Alcoa (AA), traditionally the company that starts off quarterly earnings seasons, reported earnings of 6 cents a share after the close of New York markets last night. That was right on analyst estimates. The stock is up 0.16% today, as of 1:15 p.m. New York time on slightly better than expected sales of $5.9 billion.
I think the fact that the market has decided that sales of $5.9 billion are good news tells you a lot about expectations for fourth quarter earnings right now. Revenue of $5.9 billion is good news in comparison to analyst forecasts of sales of just $5.61 billion for the quarter. But at $5.9 billion sales were still down 1.5% from the fourth quarter of 2011. (The company’s other good news was also rather limited. Alcoa estimates global aluminum demand to grow by 7% in 2013, up from 6% growth in global demand in 2012. This isn’t a barnburner demand number.) For 2013 Alcoa expects global growth in aluminum demand of 9% to 10% in aerospace; 1% to 4% in automotive; 2% to 3% in packaging; and 4% to 5% in building and construction.
The nature of Alcoa’s good news—a very modest beat above expectations for low or no growth—is a good indicator of where stock market expectations as a whole stand for the quarter. Analysts are projecting that earnings at companies in the Standard & Poor’s 500 Stock Index will grow by just 2.9% in the about-to-be-reported fourth quarter. That would be, according to Bloomberg, the second-slowest quarterly growth in S&P 500 earnings since 2009.
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