Here's What To Expect When Companies Report Their Q4 Earnings

World strongest man stoneREUTERS/ Bogdan CristelTrying to close out 2013 with a big lift.

Fourth quarter earnings season unofficially kicks off this week.

After months of anticipation, we finally get to see how companies closed out 2013.

Here are some key metrics to watch, courtesy of Factset’s John Butters survey of analysts:

  • The estimated earnings growth rate for Q4 2013 is 6.3%. The Financials sector is projected to have the highest earnings growth rate for the quarter, while the Energy sector is projected to have the lowest earnings growth rate for the quarter.
  • On September 30, the earnings growth rate for Q4 2013 was 9.6%. Nine of the 10 sectors have recorded decreases in earnings growth rates over this time frame, led by the Energy sector.
  • For Q4 2013, 94 companies have issued negative EPS guidance and 13 companies have issued positive EPS guidance.
  • Of the 19 companies that have reported earnings to date for Q4 2013, 63% have reported earnings above the mean estimate and 58% have reported sales above the mean estimate.

Butters also identified some global concerns to watch based on comments from companies that have already announced earnings:

  • Less Favourable F/X Rates: The U.S. dollar has strengthened relative to the Japanese yen and other foreign currencies over the past year.
  • Europe: A number of companies stated that economic conditions were still weak in Europe in the third quarter. However, some companies stated that conditions may have reached a bottom or improved slightly.
  • Emerging Markets: Comments on business conditions in China and emerging markets continued to be mixed during Q3. Some companies (such as Yum! Brands and NIKE) reported weak conditions, while others (such as General Mills) saw strength.

Earnings really kicks off this afternoon with aluminium giant Alcoa, a company often hailed as a bellwether for the economy at large.

“We estimate Q4/13 EPS will be down from Q3/13 due to lower prices and premiums, unfavorable currency impacts, and negative [after-tax operating income] impacts in [Global Rolled Products] and EPS due to aerospace excess inventories, a softening in the global industrial gas turbine market, and seasonal weakness in packaging,” RBC Capital Markets’ H. Fraser Phillips wrote clients.

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