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Third-quarter earnings season has picked up, with a number of companies posting earnings today before the opening bell and two tech giants set to report after the close.
When Q3 earnings kicked off a week ago, analysts estimated third-quarter earnings would come in 6.5% higher than the same quarter a year ago.
That estimate is now is a lackluster 0.8%, and a slowdown from Q1's growth of 3.4% and Q2's growth of 2.3%.
Expectations have been trimmed a number of times for Q3 earnings growth. Some 91 companies in the Standard & Poor's 500 Index have cut their earnings guidance, while just 19 have raised them, according to FactSet. Both are record numbers, the data research firm says, since it began keeping such count in 2006.
That's a bad sign for stocks, as earnings expectations are a key driver of stock prices. As Barron's notes, when analysts raise estimates for a company, shares typically rise right away. Moreover, studies show stocks also tend to gradually outperform in the months following earnings estimates increases.
Here's what to watch in earnings today as more big-name companies and stocks post results.
Key Earnings Today: Citigroup
Citigroup Inc. (NYSE: C) reported that third-quarter profit rose to $3.26 billion, or $1 a share, up from $468 million, or $0.15 a share, in the same period a year ago. That was 4 cents short of analysts' forecasts.
"We performed relatively well in this challenging, uneven macro environment," Chief Executive Officer (CEO) Michael Corbat said in a statement. Corbat added he aims to get the bank back to industry-average levels of profitably by about 2015.
Other Citigroup earnings details to note:
- Revenue rose 31% to $17.9 billion, but also missed estimates of $18.73 billion.
- Total overhead expenses were $11.7 billion, moving closer to Citi's goal to push spending below $11 billion per quarter. Slashing headcount by 11,000 over the past year helped.
- Expense cuts and reduced losses from Citi Holdings, a division set up to manage underwater mortgage securities and other troubled assets, eked out a 0.69% return on assets, a near sevenfold increase from the same quarter a year ago.
- Credit quality at the bank also continued to improve.
- Its loan-loss reserve release, a buffer against losses, was $675 million, 55% less than Q3 of 2012.
- Revenue from bond market trading fell 26%.
The third-largest U.S. bank is still recovering from the 2008 financial meltdown. Shares were up a nickel in early afternoon trading.
Key Earnings Today: Coca-Cola
The Coca-Cola Co. (NYSE: KO) reported earnings per share (EPS) of $0.54 on revenue of $12.03 billion, up from $0.50 on revenue of $12.02 billion a year ago.