This two part report from Traverse City, Michigan is unique in that much of the information it contains is not available from any other source that I know of. These reports provide a look at how the companies in the index are doing in comparison to beginning of the quarter earnings estimates, how earnings estimates are changing on a month to month basis along with sector breakdowns.
The information provided in these reports is also based on the current constituents of the S&P500, including any historical comparisons. Most historical comparisons use the constituents at the time of the past data and compare it to the present constituents. As can be seen in my reports, the S&P500 changes frequently. I believe comparing unadjusted past data to the present constituents without adjusting this data for these changes wherever possible can be misleading.
I find this information of great value in my investment decisions, and I believe investors local to the Traverse City area have too.
There were many changes to the S&P 500 index since my last article, with three of these changes involving Michigan companies.
Allegan, Michigan based and former S&P MidCap 400 constituent Perrigo Co. (PRGO) replaced Monster Worldwide Inc. (MWW) in the S&P 500 index. Monster Worldwide Inc. was moved to the S&P MidCap 400 index. Perrigo was featured in a previous “Local Companies Worth Investing In” article that can be seen here.
Auburn Hills, Michigan based and former S&P MidCap 400 constituent BorgWarner Inc. (BWA) replaced AK Steel Holding Corp. (AKS) in the S&P 500 index. AK Steel was moved to the S&P SmallCap 600 index.
Detroit, Michigan based Compuware Corp. (CPWR) was replaced in the S&P 500 index by WPX Energy Inc. (WPX). S&P 500 constituent The Williams Companies Inc. (WMB) spun off WPX Energy to shareholders and The Williams Companies stub remained in the S&P 500 index. Compuware was moved to the S&P MidCap 400 index.
Cooper Industries plc (NYSE:CBE) replaced Janus Capital Group Inc. (JNS) in the S&P 500 index. Janus Capital Group was moved to the S&P MidCap 400 index. Cooper Industries is being readmitted to the S&P 500 after being kicked out when they re-domesticating to Dublin, Ireland to avoid paying US taxes.
TripAdvisor Inc. (TRIP) replaced Tellabs Inc. (TLAB) in the S&P 500 index. S&P 500 constituent Expedia, Inc. (EXPE) spun-off TripAdvisor to its shareholders which included implementation of a one-for-two reverse stock split of Expedia stock immediately prior to the spin-off. The Expedia stub remained in the S&P 500 index. Tellabs Inc. (TLAB) was moved to the S&P MidCap 400 index.
Former S&P MidCap 400 constituent Dollar Tree Inc. (DLTR) replaced MEMC Electronic Materials Inc. (WFR) in the S&P 500 index. MEMC Electronic Materials was moved to the S&P MidCap 400 index.
AGL Resources (AGL) completed its merger with Nicor Inc (GAS) and took the place of Nicor in the S&P500. AGL Resources also took the GAS ticker symbol.
Some other notable developments include:
Electronic Arts (EA) changed their symbol from ERTS to EA and remained listed in the NASDAQ.
Ross Stores Inc. (ROST) stock split 2-1.
Frontier Communications Corporation (FTR) transferred the listing of its stock from the NYSE to the NASDAQ, but did not change its ticker symbol.
The executives of S&P 500 constituents Duke Energy (DUK) and Progress Energy (PGN) plan to submit a new proposal for their corporate merger to the Federal Energy Regulatory Commission sometime this month. The commission has already rejected two earlier merger proposals over monopoly concerns. The planned merger would make the largest electric utilities company in the nation.
Exelon Corporation (EXC) and Constellation Energy Group, Inc. (CEG) won approval for their planned merger from the U.S. Justice Department. As a condition of the approval Exelon has agreed to sell three electricity-generating plants in Maryland. The plan still needs to be approved by a federal judge.
AT&T (T) dropped their planned $39 billion acquisition of T-Mobile from German-owned Deutsche Telekom after it became obvious they would not win regulatory approval. Instead AT&T and T-Mobile entered into a roaming agreement for T-Mobile equipment use by AT&T customers. Under the agreement AT&T will gain about 10 megahertz of bandwidth. AT&T paid over $3 billion in a breakup charge and the roaming agreement added an additional $3 billion. AT&T took a $4 billion breakup charge against fourth quarter earnings to cover costs of the failed agreement.
