Key Points:
This has been a great reporting season, especially on the bottom line. The top line also looks good, especially if one excludes the Financials. However, soaring net margins have been the primary driver of the earnings growth.
Analysts have responded to the better-than-expected results by raising their estimates, but much more so for 2010 than for 2011. The (relative) lack of upward revisions for 2011 might be a yellow flag. It is not that the revisions ratio for 2011 is awful -- it is in bullish territory at 1.41, but that it lags well behind that of 2010 at 2.08.
We just passed the peak time for estimate revisions activity. For the next six weeks or so, changes in the revisions ratios will be driven more by old estimates falling out of the four-week running total than new estimates being added.
Some of the differential between 2010 and 2011 is “mechanical.” Since the third quarter is part of fiscal year 2010, if a company beats by say $0.05, an analyst has to raise his fiscal year 2010 estimate or he is implicitly cutting his forecast for the fourth quarter. An increase for fiscal 2011 means that the analyst sees the better-than-expected results for the third quarter as being sustainable at least in the medium term. Still, the 1.41 ratio is somewhat disappointing when almost four times as many firms beat the consensus in the third quarter as disappointed.
Results Have Moderated
The earnings reports over the last three weeks were not quite as stellar as those that came early in the season, but it is still shaping up as a very strong earnings season, mostly due to the continued expansion of net margins. Much of the margin expansion is due to the Financials, were the whole concept of revenues is a bit different from most companies, and thus the concept of net margins is also a bit different.
However, even if the Financials are excluded, net margins continue to march northward. Earnings growth so far has been stellar at 25.4% year over year, although that is down from the over 30% levels we were seeing earlier in the reporting season. It is also a slowdown from the 37.5% year-over-year growth that the same firms reported in the second quarter.
The remaining 16 companies left to report, are in aggregate, expected to post year-over-year earnings growth of just 12.8%. However, if they all come in exactly on target, they only represent less than 3% of the remaining earnings for the quarter, and thus will not greatly affect the final number for the quarter.
Good Full-Year Expectations
The expectations for the full year are very healthy, with total net income for 2010 expected to rise to $776.5 billion in 2010, up from $545.7 billion in 2009. In 2011, the total net income for the S&P 500 should be $885.8 billion, or increases of 42.3% and 14.1%, respectively. Translated to “EPS” for the index, that would be $57.53 for 2009, $81.97 for 2010, and 93.49 for 2011.
In an environment where the 10-year T-note is yielding just 2.89%, a P/E of 14.6x based on 2010 and 12.8x based on 2011 earnings looks attractive. Much of the $600 billion in newly created money from QE2 is likely to eventually find its way into the equity market (not directly, but eventually). Historically, the year after mid-term elections has almost always been a good one for the stock market.
Concerns Over Political Gridlock
On the other hand, there is a very real prospect of total political gridlock, which would greatly raise uncertainty about governmental policy and the strength of the economy that could undermine confidence. In the short term, the prospect of about 2 million people losing their extended unemployment benefits if they are not renewed by 11/30 will act as a significant drag on the economy. The additional monetary stimulus will help boost the economy a little bit, but that could very easily be offset by a concretionary fiscal policy.
The economy needs more fiscal stimulus, not less. Unfortunately, most of the electorate is not very well schooled in macroeconomics and clearly disagreed. The theoretical danger of QE2 is that it could lead to much higher inflation, but with the massive amount of slack in the economy right now, that risk seems pretty remote. QE2 should take the risk of deflation off the table.
The economy does seemed to have made a slow turn towards recovery, and one that has even started to show in the employment picture, as the economy has created 874,000 jobs over the last year, and that is in the face of large job losses from government (mostly state and local). The private sector has created 1.1 million jobs over the last year. A premature move to fiscal austerity threatens that progress.
Growth Is Imminent
Still, companies are growing their earnings nicely, and the 14.1% expected growth for 2011, if achieved, means that the total earnings for the S&P 500 should hit a new record by the middle of next year. The fact that analysts are on-balance still raising estimates for 2011 increases the odds that that growth will be achieved.
Growth of 14.1% is not exactly awful. Even on the revenue side the expected growth of 5.70%, or 6.19% if one excludes the Financial sector, is still pretty solid. Clearly the analytical community is not expecting the economy to turn south again.
Scorecard & Earnings Surprise
Sales Surprises
Reported Quarterly Growth: Total Net Income
The first table shows the actual reported growth of those that have already reported (484), and the second table showing the expected growth for the firms that have yet to report (16).
Expected Quarterly Growth: Total Net Income
Quarterly Growth: Total Revenues Reported
This table shows the growth of the 484 firms that have reported.
Quarterly Growth: Total Revenues Expected
Quarterly Net Margins Reported
Quarterly Net Margins Expected
Annual Total Net Income Growth
Annual Total Revenue Growth
Annual Net Margins
Revisions: Earnings
The Zacks Revisions Ratio: 2010
Revisions: Earnings
The Zacks Revisions Ratio: 2011
Total Income and Share
P/E Ratios
Biggest FY1 Revisions
The Table below shows the S&P 500 firms with the biggest increases in their FY1 (mostly 2010) mean estimate over the last 4 weeks. To qualify there must be more than 3 estimates for FY1, and have a mean estimate of more than $0.50. In addition to the change in the mean estimate, the net percentage of estimates being raised is shown for both FY1 and FY2, as well as the P/E ratios based on each year's earnings is shown.
Note that estimate momentum and value are not mutually exclusive. The most interesting of these firms will be where the net revisions percentage (#up-#dn/Tot) is more than 0.50 but less than 1.00. Big mean estimate changes based on a handful of individual revisions are suspect, but could prove to be the most interesting if other analysts follow suit. On the other hand, if all the analysts have raised their estimates already, the mean estimate is less likely to rise again over the next month.
Data in this report, unless stated otherwise, is through the close on Thursday 11/18/2010.
We use the convention of referring to the next full fiscal year to be completed as 2010, not all firms are on December fiscal years, this can cause discontinuities in the data, particularly around this time of year. The data is based on FY1, not based on 2010, even though I may call it 2010 in the report. All numbers, including historical ones, reflect the current composition of the S&P 500, thus some historical numbers may differ from those reported by S&P which are based on the composition of the index at the time of the reports.
- 3Q Earnings season almost done, 484 or 96.8% of S&P 500 reports in so far.
