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Unofficial Start of Quarterly Earnings Season


For some reason, today still marks the unofficial start of quarterly earnings season, generally because aluminum giant Alcoa AA reports its Q4 2016 earnings after the bell. But if you think about it, this is a rather 20th century mentality at work: back in the old days, if you wanted to find a plumber you went to the Yellow Pages, and the reason you chose AA Plumbers is because they were first on the list.

Of course, we are seeing extremely important companies report this week — the big banks, who stand to gain on increasing interest rates, as well as a more active domestic economy and a stronger dollar, including Bank of America BAC, Wells Fargo WFC and JPMorgan JPM, although none of these come out until Friday. Airline major Delta DAL reports before Thursday’s market opens.

Next week and in the weeks following is when we see precipitous amounts of publicly traded companies bringing out their quarterly earnings results, but really what we refer to as “Q4” already began a couple weeks ago, when industry leaders in specialty retail like Nike NKE and logistics like FedEx FDX reported earnings. And even though an outsized share of market capitalization of the S&P 500 comes along with the big banks reporting, we won’t be able to assess the strength or weakness of this earnings season until we tip past the half-way point of companies reporting, at least.

For now, the best way to keep track of Q4 earnings and expectations therein is to follow Zacks Director of Research Sheraz Mian’s articles on the subject. For instance, last Friday’s Earnings Preview asks this important question: Can the Bank Stock Rally Continue?

Merger Monday

Ahead of the opening bell today, we learn Japanese drug maker Takeda Pharmaceutical is purchasing cancer treatment company Ariad ARIA for an enterprise value of $5.2 billion, or $24 per share. This is approximately a 75% premium from Friday’s closing price. Ariad shares were halted in pre-market trading upon the announcement.

Also, candy maker Mars Inc. is acquiring veterinary supply company VCA WOOF for $7.7 billion. Most people probably don’t associate the company that produces M&Ms with pet products, but the firm actually has a worldwide pet food business, which the synergies of VCA should enhance. After being halted in pre-market trading initially, WOOF shares are now bid up “ruff”ly 27% before the bell.

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