Leigh Drogen

About the Author Leigh Drogen

Leigh Drogen is the Founder and CEO of Estimize. Estimize is an open financial estimates platform which facilitates the aggregation of fundamental estimates from independent, buy-side, and sell-side analysts, along with those of industry experts, private investors and students. By sourcing estimates from a diverse community of individuals, Estimize provides both a more accurate and more representative view of expectations compared to sell side only data. Leigh started his career as a quant trader at Geller Capital, a White Plains, NY based fund where he ran strategies that looked at earnings acceleration and analyst estimate revision models, as well as price momentum and several sentiment indicators. Leigh later went on to be the founder of Surfview Capital, a New York based asset management firm that used many of the same strategies as Geller Capital, with a focus on higher beta names on an intermediate term time frame. His educational background includes focus in economics and international relations, specifically war theory. He is a graduate with honors from Hunter College in New York City. You can contact Leigh by emailing him at Leigh@estimize.com

Disappointing Bank Results Push Q4 Financials Profit Growth To -2.5%

After disappointing results from many of the banks, with estimates for those that have yet to report continually dropping, and volatile oil prices causing downward revisions in the energy sector, S&P 500 expected growth has dropped significantly to 6.0%, from 8.0% earlier in the week.

Worse-than-expected results from the likes of JPMorgan Chase (NYSE:JPM) and Citigroup (NYSE:C), and subsequent revisions to Goldman Sachs [(NYSE:GS) (reporting tomorrow)] and to a lesser degree Morgan Stanley [(NYSE:MS) (reporting Tuesday)] have caused the expected growth rate for financials to plunge. At the beginning of the season, estimated EPS growth for financials was around the 5% mark, the sector is now anticipated to post a decline of 2.4%. The main culprit is the banking industry, now pegged to come in at -5.0%, down from 3.0% earlier the quarter.

The energy sector has also fallen dramatically. At the start of the year profit growth was expected to come in at -10%, that number has since been revised downward to -17.5%.

After a day marked with dismal earnings and unfortunate economic data from the Philly Fed and jobless claims, we’re hoping for this afternoon’s Intel (NASDAQ:INTC) report to be a bit of a bright spot. The semiconductor company is expected to post EPS of $0.67, which would denote a 31% increase YoY, and revenues of $14.7B suggesting growth of 6.6%.

How are we doing?

Expectations for S&P 500 earnings growth for the fourth quarter stand at 6.0%. Revenues are anticipated to come in with 1.4% growth.

Leaders

Earnings:

Health Care (22.1%). Notable industry: Biotechnology (60.2%)

Telecommunication Services (19.7%)

Information Technology (11.5%). Notable industry: Semiconductors (29.6%)

Revenues:

Health Care (7.9%). Notable industry: Biotech (37.3%)

Information Technology (7.5%). Notable industry: Semiconductors (15.0%)

Laggards

Earnings:

Energy (-17.5%). Notable industry: Oil, Gas and Consumable Fuels (-19.0%)

Materials (-2.8%). Notable industry: Metals & Mining (-6.7%)

Financials (-2.4%). Notable industry: Banks (-5.0%)

Revenues:

Energy (-13.1%). Notable industry: Oil, Gas and Consumable Fuels (­-15.4%).

Materials (-1.1%). Notable industry: Paper & Forest Products (­-17.9%).

Beat/Miss/Match

Earnings: With 30 S&P 500 companies reporting thus far, 52% have beaten the Estimize consensus, 35% have missed and 13% have met. This is compared to Wall Street estimates, of which 67% of companies have beat on the bottom­-line, 17% have missed and 16% have met.

Revenue: 57% have beaten the Estimize consensus, while 43% have missed. For revenues, 63% of companies have beat the Wall Street estimate, while 37% have missed.