- Strong earnings season, with a median EPS surprise of 4.92% and a 3.73 surprise ratio. While those numbers are down from earlier in the reporting season, they are still very good. Total of 347 positive surprises and just 93 disappointments. Positive year-over-year growth for 367, falling EPS for 113 firms, 3.25 ratio. 71.7% of all reporting firms do better than expected, 75.8% report positive year-over-year growth. Total net income reported up 25.4%.
- Sales Surprise ratio at 1.51, median surprise 0.70%, 56.6% of all firms do better than expected on top line. Revenue growth healthy at 8.09%.
- Net margins among the 484 firms with reports in fall to 9.08% from 9.09 in the second quarter but far above 7.82% year ago level. Excluding Financials, net margins rise to 8.09% from 7.94% in the second quarter and 7.02% a year ago.
- Total net income reported so far $201.94 billion, up from $160.99 billion a year ago.
- Full-year total earnings for the S&P 500 expected to jump 42.3% in 2010, 14.1% further in 2011. Total revenues for the S&P 500 expected to rise 4.89% in 2010, 5.70% in 2011.
- Autos, Finance, Basic Materials and Energy expected to be earnings growth leaders in 2010. Construction expected to move from the red to the black. No sector expected to see earnings decline in 2010 or in 2011.
- Net Margins marching higher, from 5.90% in 2008 to 6.41% in 2009 to 8.70% expected for 2010, 9.39% expected for 2011. Major source of earnings growth. Net margins ex-Financials 6.89% in 2008, 6.04% in 2009, 7.23% expected for 2010 and 7.66% in 2011.
- Revisions ratio for full S&P 500 at 2.08 for 2010, at 1.41 for 2011, a small deterioration from last week. Ratio of firms with rising to falling mean estimates at 1.89 for 2010, 1.49 for 2011. Total revisions activity past peak, will plunge over the next month.
- S&P 500 earned $545.7 billion in 2009, expected to earn $776.5 billion in 2010, $885.8 billion in 2011.
- S&P 500 earned $57.53 in 2009: $80.97 in 2010 and $93.49 in 2011 expected bottom up. Puts P/E's at 20.8x for 2009, 14.6x for 2010, and 12.8x for 2011.
- Top Down estimates: $80.15 for 2010, $90.54 for 2011.
This has been a great reporting season, especially on the bottom line. The top line also looks good, especially if one excludes the Financials. However, soaring net margins have been the primary driver of the earnings growth.
Analysts have responded to the better-than-expected results by raising their estimates, but much more so for 2010 than for 2011. The (relative) lack of upward revisions for 2011 might be a yellow flag. It is not that the revisions ratio for 2011 is awful -- it is in bullish territory at 1.41, but that it lags well behind that of 2010 at 2.08.
We just passed the peak time for estimate revisions activity. For the next six weeks or so, changes in the revisions ratios will be driven more by old estimates falling out of the four-week running total than new estimates being added.
Some of the differential between 2010 and 2011 is “mechanical.” Since the third quarter is part of fiscal year 2010, if a company beats by say $0.05, an analyst has to raise his fiscal year 2010 estimate or he is implicitly cutting his forecast for the fourth quarter. An increase for fiscal 2011 means that the analyst sees the better-than-expected results for the third quarter as being sustainable at least in the medium term. Still, the 1.41 ratio is somewhat disappointing when almost four times as many firms beat the consensus in the third quarter as disappointed.
Results Have Moderated
The earnings reports over the last three weeks were not quite as stellar as those that came early in the season, but it is still shaping up as a very strong earnings season, mostly due to the continued expansion of net margins. Much of the margin expansion is due to the Financials, were the whole concept of revenues is a bit different from most companies, and thus the concept of net margins is also a bit different.
However, even if the Financials are excluded, net margins continue to march northward. Earnings growth so far has been stellar at 25.4% year over year, although that is down from the over 30% levels we were seeing earlier in the reporting season. It is also a slowdown from the 37.5% year-over-year growth that the same firms reported in the second quarter.
The remaining 16 companies left to report, are in aggregate, expected to post year-over-year earnings growth of just 12.8%. However, if they all come in exactly on target, they only represent less than 3% of the remaining earnings for the quarter, and thus will not greatly affect the final number for the quarter.
Good Full-Year Expectations
The expectations for the full year are very healthy, with total net income for 2010 expected to rise to $776.5 billion in 2010, up from $545.7 billion in 2009. In 2011, the total net income for the S&P 500 should be $885.8 billion, or increases of 42.3% and 14.1%, respectively. Translated to “EPS” for the index, that would be $57.53 for 2009, $81.97 for 2010, and 93.49 for 2011.
In an environment where the 10-year T-note is yielding just 2.89%, a P/E of 14.6x based on 2010 and 12.8x based on 2011 earnings looks attractive. Much of the $600 billion in newly created money from QE2 is likely to eventually find its way into the equity market (not directly, but eventually). Historically, the year after mid-term elections has almost always been a good one for the stock market.
Concerns Over Political Gridlock
On the other hand, there is a very real prospect of total political gridlock, which would greatly raise uncertainty about governmental policy and the strength of the economy that could undermine confidence. In the short term, the prospect of about 2 million people losing their extended unemployment benefits if they are not renewed by 11/30 will act as a significant drag on the economy. The additional monetary stimulus will help boost the economy a little bit, but that could very easily be offset by a concretionary fiscal policy.
The economy needs more fiscal stimulus, not less. Unfortunately, most of the electorate is not very well schooled in macroeconomics and clearly disagreed. The theoretical danger of QE2 is that it could lead to much higher inflation, but with the massive amount of slack in the economy right now, that risk seems pretty remote. QE2 should take the risk of deflation off the table.
The economy does seemed to have made a slow turn towards recovery, and one that has even started to show in the employment picture, as the economy has created 874,000 jobs over the last year, and that is in the face of large job losses from government (mostly state and local). The private sector has created 1.1 million jobs over the last year. A premature move to fiscal austerity threatens that progress.
Growth Is Imminent
Still, companies are growing their earnings nicely, and the 14.1% expected growth for 2011, if achieved, means that the total earnings for the S&P 500 should hit a new record by the middle of next year. The fact that analysts are on-balance still raising estimates for 2011 increases the odds that that growth will be achieved.
Growth of 14.1% is not exactly awful. Even on the revenue side the expected growth of 5.70%, or 6.19% if one excludes the Financial sector, is still pretty solid. Clearly the analytical community is not expecting the economy to turn south again.
