With Alcoa leading off earnings season next week, MoneyShow’s Jim Jubak explains why it may be a good example of the surprises that this reporting period may have for investors.

First-quarter earnings season, when companies report first-quarter earnings for 2012, starts officially on April 10, with Alcoa (AA) reporting after the market close.

Now, this looks like it is going to be a really interesting earnings season. Interesting is not necessarily good for an investor—what we really like is dull and boring and certain—but this one is not going to be that.

Alcoa is a really good example of why it is uncertain. Here is what you’ve got: analysts are saying that Alcoa in the first quarter is actually going to show a loss of 3 cents—that’s versus profits of 28 cents a share in the first quarter of 2011—and you would say, “OK, this is really terrible news!”

But that is the consensus, and what that does is it sets up the possibility of a surprise. People are saying, “Well, Alcoa is going to report a loss,” so if Alcoa actually reports break-even, that would be great, big, good news.

This is what you have got. You have a first quarter where everybody is thinking that earnings are going to be pretty lousy, earnings growth is actually going to be negative, we are just going to see a decline year over year—not a whole lot, but 2% or 3%…again, that is the consensus. So the question really is, what do people believe, and what are they going to do when we get the numbers?

We don’t know what numbers we will get. The economy looks like it might actually be stronger than expected, which would set up the possibility for a lot of upside surprises if people really believe the negative take on the numbers.

So, you have got two things going on. One is, we don’t know what the actual numbers that are going to be reported are. We will know that when they get reported. Two is that we really don’t know what in their heart-of-hearts investors’ expectations for the quarter are, which makes it kind of hard to tell whether these stocks are going to disappoint or not disappoint going forward.

This sets up a really uncertain period. If you have been looking for volatility in the market, day-to-day and stock-to-stock, I think first-quarter earnings season will give you everything you wanted and more.

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