Despite beating the Street on both the top and bottom-line, Facebook (FB) stock still fell 9% in the after hours, and is down nearly 6% today. This is just further proof that the markets were looking for more from the company, with the Estimize consensus suggesting EPS should have been $0.02 higher at $0.45. Adding fuel to the fire were comments on the subsequent earnings conference call. Chief Financial Officer, David Wehner, cautioned that spending would be ramping up by 50 - 70% in 2015 on a non-GAAP basis, causing investors to fear Facebook might become the next Amazon, a company which has a seen a deep decline due to large, failed investments. Facebook also warned Q4 revenues would show a year-over-year increase of 40 - 47%, a slower pace than they have historically grown, and much lower than the 59% increase we saw in the Q3 results. However, the company made the same claims regarding weaker revenues in Q3, but were able to beat top-line expectations, and post YoY growth that was roughly in-line with Q2 results.
After the bell we get results from 15 more S&P 500 companies, including Kraft Foods, Visa and insurers Metlife and Allstate.
How Are We Doing?
Expectations for S&P 500 earnings growth for the third quarter stand at 10.8%. Revenues are anticipated to come in with 4.4% growth. All 10 sectors are anticipated to post positive YoY growth on both the earnings and revenue front.
Leaders
Earnings:
Health Care (13.3%). Notable industry: Biotechnology (45.1%)
Consumer Discretionary (13.1%). Notable industry: Internet Retail (20.4%)
Materials (13.0%). Notable industry: Metals & Mining (15.1%).
Revenues:
Health Care (10.7%). Notable industry: Biotech (38.9%).
Information Technology (7.3%). Notable industry: Software (15.7%)
Laggards
Earnings:
Utilities (4.2%). Notable industry: Electric Utilities (3.0%).
Telecommunication Services (0.9%): All five companies are within Diversified Telecom Services. Only Verizon posted yoy growth.
Revenues:
Energy (0.1%). Notable industry: Oil, Gas and Consumable Fuels (-0.7%).
Materials (2.7%). Notable industry: Paper & Forest Products (-13.6%).
Beat/Miss/Match
Earnings: 280 companies have reported thus far, 54% have beaten the Estimize consensus, 35% have missed and 11% have met. This is compared to Wall Street estimates, of which 72% of companies have beat on the bottom-line, 21% have missed and 8% have met.
Revenue: 51% have beaten the Estimize consensus, 49% have missed, and 0% have met. For revenues, 59% of companies have beat the Wall Street estimate, while 41% have missed.
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