Scorecard & Earnings Surprise
- 484 of S&P 500 firms have reported 3Q earnings. The remaining firms are unlikely to significantly change the overall results. Nine sectors done and three more over 95% done.
- Strong season with a median surprise of 4.92%, and a 3.73 surprise ratio (347 beats, 93 misses), 71.7% of all firms reporting beat expectations.
- Early part of earnings season much stronger than the later part. Three weeks ago at the 2/3 point of earnings season we had 255 positive surprise and 56 disappointments, for a ratio of 4.55. The last three weeks have thus seen 92 positive surprises and 37 disappointments, or a ratio of just 2.49.
- Positive year-over-year growth for 367, falling EPS for 113 firms, 3.25 ratio, 75.8% of all firms reporting have higher EPS than last year.
- Total net income up 25.4%. All sectors but Construction have more positive surprises than disappointments. Six sectors have surprise ratios of 8:1 or better. Disappointments concentrated in Finance, Utility and Energy sectors.
| Income Surprises | Yr/Yr Growth | % Reported | Surprise Median | EPS Surp Pos | EPS Surp Neg | # Grow Pos | # Grow Neg |
| Conglomerates | 6.20% | 100.00% | 8.84 | 9 | 1 | 6 | 3 |
| Consumer Discretionary | 17.63% | 96.97% | 7.90 | 22 | 6 | 28 | 4 |
| Auto | 90.75% | 100.00% | 7.24 | 5 | 1 | 5 | 1 |
| Computer and Tech | 49.91% | 95.71% | 6.90 | 52 | 4 | 58 | 8 |
| Finance | 28.30% | 100.00% | 5.86 | 51 | 21 | 48 | 30 |
| Retail/Wholesale | 10.21% | 93.33% | 4.67 | 35 | 4 | 36 | 6 |
| Oils and Energy | 37.49% | 100.00% | 4.62 | 23 | 13 | 30 | 8 |
| Business Service | 15.62% | 94.74% | 4.38 | 16 | 1 | 15 | 3 |
| Industrial Products | 40.80% | 90.00% | 4.25 | 13 | 3 | 13 | 5 |
| Medical | 11.04% | 95.74% | 4.17 | 38 | 3 | 33 | 12 |
| Transportation | 65.17% | 100.00% | 4.00 | 8 | 1 | 9 | 0 |
| Aerospace | 144.50% | 100.00% | 2.83 | 8 | 1 | 8 | 2 |
| Basic Materials | 42.34% | 100.00% | 2.70 | 15 | 8 | 19 | 4 |
| Consumer Staples | 4.69% | 89.47% | 2.54 | 23 | 7 | 22 | 11 |
| Utilities | 6.37% | 100.00% | 2.47 | 24 | 14 | 31 | 12 |
| Construction | 1148.57% | 100.00% | 0.00 | 5 | 5 | 6 | 4 |
| S&P | 25.44% | 96.80% | 4.92 | 347 | 93 | 367 | 113 |
Sales Surprises
- Sales Surprise ratio at 1.51, median surprise 0.70%, 56.6% of all firms do better than expected on top line.
- Growing Revenues outnumber falling revenues by ratio of 3.82, 78.9% of firms have higher revenues than a year ago.
- Revenue growth healthy at 8.09% but still greatly lags earnings growth, pointing to net margin expansion (see net margin tables below).
| Sales Surprises | Yr/Yr Growth | % Reported | Surprise Median | Sales Surp Pos | Sales Surp Neg | # Grow Pos | # Grow Neg |
| Auto | 5.02% | 100.00% | 2.663 | 4 | 2 | 5 | 1 |
| Basic Materials | 17.45% | 100.00% | 2.654 | 16 | 7 | 23 | 0 |
| Finance | 1.82% | 100.00% | 2.529 | 39 | 12 | 50 | 28 |
| Business Service | 7.68% | 94.74% | 1.563 | 14 | 4 | 17 | 1 |
| Construction | 3.06% | 100.00% | 1.188 | 6 | 5 | 6 | 5 |
| Industrial Products | 22.98% | 90.00% | 0.84 | 11 | 7 | 15 | 3 |
| Oils and Energy | 16.11% | 100.00% | 0.828 | 23 | 15 | 33 | 5 |
| Computer and Tech | 22.71% | 95.71% | 0.705 | 49 | 18 | 61 | 6 |
| Consumer Discretionary | 3.60% | 96.97% | 0.622 | 20 | 12 | 25 | 7 |
| Retail/Wholesale | 3.58% | 93.33% | 0.334 | 25 | 17 | 37 | 5 |
| Medical | 8.63% | 95.74% | 0.07 | 23 | 22 | 30 | 14 |
| Transportation | 16.71% | 100.00% | -0.051 | 4 | 5 | 9 | 0 |
| Consumer Staples | 3.28% | 89.47% | -0.551 | 13 | 21 | 23 | 10 |
| Utilities | 5.59% | 100.00% | -0.835 | 20 | 23 | 34 | 9 |
| Conglomerates | -0.11% | 100.00% | -1.648 | 4 | 5 | 6 | 4 |
| Aerospace | 2.36% | 100.00% | -2.31 | 3 | 7 | 8 | 2 |
| S&P | 8.09% | 96.80% | 0.704 | 274 | 182 | 382 | 100 |
Reported Quarterly Growth: Total Net Income
The first table shows the actual reported growth of those that have already reported (484), and the second table showing the expected growth for the firms that have yet to report (16).
- The total net income of firms that have reported so far is 25.4% above what they reported in the third quarter of 2009. These same firms reported year-over-year growth of 37.5% in the second quarter. Sequential earnings growth is 0.88%.
- Thirteen sectors reporting showing double-digit earnings growth, seven with more than 40% growth. Cyclical sectors lead the growth parade.
- Only four sectors showing acceleration in year-over-year growth from second quarter, twelve decelerate.
- If remaining firms come in exactly on target 97.3% of all net income for the quarter has already reported (and 96.4% of the revenue).
