201106 $1.68 $1.46 2.1 20110719 AMC $324.63
    CINTAS CORP CTAS 201105 $0.44 $0.35 13.89 20110719 AMC $31.22
    COCA COLA CO KO 201106 $1.16 $1.06 -1.15 20110719 BTO $67.67
    COMERICA INC CMA 201106 $0.53 $0.39 18.75 20110719 BTO $32.58
    CROWN HLDGS INC CCK 201106 $0.83 $0.67 14.29 20110719 AMC $37.71
    CSX CORP CSX 201106 $0.44 $0.36 1.92 20110719 AMC $25.25
    DELTA AIR LINES DAL 201106 $0.49 $0.65 24 20110719 BTO $8.51
    FIDELITY NAT IN FIS 201106 $0.54 $0.46 0 20110719 AMC $29.60
    FOREST LABS A FRX 201106 $0.96 $0.95 3.7 20110719 BTO $38.79
    FORTINET INC FTNT 201106 $0.07 $0.05 41.67 20110719 AMC $26.98
    FULTON FINL FULT 201106 $0.18 $0.14 0 20110719 AMC $10.50
    GOLDMAN SACHS GS 201106 $2.32 $2.75 97.47 20110719 BTO $129.89
    GRAINGER W W GWW 201106 $2.11 $1.65 21.79 20110719 BTO $156.59
    HARLEY-DAVIDSON HOG 201106 $0.70 $0.59 -3.77 20110719 BTO $41.80
    INFINERA CORP INFN 201106 ($0.22) ($0.10) 5.88 20110719 AMC $6.50
    INTUITIVE SURG ISRG 201106 $2.71 $2.19 4.02 20110719 $355.96
    JOHNSON & JOHNS JNJ 201106 $1.24 $1.21 8 20110719 BTO $67.66
    KAYNE ANDSN EGY KED 201105 $0.25 $0.16 3.33 20110719 AMC $20.18
    KEYCORP NEW KEY 201106 $0.20 $0.06 40 20110719 BTO $7.96
    KNOLL INC KNL 201106 $0.27 $0.22 0 20110719 BTO $19.55
    MANHATTAN ASOC MANH 201106 $0.39 $0.36 -8.33 20110719 AMC $34.36
    MARTEN TRANS MRTN 201106 $0.28 $0.23 11.76 20110719 AMC $22.11
    MCMORAN EXPLOR MMR 201106 ($0.14) ($0.11) -42.11 20110719 $17.51
    MERCANTILE BANK MBWM 201106 $0.12 ($0.08) 192.31 20110719 BTO $8.60
    MERIDIAN BIOSCI VIVO 201106 $0.21 $0.17 0 20110719 BTO $26.15
    MILLER ENERGY MILL 201104 ($0.08) ($2.18) 0 20110719 AMC $7.46
    NOVARTIS AG-ADR NVS 201106 $1.39 $1.20 6.87 20110719 BTO $61.35
    OMNICOM GRP OMC 201106 $0.92 $0.79 16.95 20110719 $47.11
    PEABODY ENERGY BTU 201106 $1.04 $0.69 11.67 20110719 BTO $58.04
    PINNACLE FIN PT PNFP 201106 $0.11 ($0.32) 100 20110719 AMC $15.10
    PLATINUM UNDRWT PTP 201106 $0.60 $1.50 10.9 20110719 AMC $33.34
    POLARIS INDUS PII 201106 $1.18 $0.76 91.43 20110719 BTO $113.41
    PRECISION CASTP PCP 201106 $1.95 $1.65 -2.09 20110719 BTO $160.48
    RENASANT CORP RNST 201106 $0.22 $0.18 -5.88 20110719 AMC $15.01
    RIVERBED TECH RVBD 201106 $0.12 $0.05 -10 20110719 AMC $39.01
    SCHIFF NUTRITN WNI 201105 $0.11 $0.08 7.69 20110719 BTO $11.42
    SMITH (AO) CORP AOS 201106 $0.50 $0.81 10.64 20110719 BTO $41.32
    STATE ST CORP STT 201106 $0.97 $0.93 3.53 20110719 BTO $44.20
    STERLING BCS-TX SBIB 201106 $0.02 $0.01 -100 20110719 BTO $7.69
    STRYKER CORP SYK 201106 $0.90 $0.80 1.12 20110719 $58.64
    TAUBMAN CENTERS TCO 201106 $0.62 $0.61 8.62 20110719 AMC $60.04
    TD AMERITRADE AMTD 201106 $0.29 $0.30 7.14 20110719 $18.06
    TESSCO TECH INC TESS 201106 $0.40 $0.26 40 20110719 AMC $11.61
    UNITEDHEALTH GP UNH 201106 $0.93 $0.99 37.08 20110719 BTO $52.27
    UTD RENTALS INC URI 201106 $0.44 $0.25 -166.67 20110719 AMC $23.29
    VMWARE INC-A VMW 201106 $0.31 $0.20 0 20110719 AMC $100.55
    WAL-MART MX-ADR WMMVY 201106 $0.23 $0.20 0 20110719 $29.20
    WASTE CONNCTION WCN 201106 $0.38 $0.32 6.67 20110719 AMC $32.51
    WELLS FARGO-NEW WFC 201106 $0.69 $0.55 0 20110719 BTO $27.28
    WESTAMER BANCP WABC 201106 $0.78 $0.80 -2.53 20110719 $48.22
    WIPRO LTD-ADR WIT 201106 $0.12 $0.12 8.33 20110719 AMC $12.78
    YAHOO! INC YHOO 201106 $0.18 $0.16 18.75 20110719 $14.63
    YARA INTL-ADR YARIY 201106 $1.50 $0.84 15.23 20110719 $56.24
    8X8 INC EGHT 201106 $0.03 $0.02 -25 20110720 AMC $4.53
    ABBOTT LABS ABT 201106 $1.11 $1.01 1.11 20110720 BTO $53.16
    ALTRIA GROUP MO 201106 $0.54 $0.50 0 20110720 $26.85
    AMER EXPRESS CO AXP 201106 $0.98 $0.84 4.3 20110720 AMC $51.38
    AMPHENOL CORP-A APH 201106 $0.77 $0.68 1.41 20110720 BTO $50.39
    AMR CORP AMR 201106 ($0.74) ($0.03) 9.02 20110720 BTO $5.09
    ASTORIA FINL CP AF 201106 $0.23 $0.19 31.82 20110720 AMC $13.11
    ATMI INC ATMI 201106 $0.28 $0.24 13.64 20110720 BTO $18.57
    BANNER CORP BANR 201106 ($0.53) ($1.96) 40 20110720 AMC $17.13
    BLACKROCK INC BLK 201106 $2.92 $2.37 7.64 20110720 BTO $182.27
    BOSTON SCIENTIF BSX 201106 $0.08 $0.06 250 20110720 AMC $7.09
    CA INC CA 201106 $0.47 $0.46 4.35 20110720 AMC $22.11
    CATHAY GENL BCP CATY 201106 $0.26 ($0.03) 27.78 20110720 AMC $15.78
    CENTRAL VLY COM CVCY 201106 $0.09 $0.04 77.78 20110720 AMC $6.68
    CHEESECAKE FACT CAKE 201106 $0.42 $0.39 3.03 20110720 AMC $32.70
    COCA-COLA FEMSA KOF 201106 $1.22 $1.05 2.97 20110720 BTO $93.82
    COHEN&STRS INC CNS 201106 $0.34 $0.19 -6.25 20110720 AMC $34.01
    COHU INC COHU 201106 $0.21 $0.28 18.52 20110720 $12.89
    CORE LABS NV CLB 201106 $0.88 $0.71 1.32 20110720 AMC $115.34
    COVANTA HOLDING CVA 201106 $0.09 $0.17 -25 20110720 AMC $16.48
    CROSS(AT)-A ATX 201106 $0.22 $0.20 233.33 20110720 AMC $12.86
    CVB FINL CVBF 201106 $0.14 $0.18 33.33 20110720 AMC $9.14
    DATALINK CORP DTLK 201106 $0.07 $0.00 30 20110720 AMC $7.00
    E TRADE FINL CP ETFC 201106 $0.16 $0.12 33.33 20110720 AMC $12.96
    EAGLE BCP INC EGBN 201106 $0.24 $0.15 4.35 20110720 AMC $13.77
    EAST WEST BC EWBC 201106 $0.37 $0.21 8.82 20110720 BTO $19.46
    EBAY INC EBAY 201106 $0.39 $0.35 0 20110720 $32.19
    EMC CORP -MASS EMC 201106 $0.27 $0.23 -4 20110720 BTO $26.82
    EXPONENT INC EXPO 201106 $0.51 $0.48 12.77 20110720 AMC $44.40
    F5 NETWORKS INC FFIV 201106 $0.71 $0.50 1.49 20110720 $110.96
    FIRST CASH FINL FCFS 201106 $0.47 $0.36 4.17 20110720 $42.41
    FIRST REP BK SF FRC 201106 $0.65 $999.00 15.52 20110720 BTO $29.82
    FORWARD AIR CRP FWRD 201106 $0.37 $0.27 17.39 20110720 AMC $33.96
    FREESCALE SEMI FSL 201106 $0.25 $999.00 N/A 20110720 AMC $17.85
    GRUPO AEROP-ADS OMAB 201106 $0.27 $0.13 106.25 20110720 $18.10
    HANESBRANDS INC HBI 201106 $0.86 $0.67 48.48 20110720 BTO $31.50
    HEARTLAND EXP HTLD 201106 $0.21 $0.18 6.67 20110720 DMT $16.63
    HOST HOTEL&RSRT HST 201106 $0.29 $0.23 -8.33 20110720 BTO $16.64
    ICON PLC ICLR 201106 $0.22 $0.38 -4.55 20110720 BTO $24.79
    INTEL CORP INTC 201106 $0.51 $0.51 21.74 20110720 $22.27
    JAKKS PACIFIC JAKK 201106 $0.15 $0.17 2.5 20110720 BTO $17.86
    JOHNSON CONTROL JCI 201106 $0.53 $0.54 1.82 20110720 $40.76
    KINDER MORG MGT KMR 201106 $0.46 $0.52 -43.18 20110720 AMC $65.04
    KNIGHT CAP GP KCG 201106 $0.21 $0.58 32 20110720 $10.83
    LASALLE HTL PRP LHO 201106 $0.57 $0.52 18.18 20110720 AMC $25.37
    LUFKIN INDS LUFK 201106 $0.68 $0.35 -4.35 20110720 BTO $85.32
    M&T BANK CORP MTB 201106 $1.53 $1.53 18.44 20110720 BTO $86.00
    MELLANOX TECH MLNX 201106 $0.09 $0.15 180 20110720 AMC $28.86
    MKS INSTRUMENTS MKSI 201106 $0.63 $0.66 2.82 20110720 AMC $25.06
    MONARCH CASINO MCRI 201106 $0.13 $0.16 -16.67 20110720 AMC $10.04
    NEOGENOMICS INC NGNM 201106 ($0.01) ($0.03) -100 20110720 BTO $1.36
    NOBLE CORP NE 201106 $0.29 $0.85 -11.11 20110720 BTO $36.09
    NORTHERN TRUST NTRS 201106 $0.69 $0.78 -9.23 20110720 BTO $44.44
    NVE CORP NVEC 201106 $0.77 $0.64 -8.54 20110720 AMC $56.34
