Black Friday and Cyber Monday hype doesn't equal analyst revisions

This past week was a focus week for retailers, with high profile shopping days “Black Friday” and “Cyber Monday” taking place during the week.  However, analysts didn’t make significant revisions to EPS estimates for retailers in the S&P 500, based on the results of the past week. Eight of the ten retail sub-industries in the index saw no change in their earnings growth rates for Q4 2011 over the past week. The Computers & Electronics Retail sub-industry recorded a slight increase in expected growth (to -5.9% from -6.1%), while the Specialty Stores sub-industry recorded a decrease in expected growth (to 5.6% from 7.0%).

Overall, analysts and corporations have significantly tempered expectations for earnings growth for Q4 2011 for the S&P 500.  Since the start of the quarter, the estimated earnings growth rate for the S&P 500 has dropped to 13.6% today from 19.0% on September 30, due to broad-based cuts to earnings estimates. On a percentage basis, share-weighted earnings for the quarter have fallen by 4.6% during this time. This 4.6% cut reflects the sharpest reduction in estimates through the first nine weeks of a quarter since Q2 2009 (-5.8%). In terms of EPS guidance, companies have issued 81 negative preannouncements for Q4 2011. If the final number of negative preannouncements for the quarter is 81, it will tie the mark with Q4 2008 for the highest number of negative EPS preannouncements issued during a quarter (since 2006).

The estimated earnings growth for the fourth quarter currently stands at 13.6%. If the final earnings growth rate is 13.6%, it will mark the ninth consecutive quarter of double-digit earnings growth for the index. The Financials sector is predicted to have the highest earnings growth (84%) and be the largest contributor to dollar-level earnings growth.  However, one company accounts for most of the growth in the Financials sector and more than half of the growth for the entire index: AIG.  If AIG is excluded from the index, the Q4 2011 earnings growth rate for the S&P 500 drops by more than 50%,
from 13.6% to 6.0%.  Comparisons to weak year-ago earnings are driving the unusually high dollar-level growth for AIG.

During the next couple of weeks, the last few companies will report earnings for Q3 2011 and the first few companies will report earnings for Q4 2011. During the upcoming week, three companies in the S&P 500 are scheduled to report earnings for the third quarter and two companies in the S&P 500 are scheduled to report earnings for the fourth quarter.

Read more about expectations for Q4 2011 in this week's edition of FactSet Earnings Insight.

All of the data used to compile FactSet Earnings Insight is available in the FactSet workstation.