- The numbers in the table (and the "revenue growth" table) below only refer to those firms which have already reported. Refer back to the % reporting in the scorecard to assess the significance of the sector growth numbers.
| Income Growth | Sequential Q4/Q3 E | Sequential Q3/Q2 A | Year over Year 3Q 10 A | Year over Year 4Q 10 E | Year over Year 2Q 10 A |
| Construction | -27.53% | -37.21% | 1148.57% | 9.21% | 1060.00% |
| Aerospace | 3.40% | -2.81% | 144.50% | -8.01% | -1.73% |
| Auto | -9.09% | -18.76% | 90.75% | 12.53% | 808.63% |
| Transportation | -1.71% | 5.16% | 65.17% | 31.93% | 73.88% |
| Computer and Tech | 7.05% | 8.28% | 49.91% | 12.68% | 64.24% |
| Basic Materials | -7.97% | -12.87% | 42.34% | 19.21% | 114.14% |
| Industrial Products | -9.35% | 7.56% | 40.80% | 49.22% | 64.79% |
| Oils and Energy | 2.42% | -9.58% | 37.49% | 26.21% | 95.23% |
| Finance | -7.55% | -4.87% | 28.30% | 163.80% | 40.60% |
| Consumer Discretionary | -9.49% | 18.96% | 17.63% | 5.36% | 25.37% |
| Business Service | 10.49% | 3.13% | 15.62% | 14.43% | 20.01% |
| Medical | -8.85% | -1.06% | 11.04% | 2.16% | 17.64% |
| Retail/Wholesale | 26.17% | -4.10% | 10.21% | 6.34% | 9.68% |
| Utilities | -29.61% | 21.54% | 6.37% | 0.56% | 6.87% |
| Conglomerates | 0.27% | 5.34% | 6.20% | 5.68% | -0.58% |
| Consumer Staples | -8.07% | 6.76% | 4.69% | 2.23% | 6.36% |
| S&P | -2.91% | 0.88% | 25.44% | 21.73% | 37.52% |
Expected Quarterly Growth: Total Net Income
- Total net income for the S&P 500 in the third quarter of 2010 (among those yet to report) is expected to rise 13.4% over third quarter of 2009 levels. Just a handful of firms left, so don't put much weight on these numbers.
- Slowdown from the 20.5% growth those same firms had in the second quarter. A further slowdown to 8.9% expected in the fourth quarter.
- Remaining reports concentrated in the Retail, Staples and Tech sectors.
| Income Growth | Sequential Q4/Q3 E | Sequential Q3/Q2 E | Year over Year 3Q 10 E | Year over Year 4Q 10 E | Year over Year 2Q 10 A |
| Auto | na | Na | na | na | na |
| Basic Materials | na | Na | na | na | na |
| Construction | na | na | na | na | na |
| Conglomerates | na | na | na | na | na |
| Aerospace | na | na | na | na | na |
| Oils and Energy | na | na | na | na | na |
| Finance | na | na | na | na | na |
| Utilities | na | na | na | na | na |
| Transportation | na | na | na | na | na |
| Industrial Products | -15.38% | -35.06% | 210.56% | 31.85% | 43.76% |
| Consumer Staples | -13.08% | 32.13% | 12.71% | 1.35% | 30.32% |
| Retail/Wholesale | 112.29% | -29.05% | 9.23% | 11.32% | 11.08% |
| Computer and Tech | -3.99% | 11.00% | 6.79% | 8.19% | 21.44% |
| Medical | 5.10% | 1.25% | 3.84% | 7.46% | -0.65% |
| Business Service | -2.28% | -17.43% | -3.36% | 3.65% | 26.40% |
| Consumer Discretionary | -158.09% | 1.14% | -7.69% | 25.12% | -12.21% |
| S&P | 4.23% | 2.16% | 13.43% | 8.92% | 20.51% |
Quarterly Growth: Total Revenues Reported
This table shows the growth of the 484 firms that have reported.
- Five sectors reporting revenue growth of over 16%. Industrials and Tech in the lead, Materials, Transports and Energy also very strong.
- Seven sectors showing growth of less than 4%.
- S&P 500 reported Revenues up 8.1% year over year in 3Q, down from 10.8% revenue increase the same firms showed in the 2Q. This is still a very healthy level of revenue growth.
| Sales Growth | Sequential Q4/Q3 E | Sequential Q3/Q2 A | Year over Year 3Q 10 A | Year over Year 4Q 10 E | Year over Year 2Q 09 A |
| Industrial Products | -2.79% | 3.31% | 22.98% | 19.14% | 20.71% |
| Computer and Tech | -0.49% | 3.53% | 22.71% | 13.15% | 24.04% |
| Basic Materials | -6.22% | -0.64% | 17.45% | 8.48% | 18.54% |
| Transportation | -0.13% | 1.22% | 16.71% | 12.80% | 20.20% |
| Oils and Energy | 2.76% | 1.31% | 16.11% | 9.31% | 27.70% |
| Medical | 2.49% | -0.64% | 8.63% | 2.47% | 10.34% |
| Business Service | 0.91% | 1.89% | 7.68% | 5.33% | 7.56% |
| Utilities | -5.95% | 10.73% | 5.59% | 6.86% | 1.98% |
| Auto | -1.74% | -6.73% | 5.02% | -6.83% | 26.09% |
| Consumer Discretionary | -4.59% | 4.22% | 3.60% | 4.91% | 7.97% |
| Retail/Wholesale | 2.66% | 0.08% | 3.58% | 4.04% | 4.09% |
| Consumer Staples | -9.95% | -2.56% | 3.28% | -4.56% | 7.15% |
| Construction | -8.95% | -1.86% | 3.06% | -3.71% | 7.90% |
| Aerospace | -2.39% | 2.47% | 2.36% | 1.42% | -2.25% |
| Finance | -21.66% | -0.12% | 1.82% | -19.58% | 3.74% |
| Conglomerates | -2.72% | -2.67% | -0.11% | 1.27% | 2.10% |
| S&P | 0.25% | 0.98% | 8.09% | 1.61% | 10.76% |
Quarterly Growth: Total Revenues Expected
- Total revenue for the remaining handful of S&P 500 firms expected to rise 7.2% from a year ago, a slowdown from the 9.0% year-over-year growth posted in the second quarter. Revenue rise of 4.9% is now expected for the fourth quarter.