    PACIFIC CONTL PCBK 201106 $0.10 $0.09 0 20110720 AMC $10.05
    PIPER JAFFRAY PJC 201106 $0.49 $0.36 -28.3 20110720 BTO $27.15
    PLEXUS CORP PLXS 201106 $0.54 $0.59 5.36 20110720 AMC $32.20
    PNC FINL SVC CP PNC 201106 $1.47 $1.60 14.6 20110720 $57.26
    POPULAR INC BPOP 201106 $0.05 ($0.29) -2100 20110720 BTO $2.59
    QUALCOMM INC QCOM 201106 $0.62 $0.50 6.94 20110720 AMC $54.92
    QUEST DIAGNOSTC DGX 201106 $1.13 $1.07 1.01 20110720 BTO $58.00
    RAYMOND JAS FIN RJF 201106 $0.42 $0.48 3.23 20110720 AMC $31.44
    RLI CORP RLI 201106 $1.05 $1.52 19.35 20110720 AMC $62.62
    ROBT HALF INTL RHI 201106 $0.22 $0.08 5.88 20110720 AMC $25.32
    S Y BANCORP INC SYBT 201106 $0.45 $0.40 -4.76 20110720 BTO $23.35
    SABA SOFTWARE SABA 201105 ($0.01) $0.06 200 20110720 AMC $8.91
    SEAGATE TECH STX 201106 $0.25 $0.70 -7.41 20110720 AMC $16.68
    SEI INVESTMENTS SEIC 201106 $0.31 $0.28 3.33 20110720 BTO $22.05
    SELECT COMFORT SCSS 201106 $0.17 $0.11 57.89 20110720 AMC $18.00
    SENSATA TECHNOL ST 201106 $0.50 $0.44 0 20110720 BTO $36.62
    SLM CORP SLM 201106 $0.41 $0.39 17.07 20110720 AMC $16.15
    ST JUDE MEDICAL STJ 201106 $0.84 $0.79 2.56 20110720 $45.55
    STANLEY FURN CO STLY 201106 ($0.16) ($0.80) 31.25 20110720 AMC $4.27
    TE CONNECT-LTD TEL 201106 $0.71 $0.70 -1.39 20110720 BTO $35.28
    TEREX CORP TEX 201106 $0.18 ($0.28) -60 20110720 AMC $26.39
    TEXAS CAP BCSHS TCBI 201106 $0.36 $0.22 -3.13 20110720 AMC $26.27
    TEXTRON INC TXT 201106 $0.24 $0.29 -41.18 20110720 BTO $21.91
    TRACTOR SUPPLY TSCO 201106 $1.19 $1.02 50 20110720 AMC $69.07
    UMPQUA HLDGS CP UMPQ 201106 $0.13 $0.04 20 20110720 AMC $11.59
    UNITED CONT HLD UAL 201106 $1.42 $1.95 8.89 20110720 BTO $21.20
    US BANCORP USB 201106 $0.53 $0.45 6.12 20110720 BTO $24.69
    UTD TECHS CORP UTX 201106 $1.41 $1.32 6.6 20110720 BTO $87.82
    VIRGINIA COMMRC VCBI 201106 $0.14 $0.15 -14.29 20110720 $5.99
    WERNER ENTRPRS WERN 201106 $0.34 $0.29 4.76 20110720 AMC $25.36
    WESTELL TECH-A WSTL 201106 $0.05 $0.07 25 20110720 AMC $3.38
    WESTWOOD HLDGS WHG 201106 $0.52 $0.36 10.42 20110720 AMC $39.35
    XILINX INC XLNX 201106 $0.53 $0.58 15.38 20110720 AMC $33.53
    ABB LTD-ADR ABB 201106 $0.37 $0.27 -6.45 20110721 $25.63
    ACACIA RES-TECH ACTG 201106 ($0.01) ($0.06) -19.05 20110721 AMC $36.96
    ACME PACKET INC APKT 201106 $0.21 $0.15 0 20110721 AMC $65.30
    ADV MICRO DEV AMD 201106 $0.08 $0.12 60 20110721 $6.44
    AKZO NOBEL NV AKZOY 201106 $1.27 $1.35 N/A 20110721 $59.62
    ALASKA AIR GRP ALK 201106 $2.35 $2.29 15.94 20110721 $67.21
    ALBEMARLE CORP ALB 201106 $1.12 $0.89 21.05 20110721 AMC $67.92
    ALEXION PHARMA ALXN 201106 $0.22 $0.16 11.9 20110721 BTO $51.27
    ALLIANCE DATA ADS 201106 $1.54 $1.24 21.43 20110721 BTO $95.24
    AMSURG CORP AMSG 201106 $0.41 $0.43 0 20110721 AMC $26.23
    ARBITRON INC ARB 201106 $0.22 $0.14 -3.28 20110721 BTO $39.94
    ASSOC BANC CORP ASBC 201106 $0.13 ($0.06) 12.5 20110721 AMC $13.35
    AT&T INC T 201106 $0.59 $0.61 0 20110721 BTO $30.58
    ATHENAHEALTH IN ATHN 201106 $0.11 $0.04 66.67 20110721 AMC $45.87
    AUTOLIV INC ALV 201106 $1.26 $1.70 10.92 20110721 $69.87
    AVID TECH INC AVID 201106 $0.00 ($0.15) -33.33 20110721 $20.05
    BADGER METER BMI 201106 $0.46 $0.53 -48.84 20110721 BTO $36.87
    BANCO LATINOAME BLX 201106 $0.40 $0.05 12.82 20110721 $17.83
    BANCORP BNK/THE TBBK 201106 $0.10 $0.01 -9.09 20110721 BTO $9.93
    BASIC EGY SVCS BAS 201106 $0.46 ($0.31) 900 20110721 AMC $35.17
    BAXTER INTL BAX 201106 $1.02 $0.93 5.38 20110721 $60.99
    BB&T CORP BBT 201106 $0.43 $0.30 3.23 20110721 BTO $25.32
    BCP RHODE ISLD BARI 201106 $0.56 $0.57 -2 20110721 BTO $45.04
    BJ’S RESTAURANT BJRI 201106 $0.27 $0.23 31.58 20110721 AMC $54.50
    BLACKSTONE GRP BX 201106 $0.39 $0.18 24.39 20110721 BTO $16.08
    BUILDERS FIRSTS BLDR 201106 ($0.11) ($0.12) 23.53 20110721 AMC $2.22
    CALIX INC CALX 201106 $0.04 ($0.05) 26.67 20110721 AMC $20.97
    CARDINAL FINL CFNL 201106 $0.19 $0.16 0 20110721 DMT $11.21
    CASH AM INTL CSH 201106 $0.78 $0.70 11.21 20110721 $56.71
    CELANESE CP-A CE 201106 $1.41 $1.12 15.66 20110721 BTO $53.23
    CEPHEID INC CPHD 201106 ($0.02) ($0.03) 200 20110721 AMC $32.15
    CHICAGO BRIDGE CBI 201106 $0.59 $0.47 0 20110721 AMC $40.82
    CHUBB CORP CB 201106 $1.02 $1.41 19.47 20110721 AMC $62.25
    CIRRUS LOGIC CRUS 201106 $0.21 $0.27 -9.52 20110721 BTO $16.01
    CITY NATIONAL CYN 201106 $0.78 $0.56 7.25 20110721 AMC $53.20
    COBIZ FINL INC COBZ 201106 $0.06 ($0.13) 200 20110721 $6.06
    COMPUWARE CORP CPWR 201106 $0.06 $0.06 14.29 20110721 $9.65
    COOPER INDS PLC CBE 201106 $0.95 $0.82 0 20110721 BTO $58.26
    CYMER INC CYMI 201106 $0.71 $0.70 16.05 20110721 $44.99
    CYPRESS SEMICON CY 201106 $0.19 $0.11 16.67 20110721 $20.81
    CYPRESS SHARPRG CYS 201106 $0.54 $0.58 N/A 20110721 BTO $12.91
    CYTEC INDS INC CYT 201106 $0.89 $1.31 13.04 20110721 AMC $55.32
    DANAHER CORP DHR 201106 $0.67 $0.56 7.02 20110721 BTO $52.48
    DIAMOND OFFSHOR DO 201106 $1.89 $1.61 25 20110721 $68.07
    DIGI INTL INC DGII 201106 $0.13 $0.09 0 20110721 AMC $13.66
    EASTGROUP PPTYS EGP 201106 $0.72 $0.71 2.9 20110721 $43.54
    EDUCATION RLTY EDR 201106 $0.11 $0.12 -16.67 20110721 AMC $8.95
    EDWARDS LIFESCI EW 201106 $0.50 $0.46 26.19 20110721 AMC $89.95
    ELECTRN IMAGING EFII 201106 $0.11 $0.01 242.86 20110721 AMC $16.86
    ENCANA CORP ECA 201106 $0.13 $0.11 -31.25 20110721 $29.94
    ENDOLOGIX INC ELGX 201106 ($0.07) ($0.01) -50 20110721 AMC $9.24
    ENTEGRIS INC ENTG 201106 $0.24 $0.16 15 20110721 BTO $8.51
    ERICSSON LM ADR ERIC 201106 $0.22 $0.15 56.25 20110721 BTO $13.67
    EZCORP INC CL A EZPW 201106 $0.53 $0.40 10.53 20110721 $36.55
    FIFTH THIRD BK FITB 201106 $0.27 $0.16 -62.96 20110721 BTO $12.02
    FIRST NIAGARA FNFG 201106 $0.24 $0.22 0 20110721 BTO $13.17
    FLEXTRONIC INTL FLEX 201106 $0.20 $0.17 -5 20110721 $6.27
    FLIR SYSTEMS FLIR 201106 $0.38 $0.39 -8.57 20110721 BTO $32.11
    FREEPT MC COP-B FCX 201106 $1.38 $0.75 24.6 20110721 $54.25
    GARDNER DENVER GDI 201106 $1.20 $0.73 20.21 20110721 AMC $83.05
    GENTEX CORP GNTX 201106 $0.27 $0.24 0 20110721 $30.61
    GLIMCHER REALTY GRT 201106 $0.14 $0.15 8.33 20110721 AMC $9.73
    GLOBAL PAYMENTS GPN 201105 $0.73 $0.58 -1.56 20110721 AMC $51.21
    GOODRICH CORP GR 201106 $1.32 $1.24 8.8 20110721 BTO $92.56
    GRUPO AEROP-ADR ASR 201106 $1.08 $0.89 9.01 20110721 $58.38
    GULFMARK OFFSHR GLF 201106 $0.29 $0.47 -131.25 20110721 BTO $43.60
    HANCOCK HLDG CO HBHC 201106 $0.40 $0.22 -2.27 20110721 AMC $30.21
    HANMI FINL CP HAFC 201106 $0.05 ($0.57) 600 20110721 BTO $1.18
    HEALTHWAYS INC HWAY 201106 $0.18 $0.29 -40 20110721 AMC $15.99
    HITTITE MICROWV HITT 201106 $0.66 $0.64 1.54 20110721 AMC $59.68
    HNI CORP HNI 201106 $0.10 $0.15 56 20110721 $24.18
    HOME BANCSHARES HOMB 201106 $0.42 $0.30 23.53 20110721 BTO $24.52
    HUMAN GENOME HGSI 201106 ($0.41) ($0.30) -32.69 20110721 AMC $23.32
