MARKET SNAPSHOT: Consumer-staples Earnings Missing Out On 'gasoline Tax' Boost

By Wallace Witkowski, MarketWatch

Consumer discretionary companies appear to be benefitting from savings

SAN FRANCISCO (MarketWatch) -- Consumer-staples earnings figure heavily in quarterly reports this week but companies in the sector appear to have benefitted less than their consumer-discretionary counterparts in the fourth quarter as lower gasoline prices put more money in people's pockets.

Stocks finished higher for the week, with the Dow Jones Industrial Average (DJI) rising 3.8%, the S&P 500 Index (SPX) rising 3%, and the Nasdaq Composite Index (RIXF) up 2.4%, after a strong showing from consumer-discretionary earnings.

Two Dow components, Coca-Cola Co. (KO) and Cisco Systems Inc. (CSCO), report this week along with more than 60 other companies in the S&P 500.

Consumer-staples earnings are hard-pressed to match the performance from their consumer discretionary counterparts this season. Earnings growth for the S&P 500 stands at 3.0%, up from 2.0% a week ago, with consumer-discretionary earnings alone accounting for almost half that growth, according to John Butters, senior earnings analyst at FactSet.

Much of that rocket-fuel likely came from the money consumers saved from lower gasoline prices.

The average price of regular gasoline in the U.S. fell to $2.20 a gallon from $3.39 a gallon, or 35%, over the fourth quarter alone, according to AAA. The organization reported that Americans saved $14 billion, or $115 per household, on gasoline in 2014, with the majority of those savings coming in the fourth quarter.

So far, that extra money doesn't seem to be translating into the consumer staples sector. The sector is on track to see a 3.2% earnings decline from a year ago on 1.8% revenue growth, according to Butters. At the end of the fourth-quarter the sector was forecast to see a 2% decline in earnings on 2.8% revenue growth.

By comparison, the consumer discretionary sector is on track for 9.3% earnings growth, up from the end-of-quarter forecast of 4.5%, with revenue growth tracking at 2.8% growth, slightly down from the end-of-quarter forecast of 3.4%.

Notable earnings reports this week

 
Report date     Company/ticker (FactSet EPS / revenue estimates) 
Mon., Feb. 9    Hasbro Inc.  ($1.19 / $1.33 billion) 
Tues., Feb.10   Coca-Cola (42 cents / $10.76 billion)Molson Coors Brewing Co.  (69 cents / $970 million)CVS Health Corp.  ($1.20 / $36.06 billion)Reynolds American Inc.  (87 cents / $2.14 billion) 
Weds., Feb. 11  PepsiCo Inc.  ($1.08 / $19.68 billion)Whole Foods Market Inc.  (45 cents / $4.67 billion)Mondelez International Inc.  (43 cents / $8.91 billion)Time Warner Inc.  (93 cents / $7.55 billion)CBS Corp.  (76 cents / $3.65 billion)Cisco (51 cents / $11.8 billion)Tesla Motors Inc.  (30 cents / $1.23 billion)TripAdvisor Inc.  (37 cents / $285 million) 
Thurs., Feb. 12 Kraft Foods Group Inc.  (73 cents / $4.63 billion)Avon Products Inc.  (25 cents / $2.35 billion)Orbitz Worldwide Inc.  (7 cents / $220 million)American International Group Inc.  ($1.05 / $8.17 billion) 
Fri., Feb. 13   J.M. Smucker Co.  ($1.51 $1.47 billion) Exelon Corp.  (50 cents / $7.23 billion)DTE Energy Co.  ($1.04 / $2.3 billion) 
 
 

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