- Remember that this table only refers to 16 firms.
| Sales Growth | Sequential Q4/Q3 E | Sequential Q3/Q2 E | Year over Year 3Q 10 E | Year over Year 4Q 10 E | Year over Year 2Q 10 A |
| Auto | Na | na | na | na | na |
| Basic Materials | Na | na | na | na | na |
| Construction | Na | na | na | na | na |
| Conglomerates | Na | na | na | na | na |
| Aerospace | Na | na | na | na | na |
| Oils and Energy | Na | na | na | na | na |
| Finance | Na | na | na | na | na |
| Utilities | Na | na | na | na | na |
| Transportation | Na | na | na | na | na |
| Industrial Products | -19.70% | -3.67% | 23.11% | 7.77% | 14.98% |
| Computer and Tech | -0.19% | 6.48% | 6.76% | 5.17% | 12.39% |
| Consumer Staples | -6.90% | 11.66% | 6.50% | 4.45% | 8.85% |
| Business Service | -1.26% | 5.26% | 6.37% | 8.24% | 1.64% |
| Retail/Wholesale | 8.02% | -1.71% | 4.94% | 4.20% | 6.04% |
| Consumer Discretionary | 181.36% | 23.36% | 3.68% | 1.71% | -0.72% |
| Medical | 1.60% | 2.77% | 2.11% | 3.34% | -2.12% |
| S&P 500 | -0.12% | 3.92% | 7.21% | 4.94% | 9.00% |
Quarterly Net Margins Reported
- This is for the 484 firms that have already reported, calculated as total net income for the sector divided by total revenues for the sector. With the vast amount of firms already having reported, these are pretty close to the final figures, although the final numbers should be a little bit lower than what is shown now. Final net margin for the quarter projected to be 8.98%.
- Net margins for S&P 500 expand to 9.08% from 7.82% a year ago, and down slightly from the 9.09% reported by these same firms in the second quarter. Net margins, ex-Financials, rise to 8.09% from 7.02% a year ago.
- All sectors reporting year over year increase in margins, eight see sequential improvement.
- Some sectors will see bigger seasonal swings in margins than others.
- Five sectors reporting double-digit net margins so far.
| Net Margins | Q4 2010 Estimated | Q3 2010 Reported | 2Q 2010 Reported | 1Q 2010 Reported | 4Q 2009 Reported | 3Q 2009 Reported |
| Computer and Tech | 17.98% | 18.03% | 17.24% | 16.62% | 18.06% | 14.76% |
| Business Service | 13.61% | 12.89% | 12.74% | 12.41% | 12.52% | 12.01% |
| Consumer Staples | 11.69% | 12.40% | 11.32% | 11.11% | 10.91% | 12.23% |
| Finance | 12.75% | 10.96% | 11.51% | 11.13% | 3.89% | 8.70% |
| Consumer Discretionary | 8.93% | 10.43% | 9.14% | 8.61% | 8.89% | 9.18% |
| Medical | 8.82% | 9.96% | 10.00% | 9.96% | 8.84% | 9.74% |
| Conglomerates | 8.66% | 9.35% | 8.64% | 7.36% | 8.29% | 8.79% |
| Utilities | 6.42% | 9.08% | 8.27% | 8.03% | 6.82% | 9.01% |
| Transportation | 8.10% | 8.49% | 8.17% | 6.09% | 6.93% | 6.00% |
| Industrial Products | 7.34% | 8.03% | 7.71% | 5.83% | 5.86% | 7.01% |
| Oils and Energy | 7.22% | 7.11% | 7.96% | 7.31% | 6.26% | 6.00% |
| Aerospace | 6.31% | 6.44% | 6.79% | 5.94% | 6.96% | 2.70% |
| Basic Materials | 5.90% | 6.27% | 7.15% | 7.39% | 5.37% | 5.18% |
| Auto | 4.99% | 5.45% | 6.26% | 5.12% | 4.13% | 3.00% |
| Retail/Wholesale | 4.40% | 3.88% | 4.04% | 3.99% | 4.31% | 3.64% |
| Construction | 1.78% | 2.34% | 3.66% | 1.78% | 1.57% | 0.19% |
| S&P 500 | 8.84% | 9.08% | 9.09% | 8.65% | 7.34% | 7.82% |
| S&P x Fin'l | 7.96% | 8.09% | 7.94% | 7.50% | 7.29% | 7.02% |
Quarterly Net Margins Expected
- Net margins (among the 16 yet to report) expected to rise to 6.72% from 6.35% a year ago.
- Sequentially margins expected to fall from 6.84% in the second quarter but rise to 7.01% in the fourth quarter.
| Net Margins | Q4 2010 Estimated | Q3 2010 Estimated | 2Q 2010 Reported | 1Q 2010 Reported | 4Q 2009 Reported | 3Q 2009 Reported |
| Auto | na | na | na | na | na | na |
| Basic Materials | na | na | na | na | na | na |
| Construction | na | na | na | na | na | na |
| Conglomerates | na | na | na | na | na | na |
| Aerospace | na | na | na | na | na | na |
| Oils and Energy | na | na | na | na | na | na |
| Finance | na | na | na | na | na | na |
| Utilities | na | na | na | na | na | na |
| Transportation | na | na | na | na | na | na |
| Medical | 20.33% | 19.65% | 19.94% | 20.92% | 19.55% | 19.32% |
| Computer and Tech | 8.85% | 9.20% | 8.82% | 8.90% | 8.60% | 9.19% |
| Industrial Products | 6.64% | 6.31% | 9.35% | 9.63% | 5.43% | 2.50% |
| Consumer Staples | 5.44% | 5.83% | 4.93% | 4.74% | 5.61% | 5.51% |
| Business Service | 4.39% | 4.44% | 5.65% | 4.66% | 4.58% | 4.88% |
| Retail/Wholesale | 2.55% | 1.30% | 1.80% | 1.85% | 2.39% | 1.25% |
| Consumer Discretionary | 7.10% | -34.41% | -41.97% | 29.60% | 5.78% | -38.65% |
| S&P 500 | 7.01% | 6.72% | 6.84% | 7.39% | 6.76% | 6.35% |
Annual Total Net Income Growth
- Total S&P 500 Net Income in 2009 was 1.49% above 2008 levels, following 34.6% plunge in 2008.
- Total earnings for the S&P 500 expected to jump 42.3% in 2010, 14.1% further in 2011.
- Earnings recovery to happen by mid-2011, full-year 2011 earnings to be 6.1% above 2007 levels. In other words, the recovery in earnings will occur far before the recovery in jobs as we are unlikely to return to 2007 job levels until mid-2014 at the earliest.
- Autos, Finance, Basic Materials and Energy expected to be earnings growth leaders in 2010. Construction expected to move from the red to the black. No sector expected to see earnings decline in 2010 or in 2011.
- Retail, Medical and Business Service the only sectors to post positive earnings growth in every year from 2008 through 2011.
- All but three sectors expected to post double-digit growth in 2011.
