First Call: 4Q Earnings Up 10.7% Vs 2001,Up 3.3% Vs Views

Dow Jones Newswires | 03-18-03 | First Call

[Starwind]

First Call: 4Q Earnings Up 10.7% Vs 2001,Up 3.3% Vs Views

NEW YORK (Dow Jones)--Earnings of companies in the Standard & Poor's 500 Stock Index that have issued fourth-quarter reports are running 10.7% higher than year-earlier results, according to Thomson First Call.

Of the 500 companies, 491, or 98%, have reported earnings for the December quarter as of Tuesday. So far, fourth-quarter earnings have come in 3.3% higher than analyst expectations.

Compared with a year ago, earnings of the S&P 500 are expected to rise 10.1% in the fourth quarter. That figure reflects actual earnings for the companies that have reported and consensus estimates for the rest.

For the first quarter, analysts expect earnings of the S&P 500 companies to rise 8.1% from the year-ago period.

The following table shows how the companies have done in the fourth quarter compared with analyst expectations:

	By number	By percentage
Positive surprises	148	30%
Positive reports	151	31%
On target	104	21%
Negative reports	55	11%
Negative surprises	31	6%

 

(One company has no analyst coverage for the quarter, and therefore isn't included in this breakdown. First Call could not determine the results of another company, so it was also excluded from the breakdown. Positive and negative surprises include companies that deviated from expectations by at least 5%, with adjustments when the numbers are near zero and the percentage difference becomes meaningless. Positive and negative reports are from companies that deviated by less than 5%.)

The following table shows how the companies are doing against year-ago results:

	By number	By percentage
Above year ago	349	71%
Matched year ago	14	3%
Below year ago	127	26%

First Call said 470, or 57%, of the 822 companies that provided previews of their first-quarter reports as of Tuesday said they will miss analysts' expectations.

First Call said 176, or 21%, expect to meet analysts' expectations, while 176, or 21%, anticipate they will beat them.

At a comparable time the previous year, 350 companies, or 49% of all pronouncements, warned of shortfalls; 154, or 22%, anticipated on-target results; and 205, or 29%, foresaw better-than-expected earnings. .

(END) Dow Jones Newswires

03-18-03 1230ET- - 12 30 PM EST 03-18-03

[Starwind]

Coming to a ticker near you in April:

First Call said 470, or 57%, of the 822 companies that provided previews of their first-quarter reports as of Tuesday said they will miss analysts' expectations.

[Starwind]

fyi...

[steveegg]

You know the expectations game; those Q1/2003 expectations will be lowered to a point below the actual numbers.

Still, it is interesting to note that year v year earnings are up.

[ricpic]

Buh bye recession fears.

[arete]

Depends on your definition of "earnings". I never know what the heck they're using anymore.

Richard W.

[steveegg]

Depends on your definition of "earnings".

Yet another casualty of the Clinton Nightmare.

[Starwind]

those Q1/2003 expectations will be lowered to a point below the actual numbers.

However, First Call said those expectations (likely lowered, agreed) would still be missed by 57% of the interviewed co's. Lowered expectations will be missed.

Still, it is interesting to note that year v year earnings are up.

I'd like to see what those earnings would look like, hypothetically restated, to account for actual pension losses and actual pension liabilities.

[Starwind]

Depends on your definition of "earnings".

Agreed. Likely in most cases, the definition is exaggerated.

[steveegg]

I'd like to see what those earnings would look like, hypothetically restated, to account for actual pension losses and actual pension liabilities.

You must be a sadist <VBG>. Well, I'd like to see that too.

[arete]

I'd like to see what those earnings would look like, hypothetically restated, to account for actual pension losses and actual pension liabilities

Yeah, and let's start expensing all those options that are floating around too. Then there are the "one time" charges. All we get is the hyped "beat by a penny" headlines. It's a sham and a con game.

Richard W.

[LS]

Wait: if "lowered expectations will be missed" and that counts as a "miss," that means if earnings are HIGHER, they still "missed," right?

[Starwind]

Wait: if "lowered expectations will be missed" and that counts as a "miss," that means if earnings are HIGHER, they still "missed," right?

In expectation speak, a 'miss' means below/lower, 'beat' means above/higher.

[LS]

Ok.

[Starwind]

Yeah, and let's start expensing all those options that are floating around too

If FASB gets their way, this may happen, options & pensions.

I wonder if they're getting pressure from the Fed or the 'Working Group on Markets' (is that the offical name?) to go slow or postpone. I guess FASB could/will announce new standards effective Q1C04, and that buys some time to cushion the shock.

[arete]

If FASB gets their way, this may happen, options & pensions.

I read somewhere in the last two weeks, that they are coming under intense political pressure to drop any option expensing demands. Many tech companies definitely don't want it and they are lobbying hard. CSCO is against it and they have the money to buy not just one but several politicians.

Richard W.

[Fractal Trader]

Forget earnings, it's always a bogus number -- look at Enron. Corporate cash flow is what counts, and it has been remarkably strong over the past year. The problem is that they have been sitting on the money, neither investing it in capital goods nor distributing to their shareholders. When these items pick up, then you know that we are really over it.

Free Republic Stock Market/Economy Discussion List. Freep Mail me if you want on or off this list.

[Liz]

Without cash flow to finance growth and dividend payouts, corporate shares are essentially worthless. The problem is that on income statements, cash flow is obscured by multiple noncash accounting adjustments: bad debt provisions, inventory write-downs, restructuring charges, and so on.

Adjustments depend almost entirely on management's admittedly subjective projected calculations. Typically, they are buried in "operating expenses."

How easy it was for WorldCom’s statement to fudge the numbers. If Enron had been forced - by instituting new reporting standards - to disclose its market math, investors would have been clued in to the outrageous assumptions management was making, and that earnings were not exactly what they seemed.

Requiring noncash adjustments to be listed separately (with explicatory footnotes) gives investors a better grip on what makes up earnings. It may even discourage companies from pushing accounting standards to the limit or engaging in the outright fraud we have seen since Enron and subsequent corporate houses of cards collapsed.

[Grampa Dave]

Time for all the haters of America's economy to buy more gold. Time for the rest of us to slide into the pure index funds. I will stay away from the Dow as that is a PC group of stocks.