Earnings Preview: Double Digit Growth Rate Possible For Q1

Alcoa’s (AA) first-quarter report, scheduled for Tuesday afternoon, will officially kickoff first-quarter earnings season. The aluminum producer is expected to report profits of 75 cents per share, though the Most Recent Consensus calls for 76 cents per share.

Joining Alcoa during the week of Apr 9 will be 32 other companies with earnings reports, including S&P 500 members: Bed, Bath & Beyond (BBBY), General Electric (GE) and MGIC Investment (MTG).

As I recently stated on our blog, first-quarter earnings for the S&P 500 appear to be on track for another quarter of double-digit growth. The consensus estimate calls for operating earnings to total $22.48 versus $20.75 a year prior. This equates to first-quarter year-over-year growth of 8.3%. If actual earnings are just 1.5% better than analysts expect, first-quarter growth will hit 10%. Given the propensity of CFOs to beat earnings expectations, a double-digit growth rate is within the realm of probabilities.

The economic calendar is light. Minutes from the March Fed meeting should be released on Wednesday afternoon. Thursday brings March import prices and weekly initial jobless claims. Friday features the February trade balance, March PPI and the preliminary University of Michigan consumer confidence numbers.

Companies That Could Issue Positive Earnings Surprises During the Week of Apr 9 - 13

Six brokerage analysts have raised their fiscal fourth-quarter estimates on Research in Motion (RIMM) over the past 30 days. The revisions were not material enough to move the consensus estimate (we have forecasts from 26 analysts for RIMM), but the Most Recent Consensus, which reflects these revisions, is bullish. The Most Recent Consensus (the average of forecasts published over the past 30 days) calls for earnings of $1.01 per share versus the consensus estimate (the average of all published forecasts) of 98 cents per share. Investors should note, however, that RIMM’s fiscal third-quarter earnings were a penny below expectations. Research in Motion is scheduled to report preliminary results on Wednesday, Apr 11, after the close of trading.

Companies That Could Issue Negative Earnings Surprises During the Week of Apr 9 - 13

MGIC Investment Corporation (MTG) missed estimates last quarter by seven cents. Ahead of the company’s first-quarter report, brokerage analysts are lowering their forecasts. During the past 30 days, three of the 13 covering analysts have cut their projections. These cuts have caused the consensus estimate to fall four cents to $1.78 per share. The Most Recent Consensus is more bearish at $1.77 per share. MGIC Investment is scheduled to report on Thursday, Apr 12, before the start of trading.