- Twelve sectors expected to grow slower in 2011 than 2010, four expected to see growth accelerate.
| Net Income Growth | 2008 | 2009 | 2010 | 2011 |
| Construction | + to - | - to - | - to + | 196.06% |
| Auto | + to - | - to + | 2101.18% | 13.86% |
| Finance | + to - | - to + | 328.32% | 20.28% |
| Basic Materials | -4.89% | -49.92% | 64.37% | 26.65% |
| Oils and Energy | 20.80% | -56.30% | 48.74% | 13.71% |
| Transportation | 1.04% | -30.14% | 43.50% | 19.60% |
| Computer and Tech | 15.01% | -4.22% | 42.46% | 13.93% |
| Industrial Products | 5.32% | -36.74% | 32.24% | 30.74% |
| Consumer Discretionary | 6.27% | -15.87% | 22.44% | 16.84% |
| Aerospace | 13.37% | -14.63% | 15.59% | 5.22% |
| Business Service | 27.20% | 1.02% | 14.71% | 15.28% |
| Retail/Wholesale | 1.39% | 2.59% | 14.18% | 12.62% |
| Consumer Staples | -7.74% | 5.64% | 9.69% | 10.82% |
| Medical | 9.29% | 2.19% | 8.26% | 6.73% |
| Conglomerates | -9.21% | -23.81% | 1.96% | 15.45% |
| Utilities | -1.29% | -13.51% | 1.28% | 4.71% |
| S&P | -34.64% | 1.49% | 42.28% | 14.07% |
Annual Total Revenue Growth
- Total S&P 500 Revenue in 2009 6.75% below 2008 levels.
- Total revenues for the S&P 500 expected to rise 4.91% in 2010, 5.70% in 2011.
- Tech to lead 2010 revenue race, Energy and Industrials to take silver and bronze, but Transportation and Materials to also grow more than 13%.
- All sectors expected to show positive top-line growth in 2011.
- Financials the biggest drag on 2010 revenue growth, Staples and Aerospace only other sectors expected to post lower top-line for the year. Revenues for Financials are notoriously flakey, low interest rates depress interest income (but also interest expense).
- Revenue growth significantly different if Financials are excluded, down 10.46% in 2009, growth of 9.24% in 2010 and 6.19% in 2011.
- Medical and Retail only sectors to have positive revenue growth for all three years.
- Looking out to 2011, Energy and Industrials the only sectors expected to see double-digit revenue growth, although four other sectors expected to have revenue growth over 8%.
| Sales Growth | 2009 | 2010 | 2011 |
| Computer and Tech | -6.22% | 22.18% | 7.29% |
| Oils and Energy | -34.49% | 18.87% | 10.67% |
| Industrial Products | -19.55% | 16.69% | 9.94% |
| Basic Materials | -19.30% | 14.46% | 6.78% |
| Transportation | -13.65% | 13.71% | 8.09% |
| Medical | 6.06% | 9.31% | 3.49% |
| Business Service | -2.35% | 7.37% | 6.10% |
| Consumer Discretionary | -9.55% | 7.15% | 6.16% |
| Auto | -21.36% | 6.17% | 8.31% |
| Retail/Wholesale | 1.25% | 5.46% | 5.50% |
| Utilities | -5.87% | 3.92% | 2.46% |
| Conglomerates | -13.27% | 0.66% | 2.22% |
| Construction | -15.92% | 0.02% | 8.33% |
| Aerospace | 6.30% | -0.04% | 5.46% |
| Consumer Staples | -2.13% | -3.35% | 5.17% |
| Finance | 21.16% | -19.29% | 1.98% |
| S&P | -6.75% | 4.89% | 5.70% |
| S&P ex Fin'l | -10.46% | 9.24% | 6.19% |
Annual Net Margins
- Net Margins marching higher, from 5.89% in 2008 to 6.41% in 2009 to 8.70% expected for 2010, 9.39% expected for 2011. Major source of earnings growth.
- Financials significantly distort overall net margins. Net margins, ex-Financials 6.89% in 2008, 6.04% in 2009, 7.18% expected for 2010, 7.66% in 2011.
- Financials net margins soar from -8.53% in 2008 to 15.27% expected for 2011.
- Fourteen sectors seeing higher net margins in 2010 than in 2009. All sectors expected to post higher net margins in 2011 than in 2010.
| Net Margins | 2008A | 2009A | 2010E | 2011E | |
| Computer and Tech | 12.30% | 12.56% | 14.65% | 15.56% | |
| Finance | -8.53% | 2.44% | 12.95% | 15.27% | |
| Business Service | 10.75% | 11.12% | 11.88% | 12.91% | |
| Consumer Staples | 9.25% | 9.99% | 11.33% | 11.94% | |
| Medical | 10.16% | 9.78% | 9.69% | 9.99% | |
| Consumer Discretionary | 8.05% | 7.48% | 8.55% | 9.41% | |
| Conglomerates | 9.29% | 8.16% | 8.27% | 9.34% | |
| Utilities | 8.76% | 8.04% | 7.84% | 8.01% | |
| Oils and Energy | 9.13% | 6.09% | 7.62% | 7.83% | |
| Transportation | 7.30% | 5.90% | 7.45% | 8.24% | |
| Industrial Products | 7.47% | 5.87% | 6.65% | 7.91% | |
| Basic Materials | 7.19% | 4.46% | 6.41% | 7.60% | |
| Aerospace | 6.81% | 5.47% | 6.32% | 6.31% | |
| Auto | -2.77% | 0.25% | 5.12% | 5.38% | |
| Retail/Wholesale | 3.50% | 3.54% | 3.84% | 4.10% | |
| Construction | -2.32% | -0.10% | 1.15% | 3.14% | |
| S&P 500 | 5.89% | 6.41% | 8.70% | 9.39% | |
| S&P ex Financials | 6.89% | 6.04% | 7.18% | 7.66% | |
Revisions: Earnings
The Zacks Revisions Ratio: 2010
- Revisions ratio for full S&P 500 at 2.08, up from 2.24 last week, a very bullish reading.
- Transportation very strong, but nine other sectors have revisions ratios above 2.00.
- Fifteen sectors with positive revisions ratios, only Construction below 1.0 and very weak with a revisions ratio of just 0.27.
- Ratio of firms with rising to falling mean estimates at 1.89 down from 1.90 last week, still a bullish reading.
- Total number of revisions (4-week total) up to 4,888 from 5,175 (-5.5%).
- Increases up to 3,303 from 3,577 (-7.6%), cuts up to 1,585 from 1,598 (-0.1%).
