Alcoa (AA) may no longer be as relevant to the U.S. economy and the stock market, but the company’s name gets plenty of sunshine from the widely-held belief that its earnings report kick-starts each quarterly reporting cycle. Many in the market even see the company’s earnings report as a leading indicator of what to expect from the rest of corporate America. But that is most likely overstating the company’s status, notwithstanding aluminum’s growing role in the automotive, aircraft manufacturing and construction end markets.
The bottom line is that the relevance of Alcoa’s results and outlook is fairly limited; it doesn’t tell us much beyond what may be useful for the broader industrial metals space. Results the day after Alcoa’s report from industrial nuts-and-bolts supplier Fastenal (FAST) and the following day (July 13th) from railroad operator CSX Corp. (CSX) have a lot more relevance to the economically sensitive parts of the U.S. economy.
This week will bring earnings results from 30 companies, including 13 S&P 500 members that include most of the money center banks. These wouldn’t be the first Q2 reports as companies with fiscal quarters ending in May have already been coming out with results and those reports get counted as part of the Q2 tally. In total, 23 S&P 500 members with fiscal quarters ending in May have reported Q2 results already.
The chart below shows the weekly calendar of Q2 earnings reports for the S&P 500 index.
Expectations for the Quarter
Total earnings are expected to be down -6.2% on -0.6% lower revenues, with growth in negative territory for 9 of the 16 Zacks sectors. This will be the 5th quarter in a row of negative earnings growth for the S&P 500 index.
As has been the pattern in other recent periods, the Energy sector remains the biggest drag on the aggregate growth picture, with total earnings for the sector expected to be down -76.8% on -27% lower revenues. Excluding the Energy sector, earnings for the rest of the index would be down -3.0%.
The table below shows the summary picture for Q2 contrasted with what was actually achieved in the preceding period.
Estimates for Q2 faithfully followed the well-trodden path of previous quarters, as the chart below shows.
No Comments