    HUNTINGTON BANC HBAN 201106 $0.15 $0.03 8.33 20110721 BTO $6.19
    IDEX CORP IEX 201106 $0.60 $0.50 5.88 20110721 $43.96
    INFORMATICA CRP INFA 201106 $0.26 $0.19 -4.55 20110721 AMC $56.39
    INGERSOLL RAND IR 201106 $0.94 $0.80 9.37 20110721 BTO $45.23
    INSTEEL INDS IIIN 201106 $0.30 $0.09 -350 20110721 $11.89
    INTERACTIVE BRK IBKR 201106 $0.30 $0.09 40.74 20110721 AMC $15.31
    ITT EDUCATIONAL ESI 201106 $2.64 $2.78 15.02 20110721 BTO $91.87
    IXIA XXIA 201106 $0.04 $0.05 20 20110721 AMC $10.15
    JANUS CAP GRP JNS 201106 $0.23 $0.17 20 20110721 BTO $8.90
    KANSAS CITY SOU KSU 201106 $0.70 $0.55 0 20110721 AMC $57.04
    KINDER MORG ENG KMP 201106 $0.41 $0.35 -6.38 20110721 AMC $73.08
    LABORATORY CP LH 201106 $1.62 $1.46 11.11 20110721 BTO $95.19
    LACROSSE FOOTWR BOOT 201106 $0.09 $0.02 -158.82 20110721 AMC $14.01
    LANDSTAR SYSTEM LSTR 201106 $0.59 $0.49 2.38 20110721 BTO $46.40
    LATTICE SEMICON LSCC 201106 $0.12 $0.13 22.22 20110721 $6.04
    LIFE TIME FITNS LTM 201106 $0.59 $0.53 0 20110721 BTO $39.12
    LILLY ELI & CO LLY 201106 $1.18 $1.24 5.98 20110721 $38.41
    LINCOLN ELECTRC LECO 201106 $0.55 $0.38 13.64 20110721 BTO $35.08
    MANPOWER INC WI MAN 201106 $0.79 $0.40 34.37 20110721 BTO $52.48
    MATTHEWS INTL-A MATW 201106 $0.71 $0.71 0 20110721 AMC $37.80
    MB FINANCL INC MBFI 201106 ($0.35) $0.18 50 20110721 AMC $19.71
    MEDCO HLTH SOL MHS 201106 $0.94 $0.80 3.41 20110721 BTO $54.28
    MERIT MEDICAL MMSI 201106 $0.21 $0.18 22.73 20110721 AMC $17.89
    METROCORP BANCS MCBI 201106 $0.04 ($0.04) 500 20110721 AMC $6.39
    MICROSOFT CORP MSFT 201106 $0.58 $0.51 0 20110721 AMC $26.47
    MOLINA HLTHCR MOH 201106 $0.36 $0.27 21.74 20110721 AMC $27.14
    MONRO MUFFLER MNRO 201106 $0.46 $0.43 8.33 20110721 BTO $36.63
    MORGAN STANLEY MS 201106 ($0.62) $0.87 35.29 20110721 $21.11
    MYERS INDS MYE 201106 $0.09 $0.01 53.85 20110721 BTO $11.68
    NASH FINCH CO NAFC 201106 $0.83 $0.88 14.52 20110721 $36.90
    NCR CORP-NEW NCR 201106 $0.42 $0.35 -78.26 20110721 AMC $18.92
    NETSCOUT SYSTMS NTCT 201106 $0.09 $0.18 0 20110721 BTO $15.56
    NEW YORK CMNTY NYB 201106 $0.28 $0.30 0 20110721 BTO $15.08
    NEWFIELD EXPL NFX 201106 $1.07 $1.06 7.69 20110721 $66.90
    NOKIA CP-ADR A NOK 201106 $0.02 $0.14 30.77 20110721 $5.54
    NUCOR CORP NUE 201106 $0.81 $0.29 42.86 20110721 $39.23
    NVR INC NVR 201106 $6.15 $11.13 -42.33 20110721 BTO $727.20
    NY TIMES A NYT 201106 $0.10 $0.18 -33.33 20110721 BTO $8.41
    OCEANFIRST FINL OCFC 201106 $0.28 $0.27 3.7 20110721 AMC $13.49
    OLD REP INTL ORI 201106 ($0.02) $0.05 -200 20110721 BTO $11.59
    OLIN CORP OLN 201106 $0.51 $0.21 16.67 20110721 AMC $22.43
    PENN NATL GAMNG PENN 201106 $0.48 $0.29 20 20110721 $40.56
    PENSKE AUTO GRP PAG 201106 $0.38 $0.32 25.81 20110721 BTO $23.00
    PEOPLES UTD FIN PBCT 201106 $0.16 $0.09 25 20110721 AMC $13.55
    PEPSICO INC PEP 201106 $1.21 $1.10 1.37 20110721 BTO $68.60
    PHILIP MORRIS PM 201106 $1.22 $1.00 1.92 20110721 $66.42
    PMC-SIERRA INC PMCS 201106 $0.12 $0.18 0 20110721 AMC $7.16
    POLYCOM INC PLCM 201106 $0.20 $0.09 23.33 20110721 AMC $30.57
    POOL CORP POOL 201106 $1.15 $1.05 87.5 20110721 $27.98
    PPG INDS INC PPG 201106 $2.01 $1.64 4.48 20110721 BTO $88.45
    PREMIERE GLOBAL PGI 201106 $0.11 $0.16 12.5 20110721 AMC $7.96
    RENAISSNCE LRNG RLRN 201106 $0.17 $0.15 5.56 20110721 $12.49
    RSC HOLDINGS RRR 201106 ($0.01) ($0.21) 10 20110721 AMC $11.57
    RUBY TUESDAY RT 201105 $0.31 $0.33 -22.58 20110721 AMC $11.07
    SAFEWAY INC SWY 201106 $0.39 $0.37 3.57 20110721 BTO $23.79
    SANDISK CORP SNDK 201106 $0.97 $1.08 1.04 20110721 AMC $41.16
    SANDY SPRING SASR 201106 $0.33 $0.21 -3.23 20110721 $17.87
    SCHOLASTIC CORP SCHL 201105 $0.76 $0.90 -213.64 20110721 BTO $26.60
    SHERWIN WILLIAM SHW 201106 $1.77 $1.72 21.15 20110721 BTO $83.12
    SIMMONS FIRST A SFNC 201106 $0.38 $0.46 -14.71 20110721 BTO $25.60
    SKYWORKS SOLUTN SWKS 201106 $0.39 $0.27 0 20110721 AMC $22.38
    SNAP-ON INC SNA 201106 $1.06 $0.78 7.87 20110721 BTO $61.51
    SONOCO PRODUCTS SON 201106 $0.63 $0.59 0 20110721 $34.17
    STANCORP FNL CP SFG 201106 $1.03 $1.04 0 20110721 AMC $40.92
    TAYLOR CAP GRP TAYC 201106 ($0.09) ($2.26) 75 20110721 BTO $9.15
    TCF FINL CORP TCB 201106 $0.21 $0.32 5.26 20110721 $13.30
    TEMPLE-INLAND TIN 201106 $0.25 $0.19 29.41 20110721 BTO $31.08
    THOMAS & BETTS TNB 201106 $0.79 $0.69 2.9 20110721 BTO $53.20
    TRAVELERS COS TRV 201106 ($0.60) $1.39 22.73 20110721 BTO $57.73
    TRINITY BIOTECH TRIB 201106 $0.16 $0.15 13.33 20110721 BTO $10.10
    ULTRATECH STEP UTEK 201106 $0.35 $0.15 15.38 20110721 BTO $26.81
    UNION PAC CORP UNP 201106 $1.58 $1.40 -1.53 20110721 $100.71
    US AIRWAYS GRP LCC 201106 $0.64 $1.34 10.53 20110721 $7.64
    V F CORP VFC 201106 $1.03 $1.00 7.5 20110721 BTO $113.85
    VITRAN CORP INC VTNC 201106 ($0.05) $0.11 88.89 20110721 AMC $11.40
    WATSCO INC WSO 201106 $1.30 $1.08 16.67 20110721 BTO $64.48
    WESCO INTL INC WCC 201106 $0.93 $0.60 -5.8 20110721 BTO $52.01
    WESTERN ALLIANC WAL 201106 $0.04 ($0.03) -400 20110721 AMC $6.96
    WESTERN DIGITAL WDC 201106 $0.66 $1.24 1.54 20110721 AMC $37.06
    WHIRLPOOL CORP WHR 201106 $2.72 $2.82 30.25 20110721 BTO $76.63
    WNS HLDGS-ADR WNS 201106 $0.15 $0.05 3.7 20110721 BTO $9.10
    AIR PRODS & CHE APD 201106 $1.46 $1.28 1.44 20110722 BTO $93.94
    CATERPILLAR INC CAT 201106 $1.76 $0.99 40.46 20110722 BTO $107.58
    CELESTICA INC CLS 201106 $0.21 $0.04 -15 20110722 BTO $8.23
    CEMEX SA ADR CX 201106 ($0.05) ($0.28) -145.45 20110722 $7.94
    COLUMBUS MCKINN CMCO 201106 $0.24 $0.05 -25.93 20110722 BTO $17.44
    COMPLETE PRODUC CPX 201106 $0.64 $0.20 0 20110722 BTO $36.04
    DOVER CORP DOV 201106 $1.16 $0.91 2.22 20110722 $65.50
    EASTERN VA BKSH EVBS 201106 $0.03 ($1.06) -4400 20110722 BTO $3.10
    FOMENTO ECO-ADR FMX 201106 $0.83 $0.55 69.35 20110722 BTO $67.50
    GENL ELECTRIC GE 201106 $0.32 $0.30 10.71 20110722 BTO $18.53
    HONEYWELL INTL HON 201106 $0.98 $0.60 8.64 20110722 BTO $57.01
    IDEXX LABS INC IDXX 201106 $0.72 $0.62 3.33 20110722 BTO $78.40
    MCDONALDS CORP MCD 201106 $1.28 $1.13 0.88 20110722 BTO $85.81
    MOSYS INC MOSY 201106 ($0.12) ($0.13) N/A 20110722 BTO $5.35
    ORIENTAL FINL OFG 201106 $0.23 $0.38 -63.64 20110722 BTO $12.55
    PRECISION DRILL PDS 201106 $0.07 ($0.23) 14.81 20110722 BTO $14.33
    PROSPERITY BCSH PRSP 201106 $0.74 $0.68 4.35 20110722 BTO $44.75
    REYNOLDS AMER RAI 201106 $0.71 $0.66 0 20110722 BTO $37.31
    ROCKWELL COLLIN COL 201106 $1.04 $0.89 0 20110722 BTO $59.25
    SCHLUMBERGER LT SLB 201106 $0.85 $0.68 -7.79 20110722 BTO $85.92
    SENSIENT TECH SXT 201106 $0.63 $0.58 1.92 20110722 BTO $37.66
    SUNTRUST BKS STI 201106 $0.32 ($0.11) 69.23 20110722 BTO $24.64
    UTD FINL BCP UBNK 201106 $0.18 $0.19 -11.11 20110722 $16.03
    VERIZON COMM VZ 201106 $0.54 $0.58 2 20110722 $36.88
    VOLVO AB ADR B VOLVY 201106 $0.34 $0.21 32 20110722 $16.31
    XEROX CORP XRX 201106 $0.24 $0.24 4.55 20110722 BTO $10.07