- Total Revisions activity passed peak. Over next six weeks plunge to less than a third of peak levels. Changes in revisions ratios will mostly be from old estimates falling out, not from new estimates being made.
| Sector | %Ch Curr Fiscal Yr Est - 4 wks | # Firms Up | # Firms Down | # Ests Up | # Ests Down | Revisions Ratio | Firms up/down |
| Transportation | 2.02 | 8 | 1 | 108 | 9 | 12.00 | 8.00 |
| Business Service | 1.01 | 13 | 5 | 148 | 34 | 4.35 | 2.60 |
| Medical | 1.54 | 35 | 9 | 402 | 107 | 3.76 | 3.89 |
| Consumer Discretionary | 3.56 | 22 | 10 | 254 | 81 | 3.14 | 2.20 |
| Aerospace | 1.37 | 9 | 1 | 110 | 37 | 2.97 | 9.00 |
| Industrial Products | 2.14 | 14 | 5 | 96 | 34 | 2.82 | 2.80 |
| Auto | 0.01 | 4 | 1 | 44 | 16 | 2.75 | 4.00 |
| Computer and Tech | 1.04 | 46 | 20 | 433 | 171 | 2.53 | 2.30 |
| Retail/Wholesale | 2.49 | 25 | 14 | 304 | 139 | 2.19 | 1.79 |
| Basic Materials | -0.99 | 17 | 6 | 120 | 55 | 2.18 | 2.83 |
| Finance | 2.64 | 49 | 28 | 615 | 312 | 1.97 | 1.75 |
| Utilities | 0.05 | 25 | 18 | 183 | 126 | 1.45 | 1.39 |
| Oils and Energy | -1.82 | 18 | 20 | 266 | 200 | 1.33 | 0.90 |
| Consumer Staples | -0.66 | 20 | 14 | 139 | 122 | 1.14 | 1.43 |
| Conglomerates | -0.91 | 4 | 5 | 57 | 53 | 1.08 | 0.80 |
| Construction | -2.23 | 3 | 8 | 24 | 89 | 0.27 | 0.38 |
| S&P | 1.05 | 312 | 165 | 3303 | 1585 | 2.08 | 1.89 |
Revisions: Earnings
The Zacks Revisions Ratio: 2011
- Revisions ratio for full S&P 500 at 1.41, up from 1.43 last week, still in bullish territory.
- Seven sectors have at least two increases per cut, Transports and Autos lead.
- Four sectors with negative revisions ratios (below 1.0), twelve with ratios above 1.0.
- Ratio of firms with rising estimate to falling mean estimates at 1.49 up from 1.41; still in bullish territory.
- Construction looks very weak for 2011, more than four cuts per increase.
- Total number of revisions (4-week total) at 4,910, up from 4,910 (-4.0%).
- Increases down to 2,758 from 2,891 (-4.6%) cuts fall to 1,957 from 2,019 (-3.1%).
| Sector | %Ch Next Fiscal Yr Est - 4 wks | # Firms Up | # Firms Down | # Ests Up | # Ests Down | Revisions Ratio | Firms up/down |
| Transportation | 1.21 | 7 | 2 | 89 | 15 | 5.93 | 3.50 |
| Auto | 2.39 | 4 | 1 | 37 | 9 | 4.11 | 4.00 |
| Industrial Products | 2.64 | 15 | 4 | 105 | 27 | 3.89 | 3.75 |
| Consumer Discretionary | 1.51 | 25 | 8 | 232 | 78 | 2.97 | 3.13 |
| Business Service | 0.34 | 12 | 6 | 107 | 48 | 2.23 | 2.00 |
| Medical | 1.03 | 29 | 17 | 361 | 173 | 2.09 | 1.71 |
| Basic Materials | -1.23 | 16 | 7 | 118 | 59 | 2.00 | 2.29 |
| Computer and Tech | 0.31 | 46 | 20 | 351 | 186 | 1.89 | 2.30 |
| Retail/Wholesale | -0.01 | 29 | 13 | 274 | 161 | 1.70 | 2.23 |
| Oils and Energy | -1.15 | 19 | 19 | 266 | 224 | 1.19 | 1.00 |
| Finance | -1.41 | 40 | 37 | 448 | 427 | 1.05 | 1.08 |
| Consumer Staples | -1.11 | 22 | 14 | 132 | 129 | 1.02 | 1.57 |
| Conglomerates | -0.52 | 4 | 5 | 43 | 48 | 0.90 | 0.80 |
| Aerospace | -1.04 | 5 | 5 | 59 | 75 | 0.79 | 1.00 |
| Utilities | -1.11 | 14 | 29 | 115 | 205 | 0.56 | 0.48 |
| Construction | -9.68 | 3 | 8 | 21 | 93 | 0.23 | 0.38 |
| S&P | -0.38 | 290 | 195 | 2758 | 1957 | 1.41 | 1.49 |
Total Income and Share
- S&P 500 earned $545.7 billion in 2009, expected to earn $776.5 billion in 2010, $885.8 billion in 2011.
- Finance share of total earnings moves from 5.8% in 2009 to 17.6% in 2010, 18.4% in 2011, regains total earnings crown.
- Medical share of total earnings far exceeds market cap share (index weight), but earnings share expected to shrink from 17.3% in 2009 to 12.2% in 2011.
- Market Cap shares of Construction, Retail, Transportation, Industrials and Business Service sectors far exceed both 2010 and 2011 earnings shares.
- Finance, Energy and Autos have rising earnings shares and market cap shares well below 2011 earnings shares.
- Staples, Utilities and Medical's share of total net income falling rapidly.
