Tuesday, January 13, 2015
This is Mark Vickery covering for Sheraz Mian, who will be out of the office until a week from next Tuesday.
As Q4 earnings season gets unofficially underway with another big earnings beat from Alcoa (AA), oil prices continue to crash through the floor, now trading below $45 per barrel. Futures are up in the pre-market this morning after the S&P 500 traded down Monday. This followed two up days to end last week.
On the earnings front, Alcoa beat estimates easily on both the revenue and earnings side, marking its 8th earnings beat in the past 9 quarters. Lower fuel costs from cheaper oil certainly helped, but Alcoa’s main gains recently have come from its Engineered Products segment, which the company intends to grow further from here. Alcoa currently has a Zacks Rank #2 (Buy).
The Finance industry is the first big group to be heard from, as always. On Wednesday, JPMorgan (JPM) and Wells Fargo (WFC) report earnings, while on Thursday we’ll see reports from Citigroup (C) and Bank of America (BAC). None of these big players are expected to beat earnings estimates for Q4; each of these firms has a Zacks Rank #3 (Hold) with an inconclusive outlook for an earnings beat.
After the bell today, CSX Corp. (CSX) will report earnings. The Zacks ESP for the large railroad company is currently at 0% for Q4 — indicating a lack of positive surprise potential — though CSX has posted modest earnings beats in 3 of the last 4 quarters. It, along with other major rail firms, is also an important indicator for other industries rail works directly with, such as manufacturing, retail and energy.
Oil prices remaining in free-fall keep concerns of deflation in economies the world over on the front burner. There is now also an expected impact on global production, which may weigh heavily not only on the energy sector but in oil & gas manufacturing and services, as well. By the end of the week, we will have a clearer initial take on Q4 earnings overall, at least in terms of how it has affected the major financial firms.
Mark Vickery
Senior Editor
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