    Dirk van Dijk, CFA is the Chief Equity Strategist for Zacks.com. With more than 25 years investment experience he has become a popular commentator appearing in the Wall Street Journal and on CNBC. Dirk is also the Editor in charge of the market beating Zacks Strategic Investor service.

    More about Zacks Strategic Investor >>


LOOK TO DATA FOR FIREWORKS

By Dirk Van Dijk, CFA, Zacks Investment Research

Earnings season is over for the first quarter, and we are starting to see the early second quarter firms report, those with May fiscal periods. Its still very light, with a total of just 18 firms are due to report, none of which are from the S&P 500. The firms reporting this week include: AAR Corp (AIR – Analyst Report), A. Schulman(SHLM – Snapshot Report), Greenbriar (GBX – Snapshot Report) and WD-40 (WDFC – Snapshot Report). Most of the fireworks will likely be in the sky, not in the earnings reports this week.

With few earnings to chew on, the market is going to be mostly focused on the economic data. We start out light but the pace of data will pick up as the week goes on. We start with Factory orders on Tuesday and then get the ISM Service numbers on Wednesday. Thursday is the set up for the big Friday numbers as the ADP report comes out. Friday brings us the all-important employment report.

Monday

  • Fireworks and cookouts. Have a happy and safe 4th of July.

Tuesday

  • Factory orders are expected to have increased by 1.0% in June, partially reversing the 1.2% drop in May.

Wednesday

  • The ISM Services Index is expected to drop to 54.0 from 54.6 in May. This is also a “magic 50” index, so we could see a decline and still indicate that the service side of the economy is still growing. A reading of 54.0 is still fairly strong, indicating solid growth. As with the ISM manufacturing index, the behavior of the key sub-indexes of business activity, new orders and employment are at least as interesting as the overall level of the index.
  • We get the appetizer for the employment report in the form of the ADP employment survey. The consensus is looking for ADP to report a gain of 60,000 private sector jobs, up from the very weak 38,000 it estimated in May (and the BLS level of 83,000 private sector). As the firm that actually cuts the checks of most companies payrolls, ADP is in an excellent position to gauge the strength of the job market. However, its numbers are often quite different than the private sector jobs numbers that are reported by the BLS on Friday. The BLS numbers do tend to be revised in the direction of the ADP numbers.

Thursday

  • Weekly initial claims for unemployment insurance come out. They had a very nice decline early in they year, but then had a very rough month or so in April and May. Last week they fell by 1,000 to 428,000. Another slight decrease is expected next week, falling to 425,000. The four-week moving average will probably stay well above the 400,000 level, where it has been for the last ten weeks (and weekly claims have been above the level for 12 weeks now). The sharp rise in initial claims were an early warning of the weak jobs report for May. Robust job expansion is generally associated with initial claims below the 400,000 level.
  • Continuing claims have also in a downtrend of late, but the road down has been bumpy. Last week they fell by 12,000 to 3.702 million. That is down 893,000 from a year ago. I would expect a small decline this week. The consensus is looking for a level of 3.700 million. Some of the longer term decline due to people simply exhausting their regular state benefits which run out after 26 weeks. But those don’t last forever, either. Federally paid extended claims fell by 27,000 to 3.926 million, and are down by 1.010 million over the last year. Looking at just the regular continuing claims numbers is a serious mistake. They only include a little over half of the unemployed now given the unprecedentedly high duration of unemployment figures. A better measure is the total number of people getting unemployment benefits, currently at 7.512 million, which is down 31,000 from last week (there are some timing issues so the change in continuing and existing claims does not exactly match the change in the total). The total number of people getting benefits is now 1.839 million below year-ago levels. What is not known is how many people have left the extended claims via the road to prosperity, finding a new job, and how many have left on the road to poverty, having simply exhausted even the extended benefits. Given the differential between job growth and the decline in total people getting benefits, it looks like about 1 million people have simply run out of benefits, and have not found new work. Make sure to look at both sets of numbers! Many of the press reports will not, but we will here at Zacks.

Friday

  • The most important report of the week is the employment report. May was extremely disappointing with 83,000 added in the private sector offset by the loss of 29,000 State and Local Government jobs. Growth should continue in March, but total payrolls will likely again be lower than private sector payrolls, as State and Local governments continue to lay people off to deal with their dismal fiscal situations. Consensus estimates expect total growth of about 80,000 in total and 110,000 on the private side. I think the total will be about where the consensus is, but with more from the private sector and more than the implied 30,000 government layoffs. Revisions to prior month’s numbers will also be important. Last month they were negative, but had been strongly positive earlier in the year. The unemployment rate is expected by the consensus to be unchanged from its 9.1% May level. Much of the change in the unemployment rate will depend on the civilian participation rate, was unchanged at 64.2% in May, but has been in a general downtrend. If it continues to decline, the unemployment rate will also decline. If the participation rate starts to rebound, as usually happens in a recovery, the unemployment rate will likely drift upwards. That would not really be all bad. The key measure will be the percentage of people who are actually working. That was at 58.5% in May (unchanged). It is still extremely low by historical standards. The consensus is expecting the report to show that average hourly earnings increased 0.2% in April, after being up 0.3 in May. The average workweek is expected to be unchanged at 34.4 hours. Overall, that adds up fairly weak report, but not as bad as May. Keep an eye on the duration of unemployment numbers, which remain at historically very high levels.
  • Consumer Credit (not including mortgage debt) is expected to have expanded by $3.5 billion in June, down from a $6.5 billion rise in May. That would be the 8th rise in a row after a long, and highly unusual, string of declines as consumers have tried to repair their balance sheets. Most of the increase will probably come from revolving debt, such as credit card. Growth in non-revolving credit like auto loans was probably held back by weak sales due to supply chain issues stemming from the Japanese disaster. I suspect that the number might come in below consensus.

In the Earnings Calendar below, $999.00 should be read as N.A.

