No news is good news


Earnings season officially kicks off today! The end of the quarter took place over Easter weekend and companies were busy tallying up orders/sales in advance of last week’s pre-announcement deadline. Pre-announcements are always an exciting time, as this is when investors get a sneak peak at who underachieved and who overachieved during the last quarter.

At Fort Pitt we are closely watching a few different companies based on allocations. We are concerned with big equipment makers; their performance shows us if construction is flat or decreasing. IBM is also a solid company to watch. They are a huge slice of IT and have a finger in every piece of the IT pie.

Here is what we saw by watching IBM last week. The company generally sends out a confirmation before the end of the quarter detailing when its earnings conference call will be held. They sent out the announcement on December 27, 2012 for the fourth quarter of 2012. This quarter, the company sent out a press release announcing when earnings would be released during the evening of April 1. This goes against the grain of what normally happens — as they tend to announce their earnings call date earlier and during working hours. What does this mean? My guess is that they ran the numbers and saw that they at least matched the earnings. However, I’m leaning towards thinking the company missed the revenue estimate.

Otherwise, pre-announcement season was relatively quiet last week, leading us to believe that most of the large companies met expectations. When it comes to earnings and pre-announcement week, boring can be better. Missed earnings have a large effect on the stock market and breaking company news, whether it’s good or bad, can cause huge swings and volatility.

The three things you can garner from earnings season:

  1. A snapshot of the overall health of our economy
  2. The health of some of the companies in your individual investment portfolio
  3. What’s ahead for the future

This year, the lack of pre-announcements is telling us the economy is doing OK and when the rest of the world seems to be reporting bad economic data at alarming rates, a ho-hum economy doesn’t seem so bad.

Nathan Boxx, Bradley Newman, Jason Seltzer

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