Industry analysts are most likely underestimating the contribution of global business to the bottom lines of the companies they follow. You can’t blame them because even company managements can’t provide them with much guidance on this source of earnings strength. That’s because more and more companies are targeting several fast-growing emerging economies as the ones most likely to boost their revenues and earnings. It’s hard to predict which ones will fire up a company’s performance during any particular quarter.
Historically, based on data starting in 1979, industry analysts tended to be too optimistic about the outlook for annual earnings and usually had to lower their numbers as companies reported their quarterly results. That changed during 2003-2006, when their weekly consensus earnings forecasts rose for each of those four years. That coincided with the global boom at the time. Estimates were then crushed during 2007-2009 by the global recession. But subsequently, the estimates for 2010-2012 have been rising since early 2009. Again, this coincides with the surprisingly strong and V-shaped recovery in the global economy.