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Expect 33% Earnings Increase in 2010: S&P’s Sam Stovall
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CNBC.com Writer
Many companies have reported impressive third-quarter earnings results, but expect better numbers next quarter, said Sam Stovall, chief investment strategist at Standard & Poor’s. He shared his fourth-quarter outlook with CNBC.
“Third-quarter [earnings] were better than expected but it really was a continuation of 'less bad is good' because we still had a year-over-year decline in operating results of about 4 percent,” Stovall told CNBC.
“But earlier on, we had expected a 9 percent decline.”
Stovall said the materials sector posted a decline of 40 percent instead of the expected 70 and the technology industry ended up posting a gain of 2 percent versus an earlier estimate of a 9 percent decline.
“But revenues are still lagging with a 10 percent year-over-year decline,” he said.
Stovall said the biggest disappointments from the third-quarter were the telecom and industrial sectors.
“Industrials were expected to lose 35 percent, but they ended up losing 40, so it’s still a very challenging time for the industrials," he said.
"Telecom was the biggest surprise because they were expected to show a year-over-year increase, but they’re likely to show a year-over-year decline—they’re not getting the traction that was expected.”
“Next quarter, [the results] will actually be better,” said Stovall. “What we’re seeing is that there is a turnaround in earnings in the fourth quarter. S&P analysts are expecting about a 33 percent increase in earnings next year driven primarily by the cyclical sectors—in particular, financials, consumer discretionary, energy, materials and tech.”
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Companies Reporting Earnings This Afternoon:
Activision Blizzard [ATVI
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Starbucks [SBUX
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Nvidia [NVDA
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Sunoco [SUN
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Disclosures:
No immediate information was available for Stovall or his firm.
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Data is a real-time snapshot *Data is delayed at least 15 minutes