Earnings Calendar

 

Company Ticker Qtr End EPS Est Year Ago
EPS
Last EPS
Surprise %
Next EPS Report Date Time Daily Price
AAR CORP AIR 201105 $0.45 $0.31 7.14 20110706 AMC $27.09
AMER SUPERCON AMSC 201103 ($0.34) $0.12 22.22 20110706 BTO $9.04
DRAGONWAVE INC DRWI 201105 ($0.19) $0.26 -56.25 20110706 AMC $6.05
MILLER ENERGY MILL 201104 ($0.08) ($2.18) 0 20110706 AMC $6.40
OCZ TECHNOLOGY OCZ 201105 ($0.01) ($0.12) -400 20110706 AMC $8.00
SCHULMAN(A) INC SHLM 201105 $0.64 $0.48 18.18 20110706 AMC $25.19
CHINA GERUI ADV CHOP 201106 $0.25 $0.26 -9.09 20110707 BTO $3.82
CONMED HEALTHCR CONM 201106 $0.04 $0.02 0 20110707 $3.65
HELEN OF TROY HELE 201105 $0.79 $0.60 26.56 20110707 BTO $34.53
HI TECH PHARMA HITK 201104 $0.71 $0.50 25.4 20110707 BTO $28.93
INTL SPEEDWAY ISCA 201105 $0.27 $0.22 2.08 20110707 BTO $28.41
KAYNE ANDSN EGY KED 201105 $0.25 $0.16 3.33 20110707 AMC $18.13
PENFORD CORP PENX 201105 $0.10 ($0.49) -425 20110707 $5.30
SEMILEDS CORP LEDS 201105 ($0.08) $999.00 -171.43 20110707 AMC $6.45
WD 40 CO WDFC 201105 $0.53 $0.54 -20.9 20110707 AMC $39.04
ZEP INC ZEP 201105 $0.32 $0.30 0 20110707 BTO $18.90
GREENBRIER COS GBX 201105 $0.21 $0.25 0 20110708 BTO $19.76
PRICESMART INC PSMT 201105 $0.47 $0.40 7.14 20110708 BTO $51.2

Dirk van Dijk, CFA is the Chief Equity Strategist for Zacks.com. With more than 25 years investment experience he has become a popular commentator appearing in the Wall Street Journal and on CNBC. Dirk is also the Editor in charge of the market beating Zacks Strategic Investor service.

More about Zacks Strategic Investor >>

EXPECT SLOWER GROWTH IN Q2 EARNINGS

By Dirk Van Dijk, CFA, Zacks Investment Research

Key Points:

  • First quarter season is over. Median surprise of 3.70% and surprise ratio of 3.03 for EPS, 1.32% and 2.23 for revenues. Solid growth of 17.1% (19.1% ex-Financials) reported. Slowdown from fourth quarter pace of 30.9%, mostly due to super financial growth in 4Q. Growth ex-Financials as 19.8% in 4Q.
  • Quarterly net margins rise to 9.40% from 8.73% a year ago, up from 9.02% in fourth quarter. Margins excluding Financials rise to 8.90% from 8.28% last year, 8.83% in fourth quarter. In the second quarter 9.96% net margins expected, 9.44% ex-Financials.
  • Full-year total earnings for the S&P 500 jumps 45.9% in 2010, expected to rise 16.5% further in 2011. Growth to continue in 2012 with total net income expected to rise 12.1%. Financials major earnings driver in 2010. Excluding Financials, growth was 27.7% in 2010, and expected to be 17.1% in 2011 and 10.4% in 2012.
  • Total revenues for the S&P 500 rise 7.80% in 2010, expected to be up 5.83% in 2011, and 6.14% in 2012. Excluding Financials, revenues up 9.19% in 2010, expected to rise 9.62% in 2011 and 6.14% in 2012.
  • Annual Net Margins marching higher, from 5.88% in 2008 to 6.39% in 2009 to 8.65% for 2010, 9.49% expected for 2011 and 10.05% in 2012.
  • Margin Expansion major source of earnings growth. Net margins ex-Financials 7.79% in 2008, 7.08% in 2009, 8.28% for 2010, 8.85% expected in 2011, and 9.22% in 2012.
  • Revisions ratio for full S&P 500 at 1.09 for 2011, at 1.18 for 2012, both neutral readings. Sharp drop from recent weeks, but driven by old increases falling out, not new cuts. Ratio of firms with rising to falling mean estimates at 1.33 for 2011, 1.31 for 2012, marginally positive readings. Total revisions activity near seasonal lows.
  • S&P 500 earned $544.3 billion in 2009, rising to $794.0 billion in 2010, expected to climb to $924.7 billion in 2011. In 2012 the 500 are collectively expected to earn $1.036 Trillion.
  • S&P 500 earned $57.13 in 2009: $83.33 in 2010 and $97.04 in 2011 expected bottom-up. For 2012, $108.79 expected. Puts P/Es at 15.2x for 2010, and 13.1x for 2011 and 11.7x for 2012, very attractive relative to 10-year T-note rate of 2.92%. Top-down estimates, $95.87 for 2011 and $103.94 for 2012.


Soft Data, Falling Revisions Ratios

The first quarter earnings season is done. Net income growth was 17.12%. While that is down from the extremely strong 30.9% the same 495 of the S&P 500 firms posted in the fourth quarter, it is still a very strong growth rate.

Almost all of the growth slowdown is from a failure of the Financial sector to repeat the massive growth it posted in the fourth quarter. Growth excluding the Financials was 19.1%, down only slightly from the 19.8% growth posted in the fourth quarter. Before the first quarter earnings season started, it was expected that growth would be just 6.7% for the S&P 500 as a whole, and 10.2% excluding Financials.

Rate of Growth Slowing

The rate of growth is expected to continue to slow in the second quarter, with total growth of 9.33% and growth of 11.24% if the Financials are excluded. Note, however, that those year-over-year growth expectations are still higher than the expectations for the first quarter before the first quarter earnings season started.

I would be very surprised if we didn’t end up with double-digit growth on both a total and ex-Financials basis. Normally about three times as many firms will report positive surprises as disappointments, and that in turn makes the intial growth projections very conservative.

Revenue Growth Stayed Strong

Revenue growth was also very strong at 8.82%, up from the 8.31% growth the S&P 500 posted in the fourth quarter. Financials are a major drag on revenue growth; if they are excluded, reported revenue growth was 10.80%, up from the 8.35% growth posted last quarter.

Revenue growth is also expected to slow dramatically in the second quarter, falling to 0.62% year over year for the S&P 500 as a whole. Revenue growth is expected to slip to 3.13% if the Financials are excluded. Relative to expectations before the quarter started, the revenue outperformance has been just as spectacular as the earnings performance. Before the earnings season started, growth expectations were just 1.41% overall, and 2.16% if the Financials are excluded.

Net Margin Expansion Slowing

Net margin expansion has been a driver of earnings growth, but that expansion is slowing down, particularly if one excludes the Financials. Overall net margins were 9.40%, up sharply from 8.73% a year ago and from 9.02% in the fourth quarter. Strip away the Financials and the picture is somewhat different, rising to 8.90% from 8.28% a year ago and from the 8.83% reported in the fourth quarter.

At the start of the season, net margins were expected to be 9.13%, and 8.14% excluding the Financials. For the second quarter, total net margins are expected to be 9.96%, and 9.44%, excluding the Financials.

On an annual basis, net margins continue to march northward. In 2008, overall net margins were just 5.88%, rising to 6.39% in 2009. They hit 8.65% in 2010 and are expected to continue climbing to 9.49% in 2011 and 10.05% in 2012. The pattern is a bit different, particularly during the recession, if the Financials are excluded, as margins fell from 7.78% in 2008 to 7.08% in 2009, but have started a robust recovery and rose to 8.28% in 2010. They are expected to rise to 8.85% in 2011 and 9.22% in 2012.

Full-Year Expectations Still Good

The expectations for the full year are very healthy, with total net income for 2010 rising to $794.0 billion in 2010, up from $544.3 billion in 2009. In 2011, the total net income for the S&P 500 should be $924.7 billion, or increases of 45.9% and 16.5%, respectively. The expectation is for 2012 to have total net income passing the $1 Trillion mark to $1.036 Trillion.

That will also put the “EPS” for the S&P 500 over the $100 “per share” level for the first time at $108.79. That is up from $57.13 for 2009, $83.33 for 2010, and $97.04 for 2011. In an environment where the 10-year T-note is yielding 2.92%, a P/E of 15.2x based on 2010 and 13.1x based on 2011 earnings looks attractive. The P/E based on 2012 earnings is 11.7x.

There has been a sharp decline in the ratio of estimate increases to estimate cuts over the last few weeks, with the Revisions ratio for 2011 falling to 1.09 from 1.42 two weeks ago and 1.89 a month ago. For 2012, the ratio is down to 1.18 from 1.67 two weeks ago and 2.03 a month ago. Most of that decline has been due to old estimate increases falling out of the sample than due to a flood of new estimate cuts.

Warning Signs Exist

We are nearing the seasonal low point in estimate revisions activity. While the numbers are still firmly in the neutral zone to slightly on the positive side, the sharp fall off is a bit of a yellow flag. If it continues to be lackluster as revisions activity picks up in a few weeks it will be a significant reason for concern.

The fundamental backing for the market continues to be solid. It is important to keep your eyes on the prize. There is lots of news out there, and much of it is more dramatic than earnings results, but rarely does it have more significance for your portfolio.

Earning are, and are going to remain, the single-most-important thing for the stock market. Interest rates are an important — but distant — second.

That does not mean that all is smooth sailing ahead. In a similar, but contrary nod to history, we are now at the softest part of the year (historically). There is a fair amount of truth to the old adage “Sell in May, but remember to return by November.” Since 1945, the gain on the S&P 500 has averaged 6.8% (ex-dividends) from November through April, but only 1.3% from May through October.

The biggest threat to the market is if the debt ceiling is not raised by the beginning of August. If it looks like it will not happen — watch out. The Government of the United States defaulting on its debt is likely to have a somewhat larger impact on the markets and the economy than the impact of Lehman Brothers defaulting on its debts.

The nation would be shoved right back into recession, and one deeper than the one that followed the Lehman collapse. If that happens, then corporate profits would also collapse. However, when push comes to shove, I find it hard to believe that even Congress could be so stupid as to let that happen.

While not the most likely case, the chance of no increase by the time the ceiling is hit is a very real possibility. Given the disastrous potential consequences, taking out some insurance in the form of “deep out of the money” puts would make a lot of sense at this point.

Low Government Spending Drags

We are already feeling the impact from lower government spending. First quarter GDP growth came in at just 1.8%, down from 3.1% in the fourth quarter. Total government spending was a drag of 1.09 points, up from being a 0.34 point drag in the fourth quarter.

In other words 0.75 of the total 1.30 point growth slowdown (57.8%) was due to increased austerity in Government spending. The recovery is clearly slowing, but so far, that has not shown up in the analysts’ profit forecasts.

