By Wallace Witkowski, MarketWatch
Will earnings misses keep on getting rewarded?
Earnings season may have gotten a little bit tougher as heavyweights from the industrial, consumer staples, and tech sectors report this week following a big Friday selloff.
Stocks fell apart on Friday on global jitters (http://www.marketwatch.com/story/us-stocks-futures-tilt-south-ahead-of-ge-consumer-prices-2015-04-17), sending both the Dow Jones Industrial Average (DJI) and Nasdaq Composite Index (RIXF) down 1.3% for the week, and the S&P 500 index (SPX) down 1%.
Of the 11% of S&P 500 companies that have already reported earnings, an above-average number of companies have reported earnings-per-share above the Wall street consensus, 77% versus the five-year average of 73%, according to John Butters, senior earnings analyst at FactSet.
Additionally, companies that are reporting earnings beats have seen their stock price go up an average 2.2% from two days before the report to two days after. That's compared with a five-year average 1% rise, Butters said. Even companies that are missing the consensus are seeing a 0.9% rise over that period, compared with the average 2.3% decline.
The drop in stocks Friday may give investors pause to pull the buy trigger going forward on earnings if there is the smell of correction in the water. See Friday's global selloff in 7 charts (http://www.marketwatch.com/story/why-global-markets-are-staging-a-sell-off-in-7-charts-2015-04-17).
While he's not calling it a sign of a recession, Citi Research's Tobias Levkovich pointed out in a recent note that upward earnings revisions for the S&P 500 in April have fallen to non-recession lows (see above chart). Sectors with improving upward earnings revisions include telecom, consumer discretionary, and utilities, he noted.
This week 140 S&P 500 companies report earnings, including 12 Dow components. Here's what to look for in International Business Machines Corp.'s (http://www.marketwatch.com/story/what-to-watch-for-in-ibms-earnings-2015-04-17)(>> International Business Machines Corp.) and Chipotle Mexican Grill Inc.'s (http://www.marketwatch.com/story/what-to-look-for-in-chipotle-earnings-2015-04-17)(>> Chipotle Mexican Grill, Inc.) earnings.
Notable earnings releases this week
Report Date Company/Ticker (FactSet EPS / revenue estimates)
Mon., April 20 IBM ($2.82 / $19.68 billion)Morgan Stanley US:MS (78 cents / $9.19 billion) Halliburton Co. US:HAL (37 cents / $6.96 billion)Hasbro Inc. US:HAS (8 cents / $661.9 million)
Tues., April 21 Verizon Communications Inc. US:VZ (95 cents / $32.27 billion) United Technologies Corp. US:UTX ($1.46 / $14.89 billion)DuPont US:DD ($1.31 / $9.41 billion)Amgen Inc. US:AMGN ($2.10 / $4.92 billion)Chipotle Mexican Grill ($3.64 / $1.11 billion)Travelers Cos. US:TRV ($2.55 / $6.05 billion)
Weds., April 22 AT& T Inc. US:T (63 cents / $32.8 billion)Boeing Co. US:BA ($1.81 / $22.54 billion)Facebook Inc. US:FB (40 cents / $3.57 billion)McDonald's Corp. US:MCD ($1.06 / $5.97 billion)Coca-Cola Co. US:KO (42 cents / $10.63 billion)
Thurs., April 23 Google Inc. US:GOOG US:GOOGL ($6.61 / $14.04 billion)Microsoft Corp. US:MSFT (51 cents / $21.12 billion)Starbucks Corp. US:SBUX (33 cents / $4.53 billion)Procter & Gamble Co. US:PG (93 cents / $18.4 billion)3M Co. US:MMM ($1.93 / $7.84 billion)Amazon.com Inc. US:AMZN (loss of 15 cents / $22.39 billion)Caterpillar Inc. US:CAT ($1.35 / $12.39 billion)General Motors Co. US:GM (94 cents / $36.42 billion)
Fri., April 24 Biogen Inc. US:BIIB ($3.92 / $2.66 billion)Simon Property Group Inc. US:SPG ($1.04 / $1.21 billion)American Airlines Group Inc. US:AAL ($1.71 / $9.86 billion)