All reports in this article are based on un-weighted operating earnings with the exception of those companies that no longer report operating earnings. All historical numbers have been adjusted for those that no longer provide operating earnings (all major reporting sources also updated these historical numbers) unless otherwise noted. These numbers are also based on the data I gathered during the 12/11/2011 update (beginning of the quarter estimates) and the update completed on 01/08/2012, along with any later rechecks/changes after screening the data for possible errors.
I found reported earnings for 32 of the constituents at the time of this update. However Dollar Tree Inc. (DLTR) was not a constituent when I gathered the comparison data used in this report, so they are not included in the tallies below. Here’s how the 32 that I did have data for fared against the beginning of the quarter estimates:
Of the 32 I have beginning of the quarter data for, there were 11 (35.48%) that missed those projections, 4 (12.90%) were in-line and 16 (51.61%) beat the estimates I had gathered on 12/11/2011. The 51% that beat these estimates is lower than the historical average for those that beat the earnings estimates made closer to the reporting date.
Of the 11 that missed the 12/11/2011 earnings estimates for this quarter, none missed by $0.01, five (45.45%) were by $0.03 or less, and one (9.09%) missed by $0.10 or more. The largest dollar miss of these estimates was $0.14 by Micron Technology (MU). None missed the estimates by 1% or less, three (27.27%) missed by 10% or more with one of those (9.09%) missed by 200% or more. The largest percentage miss of the beginning of the quarter earnings estimates was also by Micron Technology (MU) that missed by 280%.
Of the 16 that beat the 12/11/2011 earnings estimates, two (12.50%) were by $0.01, five (31.25%) were by $0.03 or less, and four (25.00%) were by $0.10 or more with the largest dollar beat being $0.25 by AutoZone Inc. (AZO). None beat the estimates by 1% or less, five (31.25%) beat by 10% or more, two (12.50%) by 20% or more, and one (6.25%) by 40% or more with the largest percentage beat being by Monsanto Company (MON) at 76.92%.
In comparison to the estimates made closer to the reporting date, according to Thomson Reuters 48% beat estimates, 24% were inline and 28% were below estimates with 29 of the constituents reporting earnings.
Overall, the 31 reported earnings gathered on 01/08/2012 beat the 12/11/2011 projection earnings by 2.49%.
Data Notes:
Estimates and earnings for Washington Post (WPO), Viacom (VIAB), Invesco Ltd (IVZ), Leucadia National Corp. (LUK), and Berkshire Hathaway (BRK.B) as explained in “data” found at bottom of the page. http://www.examiner.com/investing-in-traverse-city/earnings-updates-for-...
Additionally:
The merger of ProLogis, Inc. (PLD) with AMB Property Corp. (AMB) has left me with some questions of how to handle past earnings. For the time being I have continued to use ProLogis’s and not AMD Property’s past earnings for historical comparisons but may change this in the future. Also, since this merger completed, I have not been able to find current year or next full year earnings projections for the new ProLogis. In this absence I am using the total of quarterly earnings estimates that I have found for these time frames.
The recent merger between AGL Resources (GAS) and Nicor Inc. has left me with similar questions, and at the time of this update there were no recent earnings data available on the new company.
I could find no current estimates for recent addition WPX Energy Inc. at the time of this update, but later found and added this data.
Have a great day trading,
ronz
Disclosure: I have investments in AKS, FTR, DUK, PGN, EXC, T, and PLD. I currently have no investments in PRGO, MWW, BWA, CPWR, WPX, WMB, CBE, JNS, TRIP, TLAB, EXPE, DLTR, WFR, AGL, GAS, EA, ROST, CEG, MU, AZO, MON, WPO, VIAB, IVZ, LUK, or BRK.B although I am interested in some of these stocks. I am currently about 92% invested in stocks in my trading accounts.
Disclaimer: This article is intended to provoke thought about investment possibilities. Acting on the information provided is at your own risk. You are urged to do your own research, and where appropriate, seek professional investment advice before acting on any information contained in these articles.
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