Economic Data Softening

The overall tone of the economic data in recent weeks has been on the soft side. We got very disappointing news from the two “mini-ISM’s” last week; the Empire State and Philly Fed reports were both far weaker than expected and showed an actual contraction in manufacturing activity in the mid-Atlantic region.

Initial Claims for unemployment insurance fell by 16,000 but remained above the key 400,000 level of the 10th week in a row. Industrial production rose only 0.1% in May and April was revised lower. However, the headline numbers there were worse than the actual situation. Most of the decline was from the Utility sector and reflected cool weather as much as a slowdown in economic activity.

Manufacturing output rose by 0.4%, recouping most of its 0.5% decline in April. The April decline was mostly due to the supply chain effects of the Japan disaster. Overall Capacity Utilization was unchanged at 76.7%, but factory utilization rose to 74.5% from 74.2%. Both measures remain well below their historical averages, but have improved substantially over the last year.

Utility output plunged 2.8% on the month and utility utilization fell to 79.0% from 81.4%, and is now below the lowest level of the recession. Inflation was also hotter than expected at the core level, with the core CPI up 0.3% versus expectations of a 0.1% increase and higher than the 0.2% level in April. Headline inflation was actually lower than core at 0.2% due to falling gasoline prices. That will probably happen again in June.

Some Data Surprised to the Upside

Not all the economic data was bad. While retail sales fell 0.2%, that was much better than the 0.7% decline that was expected. Also, housing starts were higher than expected at an annual rate of 560,000, up from 541,000 in April, and April was revised sharply higher from a 523,000 rate. Most of the strength, though, was in the volatile multi-family segment, and the absolute level is still just plain awful.

Still, there is hope that the recovery (such as it is) in residential investment will continue as building permits also rose to an annual rate of 612,000, far above the expected 548,000 level and higher than the upwardly revised 563.000 level in April. Overall, though, it looks like economic growth in the second quarter is going to look a lot more like the 1.8% level of the first quarter than a return to the 3.1% level of the fourth quarter.

International Concerns Remain

The international situation clearly has the potential to abort the recovery as well. The disaster in Japan will clearly slow its economy dramatically in the second quarter, although much of that growth will be made up later in the year as the reconstruction process gets under way. Many U.S.-made products have parts which are made in Japan, and that is likely to disrupt production here.

The debt crisis in Europe is not going away. There were riots in Greece protesting the current austerity measures, even as the ECB and Germany are demanding even more in order to get the next tranche of the bailout. Rates for the Greek, Irish and Portuguese debt are substantially higher than when the crisis first started.

It is clear now that at least Greece will be forced to restructure (aka partially default) its debt. The austerity campaigns have weakened those economies and undermined tax revenues, and so the bailouts have not made the situation much better. A Greek default will cause European banks to take a serious hit.

Don’t Despair

On balance I remain bullish, and I think we will end the year with the S&P 500 north of 1400, but that does not mean we will have a smooth ride between here and there. Strong earnings should trump a dicey international situation and the drama in DC (provided it turns out to be just drama, and the game of chicken does not end in tragedy).

Valuations on stocks look very compelling, with the S&P trading from just 13.06x 2011, and 11.65x 2012 earnings. That is extremely competitive with the 2.92% yield on the 10-year Treasury note. In fact, 100 (20%) of the stocks in the S&P 500 now have dividend yields higher than the T-note. However, be prepared to move to the exits (or have some put protection in place) if it looks like the debt ceiling will not be raised.

Since there are virtually no firms that have reported second quarter earnings yet, I am going to omit the Surprise tables and the Reported Quarterly Growth and Margin tables this week.

Expected Quarterly Growth: Total Net Income

  • The total net income of 9.33% is expected, down from 17.08% year-over-year growth in the first quarter (and down from 30.8% growth in the fourth quarter).
  • Sequential earnings growth of 0.42% expected, 2.19 ex-Financials.
  • Growth slowdown mostly due to Financials not repeating extraordinary growth of the fourth quarter.  Growth ex-Financials of 11.24% is expected, versus 19.13% in the first quarter and down from 19.8% in fourth quarter.
  • Very early expectations are for 13.1% year-over-year growth in the third quarter, 14.1% excluding Financials.
  • Energy, Materials and Industrials expected to lead again, Construction and Aerospace expected to post lower total net income than last year.

 

Quarterly Growth: Total Net Income Expected
Income Growth Sequential Q3/Q2 E Sequential Q2/Q1 A Year over Year 2Q 11 E Year over Year 3Q 11 E Year over Year 1Q 11 A
Oils and Energy 0.07% 11.26% 37.75% 52.75% 40.52%
Basic Materials -4.22% -9.87% 32.01% 45.12% 48.26%
Industrial Products 3.39% 5.21% 24.09% 23.69% 65.09%
Consumer Discretionary -0.29% 11.96% 19.13% -0.19% 13.37%
Business Service 3.96% 9.35% 15.12% 16.93% 12.25%
Conglomerates 3.91% 8.21% 13.44% -11.17% -29.30%
Transportation 9.78% 32.10% 12.34% 17.27% 23.82%
Retail/Wholesale -10.59% 6.39% 6.04% 2.56% 5.68%
Computer and Tech 11.64% -6.66% 5.80% 8.37% 24.88%
Consumer Staples 11.35% 10.01% 3.46% 6.58% 3.78%
Finance 2.62% -7.53% 0.77% 8.36% 8.74%
Medical 0.57% -3.81% 0.12% 2.15% 5.90%
Utilities 28.23% -5.55% 0.05% 5.66% -1.09%
Auto -16.53% -7.26% -0.03% 3.38% 46.88%
Aerospace 5.30% 7.31% -6.28% 1.96% 5.04%
Construction 34.26% 216.81% -12.61% 86.88% -34.25%
S&P 4.26% 0.42% 9.33% 13.10% 17.08%
Excl Financials 4.60% 2.19% 11.24% 14.09% 19.13%


Quarterly Growth: Total Revenues Expected

  • Revenue growth expected to slow sharply, up from the 8.82% growth posted in the first quarter. Ex-Financials growth of 3.18% expected, down from 10.80% in the first quarter.
  • Sequentially revenues 5.27% lower than in the first quarter, down 3.61% ex-Financials.
  • Financials, Aerospace and Utilities sectors have falling revenues, seven sectors post double-digit revenue growth, Industrials and Energy grow sales over 25%.
  • As one would expect in an economic recovery, cyclicals are leading the way on revenue growth. Energy and Materials growth helped by strong commodity prices.

 

Quarterly Growth: Total Revenues Expected
Sales Growth Sequential Q3/Q2 E Sequential Q2/Q1 A Year over Year
2Q 11 E
Year over Year
3Q 11 E
Year over Year
1Q 11 A
Industrial Products -4.73% 6.01% 25.26% 16.12% 23.85%
Oils and Energy 2.82% 8.96% 25.09% 22.59% 17.13%
Basic Materials 3.07% 7.88% 19.48% 16.28% 18.16%
Computer and Tech -2.48% -5.76% 15.74% 9.24% 15.67%
Auto -0.85% 3.12% 13.96% 2.78% 1.62%
Transportation 7.96% -1.17% 11.75% 10.91% 12.71%
Consumer Discretionary 6.91% -6.51% 10.40% 13.50% 6.48%
Business Service -4.79% -3.45% 7.52% 7.87% 7.21%
Conglomerates -1.34% -6.75% 7.40% 0.15% 4.37%
Consumer Staples 2.14% -7.55% 5.80% -4.16% 6.41%
Retail/Wholesale 2.67% -5.96% 5.60% 7.11% 3.68%
Medical 1.10% -1.69% 2.56% 4.43% 4.27%
Construction 16.50% -7.03% 0.84% 2.11% -3.88%
Utilities -5.79% 5.09% -0.69% 3.39% 1.08%
Finance -18.71% -4.95% -2.19% -17.66% 8.05%
Aerospace 6.46% -12.80% -3.24% -0.84% -0.16%
S&P 500 3.91% -5.27% 0.62% 3.70% 8.82%
Excl Financials 4.98% -3.61% 3.18% 7.28% 10.80%

Quarterly Net Margins Expected

  • Sector and S&P net margins are calculated as total net income for the sector divided by total revenues for the sector.
  • Net margins for the full S&P 500 expected to expand to 9.96% from 9.17% a year ago, and up from 9.40% in the first quarter. Net margins ex-Financials rise to 9.41% from 8.76% a year ago but down from 9.44% in the first quarter.
  • Eleven sectors expected to see year-over-year margin expansion, only five to see contraction. Sequentially twelve up and four down. Further margin expansion expected for third quarter, rising to 10.00%, but falling to 9.41% excluding the Financials.
  • Margin expansion the key driver behind earnings growth.

 

Quarterly: Net Margins Expected
Net Margins Q3 2011 Estimated Q2 2011 Estimated 1Q 2011 Reported 4Q 2010 Reported 3Q 2010 Reported 2Q 2010 Reported
Computer and Tech 17.08% 15.72% 16.37% 17.56% 16.51% 15.80%
Finance 14.61% 13.71% 12.49% 10.13% 11.09% 11.61%
Medical 13.28% 13.46% 13.85% 12.62% 13.68% 13.77%
Business Service 13.08% 13.13% 11.90% 12.48% 11.84% 11.78%
Consumer Staples 13.04% 12.66% 10.47% 10.59% 11.91% 10.87%
Conglomerates 10.18% 10.37% 8.94% 10.73% 9.41% 8.65%
Oils and Energy 9.07% 10.33% 8.38% 7.72% 7.19% 8.07%
Consumer Discretionary 9.58% 10.29% 9.09% 9.98% 10.48% 9.14%
Industrial Products 9.03% 9.60% 8.69% 7.89% 8.18% 8.18%
Transportation 9.08% 8.84% 6.75% 8.03% 8.49% 8.17%
Basic Materials 7.77% 8.83% 9.17% 6.71% 6.27% 7.15%
Utilities 10.34% 7.38% 8.02% 6.78% 9.10% 8.31%
Auto 5.17% 6.66% 6.64% 3.76% 5.52% 6.38%
Aerospace 6.52% 6.50% 6.14% 6.49% 6.19% 6.55%
Retail/Wholesale 3.19% 3.63% 3.41% 4.13% 3.33% 3.54%
Construction 4.20% 3.56% 1.16% 2.04% 2.34% 3.66%
S&P 500 10.00% 9.96% 9.40% 9.02% 9.17% 9.17%
Excl Financials 9.41% 9.44% 8.90% 8.83% 8.84% 8.76%

Annual Total Net Income Growth

  • Following a rise of just 2.1% in 2009, total earnings for the S&P 500 jumps 45.9% in 2010, 16.5% further expected in 2011. Growth ex-Financials 27.7% in 2010, 17.1% in 2011.
  • For 2012, 12.1% growth expected. 10.4% ex-Financials.
  • Auto net income expands more than 15x in 2010, Financial net income more than quadruples.
  • All sectors expected to show total net income rise in 2011 and in 2012. Utilities only (small) decliner in 2010. Eleven sectors expected to post double-digit growth in 2011 and 13 in 2012. Medical the only sector expected to grow less than 5% in 2012.
  • Cyclical/Commodity sectors expected to lead in earnings growth again in 2011 and into 2012.
  • Sector dispersion of earnings growth narrows dramatically between 2010 and 2012, only four sectors expected to grow more than 20% in 2012, seven grew more than 40% in 2010.

