Earnings Shine a Ray of Light - Analyst Blog
20 Abril 2012 - 5:58AM
Zacks
Earnings reports will provide the primary backdrop for today’s
trading action given the almost empty economic calendar. It is
perhaps fair to say that this earnings season has turned out to be
better than expected, largely due to downbeat expectations in the
run up to the releases. It is a different-looking picture on the
economic front, however, where the news flow lately has been far
less inspiring.
The housing data has been weak, with Starts in March coming short
of expectations, though Permits painted a somewhat favorable
picture. We will be getting the March New Home sales data next
week, but the housing ‘green shoots’ narrative has lost some of its
strength. We may be seeing early signs of softness in the
industrial sector as well, as reflected in this week’s
underwhelming Empire State and Philly Fed readings. Deceleration in
manufacturing will be particularly troubling since this had been a
key pillar of the recovery thus far.
But the most troubling data point has been on the labor market
front, where we have yet to see any evidence from weekly Jobless
Claims that the March jobs miss was a one-off event. Loss of
momentum on the jobs front would be a particularly significant
blow, as it will have negative effects in expectations for consumer
spending, housing and elsewhere. Is this apparent stalling in
recent economic data a reflection of loss of momentum in the
economy, along the lines of what we encountered at the onset of
Spring in 2011 and 2010, or something related to quirks in
seasonally adjusting the data? Hard to say at this stage, but next
week’s advanced read on first quarter GDP will provide for
interesting reading.
While economic data may not have been reassuring enough lately, but
the first quarter earnings season has turned out to be much better
than expected. With almost a quarter of the results already in,
companies have not only been coming ahead of expectations, but also
generally doing better than what these same companies did in the
preceding quarter. Of this morning’s major releases, we got
positive surprises from General Electric (GE),
Honeywell (HON) and Schlumberger
(SLB) to name just a few.
General Electric’s strength was mostly from the company’s
industrial businesses. The year-over-year revenue comparison for
the conglomerate also becomes favorable once results are adjusted
for the sale of the NBC Universal business. Honeywell not only beat
expectations, but also provided positive guidance.
We also got better-than-expected results from Schlumberger, the
oilfield services giant, on strength in international deepwater
markets. McDonald’s (MCD) posted in-line earnings
and revenue results, same-store sales in the quarter up 7.3%
worldwide and an impressive 9% in the U.S.
GENL ELECTRIC (GE): Free Stock Analysis Report
HONEYWELL INTL (HON): Free Stock Analysis Report
MCDONALDS CORP (MCD): Free Stock Analysis Report
SCHLUMBERGER LT (SLB): Free Stock Analysis Report
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