Wal-Mart, Macy's, Kohl's, Cisco and Deere are part of Zacks Earnings Preview:

CHICAGO, Aug. 12, 2013 /PRNewswire/ -- Zacks.com releases the list of companies likely to issue earnings surprises. This week's list includes Wal-Mart (NYSE:WMT-Free Report), Macy's (NYSE:M-Free Report), Kohl's (NYSE:KSS-Free Report), Cisco (Nasdaq:CSCO-Free Report) and Deere (NYSE:DE-Free Report).

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Q2 Earnings Season in Final Stretch

The Q2 earnings season is effectively over, with results from 451 S&P 500 companies, accounting for almost 91.9% of the index's total market capitalization, already out (as of Friday, August 9th). We have already seen Q2 reports from 9 of the 16 Zacks sectors, including Finance, Energy, Basic Materials, and Utilities.

This week brings in reports from a total of 126 companies, including 13 S&P 500 members. The Retail sector, which typically has non-calendar quarter ending periods, has the most number of companies still to report Q2 results. In fact, 47% of the S&P 500 companies whose results are still awaited belong to the Retail sector. This week's line-up of reports has a heavy Retail sector representation, with Wal-Mart (NYSE:WMT-Free Report), Macy's (NYSE:M-Free Report) and Kohl's (NYSE:KSS-Free Report) reporting results. Other notable companies reporting this week include Cisco (Nasdaq:CSCO-Free Report) and Deere (NYSE:DE-Free Report).  

With the bulk of the Q2 earnings season now behind us, we are in a good position to judge the health of corporate earnings.

Looking at the aggregate growth rates, beat ratios, and median surprises, the Q2 earnings season isn't materially different from what we saw in Q1 and over the last few earnings seasons. While we had graded the Q1 earnings season as between 'average' and 'below average,' the Q2 earnings season appears to be tracking better than Q1 on improved revenue surprises.

But before buying into the not-so-bad earnings narrative, we should keep in mind that strong numbers from the Finance sector are playing an outsized role in giving respectability to the aggregate earnings picture. One could dispute the legitimacy of the strength in Finance earnings given the not-so-small contribution of reserve releases to the sector's earnings performance. But even keeping this issue aside, there is no dispute about the broad weakness outside of the Finance sector.

Given this broad-based growth weakness, I would give the Q2 earnings season a 'below average' grade, even though total earnings for the quarter will likely reach a new all-time record.

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