 

Annual Total Net Income Growth
Net Income Growth 2009 2010 2011 2012
Basic Materials -50.26% 72.13% 40.65% 11.19%
Oils and Energy -55.09% 50.09% 37.86% 9.59%
Industrial Products -35.08% 36.41% 33.79% 17.22%
Computer and Tech -5.06% 47.83% 20.38% 10.96%
Consumer Discretionary -15.44% 22.51% 19.32% 14.17%
Transportation -30.22% 44.44% 18.07% 20.85%
Business Service 1.35% 15.95% 16.01% 13.08%
Construction - to - - to + 14.28% 36.42%
Auto - to + 1457.95% 14.02% 11.90%
Finance - to + 319.87% 13.53% 20.13%
Retail/Wholesale 2.61% 14.65% 10.64% 12.58%
Conglomerates -23.60% 11.23% 10.16% 17.75%
Consumer Staples 5.79% 11.72% 6.75% 8.17%
Medical 2.52% 10.40% 5.24% 4.20%
Utilities -13.47% -0.86% 3.87% 6.86%
Aerospace -16.75% 21.02% 2.20% 14.65%
S&P 2.05% 45.88% 16.46% 12.07%

Annual Total Revenue Growth

  • Total S&P 500 Revenue in 2010 rises 7.80% above 2009 levels, a rebound from a 6.68% 2009 decline.
  • Total revenues for the S&P 500 expected to rise 5.83% in 2011, 6.14% in 2012.
  • Energy to lead revenue race in 2011. Six other sectors (all cyclical) also expected to show double-digit revenue growth in 2011.
  • All sectors but Staples and Finance expected to show positive top-line growth in 2011, but four sectors expected to show positive growth below 5%. All sectors see 2012 growth, three in double digits.
  • Aerospace the only sector to post lower top line for 2010. Revenues for Financials were virtually unchanged.
  • Construction, Transportation and Industrials the only sectors expected to post double-digit top line growth in 2012. No sector expected to post falling revenues. Autos Tech and Energy all expected to see revenues grow by more than 8%.
  • Revenue growth significantly different if Financials are excluded, down 10.46% in 2009 but growth of 9.19% in 2010, 9.62% in 2011, and 5.95% in 2012.

 

Annual Total Revenue Growth
Sales Growth 2009 2010 2011 2012
Oils and Energy -34.41% 23.15% 21.32% 7.45%
Basic Materials -19.30% 12.78% 16.37% 5.65%
Industrial Products -20.96% 12.34% 16.21% 10.84%
Consumer Discretionary -4.95% 3.93% 13.24% 6.98%
Transportation 7.25% 10.83% 12.35% 10.89%
Computer and Tech -10.42% 15.36% 11.52% 8.91%
Auto -21.40% 8.53% 11.15% 9.53%
Business Service -2.43% 5.99% 7.12% 5.86%
Retail/Wholesale 1.40% 4.08% 5.86% 5.72%
Utilities -5.84% 2.46% 5.74% 2.99%
Medical 6.38% 11.37% 4.28% 2.67%
Construction -15.92% 0.47% 4.17% 12.24%
Conglomerates -13.30% 0.94% 2.12% 4.88%
Aerospace 6.51% -0.34% 1.41% 6.03%
Consumer Staples -0.36% 4.77% -1.74% 4.76%
Finance 21.51% 0.10% -14.94% 5.01%
S&P 500 -6.68% 7.80% 5.83% 6.14%
Excl Financials -10.46% 9.19% 9.62% 5.95%

Annual Net Margins

  • Net Margins marching higher, from 5.88% in 2008 to 6.39% in 2009 to 8.65% for 2010, 9.49% expected for 2011. Trend expected to continue into 2012 with net margins of 10.05% expected. Major source of earnings growth.
  • Financials significantly distort overall net margins. Net margins ex-Financials 7.78% in 2008, 7.08% in 2009, 8.28% for 2010, 8.85% expected in 2011. Expected to grow to 9.22% in 2012.
  • Financials net margins soar from -8.42% in 2008 to 16.59% expected for 2012.
  • All sectors but Medical and Utilities saw higher net margins in 2010 than in 2009. All sectors but Utilities expected to post higher net margins in 2011 than in 2010. Widespread margin expansion currently expected for 2012 as well with all sectors expected to post expansion in margins.
  • Six sectors to boast double digit net margins in 2012, up from just three in 2009.
  • Sector net margins are calculated as total net income for sector divided by total revenues. However, there are generally fewer revenue estimates than earnings estimates for individual companies.

 

Annual Net Margins
Net Margins 2009A 2010A 2011E 2012E
Computer and Tech 11.86% 15.20% 16.30% 16.72%
Finance 2.59% 10.86% 14.50% 16.59%
Medical 13.17% 13.06% 13.16% 13.38%
Business Service 10.78% 11.80% 12.76% 13.65%
Consumer Staples 9.85% 10.50% 11.36% 11.78%
Conglomerates 8.19% 9.02% 9.73% 10.93%
Consumer Discretionary 7.50% 8.84% 9.23% 9.94%
Oils and Energy 6.27% 7.65% 8.69% 8.86%
Industrial Products 6.15% 7.46% 8.56% 9.09%
Basic Materials 4.47% 6.82% 8.23% 8.67%
Utilities 8.36% 8.09% 7.94% 8.24%
Transportation 5.83% 7.59% 7.83% 8.70%
Aerospace 5.04% 6.12% 6.16% 6.67%
Auto 0.36% 5.23% 5.37% 5.48%
Retail/Wholesale 3.06% 3.37% 3.50% 3.75%
Construction -0.51% 2.68% 2.94% 3.57%
S&P 500 6.39% 8.65% 9.49% 10.05%
Excl Financials 7.08% 8.28% 8.85% 9.22%

Earnings Estimate Revisions: Current Fiscal Year
The Zacks Revisions Ratio: 2011

  • Revisions ratio for full S&P 500 at 1.09, down from 1.42 two weeks ago, now a neutral reading. Nearing seasonal low in activity, meaning changes are driven more by old estimates falling out than new estimates being added (lowering significance of revisions ratio).
  • Four sectors with revisions ratios at or above 2.0. Industrials and Transports lead. Business Service and Energy also strong. Eight sectors with positive revisions ratios, seven negative (below 1.0). Many sector sample sizes very small.
  • Ratio of firms with rising to falling mean estimates at 1.33, down from 1.67, still a bullish reading.
  • Total number of revisions (4-week total) plunging at 1,379, down from 2,264 two weeks ago (-39.1%), and down from 5068 a month ago.
  • Increases at 720 down from 1,330 (-45.9%), cuts at 659, down from 934 (-29.4%).

 

The Zacks Revisions Ratio: 2011
Sector %Ch
Curr Fiscal Yr
Est – 4 wks
#
Firms
Up
#
Firms
Down
#
Ests
Up
#
Ests
Down
Revisions
Ratio
Firms
up/down
Industrial Products 0.20 10 10 45 13 3.46 1.00
Transportation 0.61 4 2 13 4 3.25 2.00
Business Service 0.05 9 5 14 5 2.80 1.80
Oils and Energy -0.11 30 8 121 51 2.37 3.75
Consumer Staples -0.02 19 13 54 37 1.46 1.46
Auto 0.36 4 3 8 7 1.14 1.33
Medical -0.11 25 16 54 49 1.10 1.56
Computer and Tech -0.09 27 26 106 105 1.01 1.04
Aerospace -0.11 2 5 6 6 1.00 0.40
Utilities 0.10 16 16 30 31 0.97 1.00
Retail/Wholesale -0.59 22 22 130 139 0.94 1.00
Basic Materials 0.14 12 9 11 13 0.85 1.33
Consumer Discretionary 0.02 18 10 24 32 0.75 1.80
Finance -0.95 38 37 100 153 0.65 1.03
Conglomerates 0.08 6 2 2 5 0.40 3.00
Construction -0.18 6 3 2 9 0.22 2.00
S&P -0.20 248 187 720 659 1.09 1.33

Earnings Estimate Revisions: Next Fiscal Year
The Zacks Revisions Ratio: 2012

  • Revisions ratio for full S&P 500 at 1.18, down from 1.67 two weeks ago, now in neutral territory.
  • Four sectors have at least two increases per cut. Transports and Industrials lead. Sample sizes very small for many sectors, lowering significance.
  • Five sectors with negative revisions ratio (below 1.0). Construction and Autos especially weak, but small samples.
  • Ratio of firms with rising estimate to falling mean estimates at 1.31, down from 1.84, in bullish territory.
  • Total number of revisions (4-week total) at 1,363, down from 2,118 two weeks ago (-35.6%), and from 4,571 a month ago.
  • Increases at 738 down from 1,324 last week (-44.3%), cuts fall to 625 from 794 last week (-21.3%).

