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Will Earnings Season Bring Volatility?

  • Written by Syndicated Publisher No Comments Comments
    January 12, 2014

    If the market now pretty much knows what the Fed will be doing with its stimulus over the next eight months, and is comfortable with the economic and jobs pictures, will it finally return to focusing on its historic driving force, earnings?

    We’ll soon know as the release of 4th quarter earnings reports begins to ratchet up.

    Reports after the close yesterday include: 

    Supervalu Inc. (SVU), which reported earnings rose to 12 cents a share from 8 cents in the 4th quarter last year. That missed Wall Street’s forecast of 14 cents a share, and sales declined fractionally from a year ago.

    Bed Bath & Beyond (BBBY) reported its 4th quarter earnings of $1.12 a share, up from $1.03  share a year ago, on a 1.3% sales gain. But it also missed Wall Street’s estimates of $1.15 a share. (the stock plunged 8% in after hours trading).

    Family Dollar Stores (FDO) reported its earnings were down fractionally, at 68 cents a share from 69 cents a year earlier, while sales increased 3.2% as margins were squeezed. Its earnings missed the estimates of 69 cents by a penny. But the shares fell 9.6% in pre-market trading this morning as the company warned it sees same-store sales falling by low single-digits in the current quarter.

    Just the tip of the iceberg so far. Alcoa moves the season into 2nd gear when it reports after the close today.

    Meanwhile, the earnings warning season this time around was more negative than has been seen in some years. As of mid-December earnings-tracker Thomson Reuters reported that for every S&P 500 company that pre-reported it would top Wall Street’s estimates, ten warned of weaker than previously expected earnings that would not beat estimates. The 10-1 ratio was on track to beat the previous worst record of 6.8 warnings for every positive one set in the first quarter of 2001 in the midst of the 2000-2002 bear market.

    To read my weekend newspaper column click here:  Will The Market’s 2013 Winners Also Be Winners In 2014-

    Images: Flickr (licence attribution)

    About The Author – Sy Harding, Street Smart Report

    Sy Harding publishes the financial website Street Smart Report Online and a free daily Internet blog at Sy’s Free Blog. In 1999 he authored Riding The Bear – How To Prosper In the Coming Bear Market. His latest book is Beat the Market the Easy Way! – Proven Seasonal Strategies Double Market’s Performance!

    It includes our research and analysis on the economy and markets, and provides charts and buy and sell signals on the major market indexes, sectors, bonds, gold, individual stocks and etf’s, including short-sales and ‘inverse’ etf’s.

    It provides two model portfolios as guides. One is based on ourSeasonal Timing Strategy, one on our Market-Timing Strategy.

    In depth updates are provided every Wednesday, with interim ‘hotline’ updates every time we make a trade. An 8-page traditional newsletter Street Smart Report is provided on the website every 3 weeks, in pdf format for viewing or printing out.

    There is the Street Smart School of online technical analysis ‘seminars’,commentaries to keep you ‘street smart’ about Wall Street, and much more. 

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