Sizing Up the Profit Picture

A tour bus passes the Wall Street bull in the financial district January 22, 2007 in New York City.
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A tour bus passes the Wall Street bull in the financial district January 22, 2007 in New York City.

We're just over two weeks from the kickoff of Q1 earnings reports. And no doubt, investors will be gearing up for the season when Alcoa reports on April 11th.

We’ll tally up the estimates of each sector for you.

According to research from Key Private Bank and Factset, as many as 25% of companies reporting first quarter results will actually miss their estimates. On the bright side of things, that means 75% will either meet or exceed estimates for the quarter.

Which sectors and stocks should you be focusing on? Two strategists came on Closing Bell and outlined top & bottom performers for the quarter.

His Take — Chris Konstantinos, Portfolio Risk Manager, Riverfront Investment Group

Top performers: Pfizer , Omnicom , L-3 Communications , Qualcomm .

Konstantinos said "some current S&P 500 stocks that we think carry a high level of earnings risk heading into earnings season. Qwest Communications , AMD , Merck , Computer Associates , and Hudson City Bancorp ."

His Take — Nick Raich, Director of Research, National City Private Client Group, Key Private Bank

The good news: Raich expects "20% earnings growth, 8% sales growth and 79% of companies meeting or exceeding estimates in 4Q 2010. Positive estimate revisions clearly show global macroeconomic activity is getting better. Our research is finding that the vast majority of companies will once again meet or exceed estimates in Q1 2011 earnings season."

The bad news: Raich believes "the number of companies missing estimates has been increasing over the last 4 quarters. The number of companies missing estimates will probably rise again this quarter."

Disclosures: Konstantinos, no conflicts.

Donna Burton contributed to this article.


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