Dow Stocks Earnings Summary: First Quarter 2009

With Home Depot [[HD]] and Hewlett Packard [[HPQ]] both reporting earnings last week, we have now had all 30 of the Dow stock components report their first quarter results. Overall, the results ended up being much better than Wall Street expected.


Only five Dow stocks reported quarterly earnings that missed Wall Street’s consensus estimates. That is the fewest earnings disappointments since the fourth quarter of 2007.


Meanwhile 20 Dow stocks reported earnings that exceeded Wall Street’s expectations. That was a significant improvement over last quarter when only 13 Dow components exceeded consensus expectations.


The better than expected quarterly earnings results from so many Dow stocks has certainly helped lift the markets. The Dow Jones index has increased 6% since the first Dow component (Alcoa) reported their quarterly earnings on April 7. However, the positive earnings results are more a reflection of very low expectations going into earnings season than true strong performances by these Dow stocks.


Quarterly earnings declined year-over-year for 20 out of the 30 Dow stocks. Bank of America [[BAC]] was the only Dow component to post a double-digit increase in EPS from the previous year.


Optimism for next quarter’s earnings remains very muted. Excluding General Motors [[GM]], which likely no longer even be a part of the Dow index next quarter, Wall Street is only expecting 3 stocks to report annual increases in their quarterly earnings. Analysts expect Boeing [[BA]] and Hewlett Packard [[HPQ]] to increase earnings by 3% and McDonald’s [[MCD]] to increase earnings by a whopping 1%. The remaining 26 Dow components are all expected to report declines in quarterly earnings. In fact, 23 of these stocks are expected to report double-digit declines.


So while first quarter results were better than expected, there is little reason for excessive optimism.


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