| Income ($ Bill) | Total Net Income $ 2009 | Total Net Income $ 2010 | Total Net Income $ 2011 | % Total S&P Earn 2009 | % Total S&P Earn 2010 | % Total S&P Earn 2011 | % Total S&P Mkt Cap |
| Finance | $31,652 | $135,573 | $163,072 | 5.80% | 17.46% | 18.41% | 15.61% |
| Computer and Tech | $92,276 | $131,459 | $149,767 | 16.91% | 16.93% | 16.91% | 18.22% |
| Medical | $94,643 | $102,457 | $109,357 | 17.34% | 13.19% | 12.35% | 10.49% |
| Oils and Energy | $62,732 | $93,304 | $106,093 | 11.49% | 12.02% | 11.98% | 11.16% |
| Consumer Staples | $57,381 | $62,939 | $69,751 | 10.51% | 8.11% | 7.87% | 8.84% |
| Retail/Wholesale | $50,705 | $57,894 | $65,202 | 9.29% | 7.46% | 7.36% | 8.50% |
| Utilities | $49,742 | $50,380 | $52,752 | 9.11% | 6.49% | 5.96% | 6.24% |
| Consumer Discretionary | $23,167 | $28,366 | $33,142 | 4.25% | 3.65% | 3.74% | 4.44% |
| Conglomerates | $26,232 | $26,747 | $30,879 | 4.81% | 3.44% | 3.49% | 3.68% |
| Basic Materials | $13,444 | $22,099 | $27,988 | 2.46% | 2.85% | 3.16% | 3.28% |
| Aerospace | $13,054 | $15,088 | $15,876 | 2.39% | 1.94% | 1.79% | 1.63% |
| Industrial Products | $10,603 | $14,022 | $18,332 | 1.94% | 1.81% | 2.07% | 2.28% |
| Business Service | $11,507 | $13,199 | $15,216 | 2.11% | 1.70% | 1.72% | 2.05% |
| Transportation | $8,198 | $11,764 | $14,070 | 1.50% | 1.52% | 1.59% | 1.96% |
| Auto | $471 | $10,377 | $11,815 | 0.09% | 1.34% | 1.33% | 1.13% |
| Construction | ($73) | $827 | $2,449 | -0.01% | 0.11% | 0.28% | 0.48% |
| S&P | $545,735 | $776,496 | $885,761 | 100.00% | 100.00% | 100.00% | 100.00% |
P/E Ratios
- Trading at 14.6x 2010, 12.8x 2011 earnings, or earnings yields of 6.85% and 7.87%, respectively.
- Earnings Yields extremely attractive relative to 10-year T-Note rate of 2.89%.
- Medical has lowest P/E based on 2010 earnings. Autos, Finance and Medical cheapest based on 2011 earnings.
- Construction has highest P/E for 2010 and 2011.
- Auto and Finance high 2009 P/E's to fall dramatically in 2010 and 2011.
- S&P 500 earned $57.53 in 2009: $81.97 in 2010 and $93.49 in 2011 expected.
| P/E | 2008 | 2009 | 2010 | 2011 |
| Medical | 12.8 | 12.6 | 11.6 | 10.9 |
| Oils and Energy | 12.1 | 14.2 | 12.3 | 11.7 |
| Aerospace | NM | 272.3 | 12.4 | 10.9 |
| Finance | NM | 55.9 | 13.0 | 10.8 |
| Auto | 8.8 | 20.2 | 13.6 | 11.9 |
| Utilities | 12.3 | 14.2 | 14.0 | 13.4 |
| Basic Materials | 12.1 | 15.9 | 15.6 | 13.5 |
| Consumer Staples | 21.4 | 22.4 | 15.7 | 13.8 |
| Conglomerates | 18.4 | 17.5 | 15.9 | 14.4 |
| Computer and Tech | 19.5 | 19.0 | 16.6 | 14.8 |
| Retail/Wholesale | 13.8 | 27.6 | 16.8 | 13.3 |
| Consumer Discretionary | 20.4 | 20.2 | 17.6 | 15.3 |
| Industrial Products | 18.3 | 21.7 | 17.7 | 15.2 |
| Busines Service | 15.4 | 24.4 | 18.4 | 14.1 |
| Transportation | 18.9 | 27.0 | 18.8 | 15.8 |
| Construction | NM | NM | 65.8 | 22.2 |
| S&P 500 | 21.1 | 20.8 | 14.6 | 12.8 |
Biggest FY1 Revisions
The Table below shows the S&P 500 firms with the biggest increases in their FY1 (mostly 2010) mean estimate over the last 4 weeks. To qualify there must be more than 3 estimates for FY1, and have a mean estimate of more than $0.50. In addition to the change in the mean estimate, the net percentage of estimates being raised is shown for both FY1 and FY2, as well as the P/E ratios based on each year's earnings is shown.
Note that estimate momentum and value are not mutually exclusive. The most interesting of these firms will be where the net revisions percentage (#up-#dn/Tot) is more than 0.50 but less than 1.00. Big mean estimate changes based on a handful of individual revisions are suspect, but could prove to be the most interesting if other analysts follow suit. On the other hand, if all the analysts have raised their estimates already, the mean estimate is less likely to rise again over the next month.
| Company | Ticker | %Ch Curr Fiscal Yr Est - 4 wks | %Ch Next Fiscal Yr Est - 4 wks | # Up-Dn/Tot %Ch Curr Fiscal Yr Est - 4 wks | # Up-Dn/Tot %Ch Next Fiscal Yr Est - 4 wks | P/E using Curr FY Est | P/E using Next FY Est |
| Fifth Third Bk | FITB | 28.14% | 7.62% | 0.74 | 0.44 | 23.44 | 11.32 |
| Coventry Hlthcr | CVH | 27.94% | 6.02% | 1.00 | 0.71 | 7.14 | 9.16 |
| Hartford Fin Sv | HIG | 19.72% | 0.38% | 0.93 | 0.00 | 8.78 | 6.35 |
| Legg Mason Inc | LM | 12.85% | 0.85% | 0.80 | 0.13 | 20.61 | 16.45 |
| Ford Motor Co | F | 12.69% | 8.63% | 0.87 | 0.50 | 7.93 | 7.98 |
| Avery Dennison | AVY | 12.20% | 0.23% | 0.83 | 0.14 | 12.25 | 12.07 |
| Baker-Hughes | BHI | 12.14% | 8.03% | 0.88 | 0.74 | 24.46 | 15.70 |
| Noble Energy | NBL | 11.69% | 6.99% | 0.79 | 0.44 | 20.88 | 19.12 |
| Aetna Inc-New | AET | 11.22% | 1.24% | 0.65 | 0.29 | 8.58 | 9.52 |
Data in this report, unless stated otherwise, is through the close on Thursday 11/18/2010.
We use the convention of referring to the next full fiscal year to be completed as 2010, not all firms are on December fiscal years, this can cause discontinuities in the data, particularly around this time of year. The data is based on FY1, not based on 2010, even though I may call it 2010 in the report. All numbers, including historical ones, reflect the current composition of the S&P 500, thus some historical numbers may differ from those reported by S&P which are based on the composition of the index at the time of the reports.
Dirk van Dijk, CFA is the Chief Equity Strategist for Zacks.com. With more than 25 years investment experience he has become a popular commentator appearing in the Wall Street Journal and on CNBC. Dirk is also the Editor in charge of the market beating Zacks Strategic Investor service.