 

The Zacks Revisions Ratio: 2012
Sector %Ch
Next Fiscal Yr Est – 4 wks
#
Firms Up
#
Firms Down
#
Ests Up
#
Ests Down
Revisions
Ratio
Firms up/down
Transportation 1.00 6 0 17 1 17.00 999.99
Industrial Products 0.65 15 5 49 14 3.50 3.00
Business Service 0.15 10 5 18 7 2.57 2.00
Oils and Energy 1.10 32 7 129 59 2.19 4.57
Basic Materials 0.92 12 9 18 11 1.64 1.33
Aerospace 0.03 4 3 6 5 1.20 1.33
Medical 0.07 27 14 67 58 1.16 1.93
Retail/Wholesale -0.24 25 20 129 114 1.13 1.25
Computer and Tech -0.20 32 24 106 97 1.09 1.33
Consumer Staples 0.07 18 16 37 35 1.06 1.13
Conglomerates 0.17 6 2 3 3 1.00 3.00
Consumer Discretionary -0.13 13 14 24 27 0.89 0.93
Finance -0.63 31 43 98 133 0.74 0.72
Utilities -0.14 14 21 30 43 0.70 0.67
Auto -0.02 3 3 4 7 0.57 1.00
Construction -5.96 4 7 3 11 0.27 0.57
S&P -0.10 252 193 738 625 1.18 1.31

Total Income and Share

  • S&P 500 earned $544.3 billion in 2009, rising to earn $794.0 billion in 2010, $924.7 billion expected in 2011.
  • Early expectations that the S&P 500 total earnings will hit the $1 Trillion mark in 2012 at $1.036 Trillion.
  • Finance share of total earnings moves from 5.9% in 2009 to 17.8% in 2010, 17.4% expected for 2011; 18.7% in 2012, but still well below 2007 peak of over 30%. Energy share also rising going from 11.9% in 2009 to 14.2% in 2012.
  • Medical share of total earnings far exceeds market cap share (index weight), but earnings share expected to shrink from 17.3% in 2009 to 10.7% in 2012, down each year.
  • Market Cap shares of Construction, Staples, Retail, Transportation, Industrials and Business Service sectors far exceed earnings shares of any of the years from 2010 through 2012.
  • Earnings shares of Energy, Finance, and Medical well above market cap shares.
  • As a general rule, one should try to overweight sectors with rising earnings shares, underweight falling earnings shares, but also over weight sectors where earnings shares exceed market cap shares.

 

Total Income and Share
Income ($ Bill) Total
Net
Income
$ 2010
Total
Net
Income
$ 2011
Total
Net
Income
$ 2012
% Total
S&P Earn
2010
% Total
S&P Earn
2011
% Total
S&P
Earn
2012
% Total
S&P Mkt
Cap
Computer and Tech $134,564 $161,991 $179,742 16.95% 17.52% 17.34% 17.35%
Finance $141,677 $160,850 $193,225 17.84% 17.40% 18.65% 15.55%
Oils and Energy $97,365 $134,224 $147,101 12.26% 14.52% 14.19% 12.01%
Medical $101,505 $106,826 $111,317 12.78% 11.55% 10.74% 10.67%
Consumer Staples $62,796 $67,034 $72,508 7.91% 7.25% 7.00% 8.75%
Retail/Wholesale $59,474 $65,799 $74,074 7.49% 7.12% 7.15% 8.65%
Utilities $49,924 $51,856 $55,413 6.29% 5.61% 5.35% 6.26%
Basic Materials $23,171 $32,591 $36,237 2.92% 3.52% 3.50% 3.24%
Conglomerates $28,658 $31,570 $37,174 3.61% 3.41% 3.59% 3.84%
Consumer Discretionary $26,440 $31,548 $36,019 3.33% 3.41% 3.48% 4.06%
Industrial Products $16,841 $22,531 $26,411 2.12% 2.44% 2.55% 2.68%
Business Service $12,714 $14,749 $16,678 1.60% 1.60% 1.61% 1.96%
Aerospace $14,143 $14,454 $16,572 1.78% 1.56% 1.60% 1.49%
Transportation $11,686 $13,798 $16,675 1.47% 1.49% 1.61% 1.90%
Auto $11,090 $12,645 $14,150 1.40% 1.37% 1.37% 1.06%
Construction $1,936 $2,213 $3,019 0.24% 0.24% 0.29% 0.53%
S&P 500 $793,985 $924,678 $1,036,316 100.00% 100.00% 100.00% 100.00%

P/E Ratios

  • Trading at 15.21x 2010, 13.06x 2011 earnings, or earnings yields of 6.57% and 7.66%, respectively.  P/E for 2012 at 11.65x or earnings yield of 8.58%.
  • Earnings Yields still very attractive relative to 10-year T-Note rate of 2.92%.
  • Autos have lowest P/E based on 2011 and 2012 earnings. Energy and Financials also in single digits for 2012.
  • Construction has highest P/E for all three years, but falling fast.
  • Auto and Finance high 2009 P/E’s to fall dramatically in 2010 and 2011, continue down in 2012.
  • S&P 500 earned $57.13 in 2009 rising to $83.33 in 2010. Currently expected to earn $97.04 in 2011 and $108.79 for 2012.

 

P/E Ratios
P/E 2009 2010 2011 2012
Auto 180.59 11.59 10.17 9.08
Oils and Energy 22.36 14.90 10.81 9.86
Finance 55.65 13.25 11.67 9.72
Basic Materials 29.09 16.90 12.02 10.81
Medical 14.01 12.69 12.06 11.57
Aerospace 15.38 12.71 12.44 10.85
Computer and Tech 23.01 15.57 12.93 11.66
Industrial Products 26.24 19.24 14.38 12.27
Utilities 15.02 15.15 14.59 13.65
Conglomerates 17.99 16.17 14.68 12.47
Consumer Discretionary 22.70 18.53 15.53 13.60
Consumer Staples 18.80 16.83 15.76 14.57
Retail/Wholesale 20.14 17.57 15.88 14.10
Business Service 21.57 18.61 16.04 14.18
Transportation 28.32 19.60 16.60 13.74
Construction NM 33.28 29.12 21.35
S&P 500 22.19 15.21 13.06 11.65

FY1 Revisions of More than 5%

The first table below shows the S&P 500 firms with the biggest increases in their FY1 (mostly 2010) mean estimate over the last 4 weeks. The second shows the largest declines. To qualify there must be more than 3 estimates for FY1, and have a mean estimate of more than $0.50. In addition to the change in the mean estimate, the net percentage of estimates being raised is shown for both FY1 and FY2, as well as the P/E ratios based on each year’s earnings is shown.

Note that estimate momentum and value are not mutually exclusive. The most interesting of these firms will be where the net revisions percentage (#up-#dn/Tot) is more than 0.50 but less than 1.00. Big mean estimate changes based on a handful of individual revisions are suspect, but could prove to be the most interesting if other analysts follow suit. On the other hand if all the analysts have raised their estimates already, the mean estimate is less likely to rise again over the next month.

  • This week’s cut off +/- 5%, 5 make increase cut, 12 make decrease cut
  • 1 increases greater than 10%, 6 decreases

 

Biggest FY1 Revisions (Largest Increases)
Company Ticker %Ch
Curr Fiscal Yr Est – 4 wks
%Ch
Next Fiscal Yr Est – 4 wks
# Up-Dn/Tot
%Ch
Curr Fiscal Yr Est – 4 wks
# Up-Dn/Tot
%Ch
Next Fiscal Yr Est – 4 wks
P/E using
Curr FY Est
P/E using
Next FY Est
Netapp Inc NTAP 11.35% 9.45% 0.88 0.77 23.78 20.17
Amer Intl Grp AIG 8.70% 0.92% 0.00 0.00 7.56 8.70
Tiffany & Co TIF 6.93% 7.34% 0.94 0.71 20.79 18.01
Cliffs Natural CLF 6.65% 7.02% 0.20 0.27 5.67 5.54
El Paso Corp EP 5.20% 5.95% 0.50 0.36 17.59 14.89
Biggest FY1 Revisions (Largest Declines)
Company Ticker %Ch
Curr Fiscal Yr Est – 4 wks
%Ch
Next Fiscal Yr Est – 4 wks
# Up-Dn/Tot
%Ch
Curr Fiscal Yr Est – 4 wks
# Up-Dn/Tot
%Ch
Next Fiscal Yr Est – 4 wks
P/E using
Curr FY Est
P/E using
Next FY Est
Cincinnati Finl CINF -35.46% -0.75% -0.57 0.00 39.48 19.02
Sunoco Inc SUN -25.38% 0.25% -0.11 0.00 44.12 16.64
Travelers Cos TRV -22.26% -1.36% -0.79 -0.58 11.75 9.40
Gap Inc GPS -19.42% -13.53% -0.96 -0.81 12.01 10.07
Alpha Natrl Res ANR -15.40% 1.15% -0.33 0.13 10.03 6.76
Allstate Corp ALL -12.58% -0.53% -0.39 -0.19 16.69 7.90
Comp Science CSC -9.06% -10.39% -0.71 -0.40 8.19 7.45
Utd States Stl X -7.63% -3.54% -0.09 -0.09 15.87 7.49
Natl Semicon NSM -6.60% -1.15% -0.61 -0.29 21.03 18.37
Newell Rubbermd NWL -5.87% -6.21% -1.00 -0.86 9.27 8.34
Xl Group Plc XL -5.61% -0.56% -0.47 -0.06 18.65 10.01
Appld Matls Inc AMAT -5.23% -4.93% -0.84 -0.63 8.70 8.58

Data in this report, unless stated otherwise, is through the close on Thursday 6/16/2011.

We use the convention of referring to the next full fiscal year to be completed as 2011, not all firms are on December fiscal years, this can cause discontinuities in the data. The data is based on FY1, not based on 2011, even though I may call it 2011 in the report. All numbers, including historical ones, reflect the current composition of the S&P 500, thus some historical numbers may differ from those reported by S&P which are based on the composition of the index at the time of the reports.

Dirk van Dijk, CFA is the Chief Equity Strategist for Zacks.com. With more than 25 years investment experience he has become a popular commentator appearing in the Wall Street Journal and on CNBC. Dirk is also the Editor in charge of the market beating Zacks Strategic Investor service.

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