Zacks Industry Rank Analysis Third-Quarter Earnings Forecast

Zacks Industry Rank Analysis
Third-Quarter Earnings Forecast , Q3 2009

asr: got this link from Kirk report, so Kirk must be analyzing this in a big way to adjust his screen setups ( fundamental data ).
- this Zack guys are giving forecast for quarter ending SETP 9/09 , that is 15 days to go for the Q3 results to starat .

Though the economy has stabilized, third-quarter results for the majority of companies will still be below year prior levels.

Per share profits for the S&P 500 are projected to fall 15.4%. The median company is forecast to report a 14% drop in per share earnings. (The difference being that the S&P 500 forecast is a weighted projection.) More than 340 companies may have experienced a year-over-year drop in profits.

On a revenue basis, things are not much better. Median company sales are forecast to have dropped 7.2%.* More than 360 companies are expected to report a year-over-year drop in earnings.

It's important to realize that during July and August 2008, the economy was in fairly good shape. Lehman did not collapse until September 2008. Furthermore, the credit crunch's grip severely tightened over the 2-month span of September and October 2008. As a result, many companies are now facing tough comparisons, meaning year-over-over declines in profits now.

It should be noted, however, that not all comparisons will be difficult. In fact, some industries are forecast to report actual earnings growth.

Industries Likely To Show Growth

Homebuilders

It may sound shocking, but homebuilders are likely to have some of the best year-over-year comparisons in terms of profitability.

There are 2 reasons for this. First, conditions in the housing industry were deteriorating last year, with mortgages becoming increasingly hard to get. Second, the housing market is now stabilizing, as is evidenced by the rising number of new and existing home sales.

This change will allow D.R. Horton (DHI - Analyst Report), KB Home (KBH - Snapshot Report) and Pulte Homes (PHM - Snapshot Report) to encourage shareholders with bottom line improvements by 50% or more. The improvements are relative, however, since all 3 companies will report sizable losses for Q309.

Insurance

Several insurance companies could impress investors with double-digit growth. Though some, like Allstate (ALL - Analyst Report) and Hartford Financial Services (HIG - Analyst Report), have the benefit of prior-year losses, others like Travelers (TRV - Snapshot Report) and Loews (L - Analyst Report) are experiencing true growth. (Revenues and earnings will rise for TRV and L).

The surprisingly calm hurricane season (fingers crossed that it stays this way) has helped property and causality insurers. Nearly all insurance companies have also benefited from the rebound in the financial markets. The economy is a drag, though there seem to be certain segments where premiums are rising.

Health Care

Despite all the talk about reform, profits for the entire medical sector continue to rise. The sector is less economically sensitive and less affected by swings in commodity prices. As result, several medical companies are likely growing both revenues and earnings this quarter.

Those with the strongest growth rates will include Humana (HUM - Analyst Report), Stericycle (SRCL - Snapshot Report), C.R. Baird (BCR - Analyst Report), Celgene (CELG - Analyst Report) and Gilead Sciences (GILD - Analyst Report).

Industries Likely to Report Contraction

Commodity-Related

Commodity-related companies face the toughest year-over-year comparisons. Oil peaked in July 2008 and, though the commodity bubble deflated throughout the remainder of the quarter, profits were still very, very strong. As a result, energy and metals companies are projected to report significant drops in Q309 profits.

In the Energy sector, exploration & production (E&P) companies such as Anadarko Petroleum (APC - Analyst Report) and EOG Resources (EOG - Analyst Report) will report the biggest declines. Among metals companies, AK Steel (AKS - Analyst Report), Nucor (NUE - Analyst Report) and U.S. Steel (X - Analyst Report) could all report losses after large profits in Q308.

Banks

Though government intervention has stabilized much of the financial sector, many banks remain unprofitable. High unemployment, a sustained high level of foreclosures and a weak commercial real estate market are all problem spots for the sector. As a result, analysts are projecting Fifth Third (FITB - Analyst Report), Regions Financial (RF - Analyst Report), Suntrust Banks (STI - Snapshot Report) and Zions Bancorp (ZION - Analyst Report) to post losses.