Of the third of the S&P 500 that has already reported, 83 percent have beaten earning estimates, and 64 percent have beaten revenue estimates, according to Thomson Reuters. The expectations are now that earnings for the 500 companies will increase an average 28 percent this quarter, up from a previous 24 percent, according to Thomson Reuters.
Joel Levington, managing director, corporate credit at Brookfield Investment Management, monitored about earnings calls on about 25 companies in the past week and says while earnings were good, there aren't many companies making forecasts. "Generally, across the S&P 500, revenues came in about where expected to modestly better...There hasn't been a lot of color on looking out to 2011, which highlights that companies comfortable yet with the economic backdrop to go out that far," he said.
Levington said he did hear one common trend on a number of calls, and that had to do with rising input costs and pricing. "If you're talking about industrial companies, for Ingersoll-Rand, Caterpillar , Danaher, all the comments are around pricing to offset commodity inflation...whether you're talking about aluminum, copper, gold, anything that will go into electrical equipment or machinery, everybody's talking about raising prices. They're trying to even them out sas their raw materials go up, they want to increase pricing to offset it. We are kind of hitting the peak in operating margins," he said.
If you look at food, and I look at the notes form McDonald's , they flat out said they are going to be raising their prices in 2011. If you look at what happened, to Kellogg's, part of that was pricing,..now you're talking about agricultural commodities, as opposed to metals," he said. Levington also said telephone companies AT&T and Verizon were talking about increasing their average revenue per unit next year.
"You're definitely going to have this battle over inflation, and who is going to eat it...whether it's the consumer of the goods or the manufacturers. I think the next six months, that's a story that's going to play out significant for the S&P. That's a battle that's going to be waged," he said.
Monday's earnings reports include Amgen, Texas Instruments , Plum Creek Timber, Lorillard, NuStar Energy and Masco.
On Tuesday, Arcelor Mittal, DuPont , Ford , UBS , Bristol-Myers Squibb, Biogen-Idec, CIT, Kimberly-Clark, Paccar, McGraw-Hill, TD Ameritrade, Valero, U.S. Steel, Celanese, Ashland, Sherwin-Williams, Johnson Controls, First Energy, and Cummins report ahead of the open. Massey Energy, Aflac, Dreamworks and McKesson report after the bell that day.
Procter and Gamble , Comcast, Conoco Phillips , Northrop Grumman, General Dynamics, Hess, Legg Mason, Borg Warner, Virgin Media, Whirlpool, Southern Co., Sealed Air, Sprint Nextel , Deutsche Bank and Dr. Pepper Snapple issue earnings Wednesday morning. Allstate, Visa , Norfolk Southern, Symantec, Owens Illinois, FMC, Ryland and Flextronics release results after the close Wednesday.
Thursday's reports include Exxon Mobil , 3M , Royal Dutch Shell, Sanofi-Aventis, Barrick Gold, Avon Products, Blackstone, AutoNation, Colgate-Palmolive , Motorola, CME Group, Duke Energy, Dow Chemical, Fortune Brands, Potash, Raytheon, Starwood Hotels, Williams Cos., Waste Management. Microsoft , MetLife and Expedia report after the bell that day, as does Monster Worldwide, BMC Software, Sunoco, Cephalon and Genworth Financial.
Merck , Chevron , Sony, Constellation Energy, Cigna, Estee Lauder, Weyerhaeuser, ITT and Interpublic report Friday.
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