No, we’re not changing our focus to industrials! Yesterday did, however, mark the start of earnings season with Alcoa announcing that Q2 was far better than expected, which raises the bar for all other earnings releases to come.
Alcoa said that revenue for the quarter that ended on June 30 was $5.8 billion, flat year/year but 3% ahead of expectations. That helped boost the company to a profit for the quarter, as compared to a loss in the same period last year.
Are these results stunningly awesome? No, but Alcoa’s announcement means that investors will be looking for results ahead of expectations, even in industries that typically are cyclical (like metals), with increased profitability to support rising stock prices.
According to USA Today,
Analysts are calling for more than 6% earnings growth from companies in the Standard & Poor’s 500 index in the second quarter, says S&P Capital IQ. That’s up from 3.4% earnings growth in the first quarter of 2014 and 4.9% growth in the second-quarter of 2013.
The S&P 500 is a mashup of Alcoa, ExxonMobil, Facebook, FedEx, Kraft Foods, Macy’s and 494 others — the largest market capitalizations on the markets, regardless of what they actually do. When investment analysts expect 6% earnings growth across that broad a bucket of companies, it ripples through just about all verticals.
How is our PLMish universe likely to do against those expectations? During their last earnings announcements,
- Dassault Systèmes said it expected Q2 revenue of about €560 million, up 7%. That €560 million will include revenue from Accelrys. DS reports results on July 24.
- PTC said it expects calendar Q2/fiscal Q3 revenue of $325 million to $340 million, or an increase of 3% to 8%. PTC also reports on July 24.
- ANSYS, for a slightly different take on the world of engineering software, forecasted revenue of $224 million to $233 million, which would be growth of 4% to 8%, including a slight contribution from Spaceclaim. ANSYS hasn’t set the date for its next earnings release, but it’s likely to be in early August.
- Autodesk‘s quarters are off by a month, with its Q2 ending on July 31. The company forecast Q2 revenue around $600 million, up 7% or so. Look for the company to release results in late August.
It looks like revenue growth could support that 6% expectation, but only if companies report revenue at the top end of guidance. A little help from cost control and maybe some one-time benefits from tax credits or something, and 6% earnings growth looks doable, too.