Monday, May 13, 2013

S&P 500 Earnings Expectations (excerpt)

Let’s assess the impact of the latest company results on expectations for revenues and earnings for the remaining quarters of the year, as well as annual expectations for this year and next year:

On a weekly basis, I monitor the consensus expectations of industry analysts for quarterly and annual S&P 500 operating earnings. The consensus for Q1 at the start of the earnings season was $25.73 per share. The latest number as of the week of May 9, reflecting all the reported results, is exactly one dollar higher at $26.73. Over this same period, the estimates for Q2, Q3, and Q4 were knocked down $0.79, $0.55, $0.29, respectively, and $1.63 in total.

The 2013 and 2014 estimates fell to new lows of $110.98 and $123.39, with the former up 6.9% y/y and the latter up 11.2% y/y. While these y/y growth rates would be fine, I am troubled to see that forward earnings has been stuck around its record high of $115 for the past nine weeks. This is the measure of earnings that I believe drives the market.

Today's Morning Briefing: Yearning for Earnings. (1) Singing the blues about earnings. (2) Some are reaching for yield, while others are yearning for earnings. (3) Putting a high price on dividend growers. (4) Q1 results depressing estimates for the rest of the year. (5) Stay Home vs. Go Global. (6) Forward earnings stuck at record high in recent weeks. (7) Revenues growth estimates in the low single digits. (8) Analysts still expecting higher margins. (9) Focus on overweight-rated Retailers. (More for subscribers.)

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