Monday, August 12, 2013

S&P 500 Earnings (excerpt)

Did the Q2-2013 earnings season, which is almost over, contribute to the summer rally or did it set the stage for the doldrums over the rest of the summer? Yes, it did both. Let’s review:

(1) Q3 drops almost as much as Q2 increases. As of August 1, earnings announcements by the S&P 500 companies have boosted the Q2 number by 2.4%. However, the Q3 estimate was lowered by 1.7% over this same period.

(2) The 2013 estimate didn’t change. So on a y/y basis, Q2 and Q3 earnings are each up 5.7%. The expected level for 2013 hasn’t changed much at all during the latest earnings season and is currently projected to gain 7.3% over 2012.

(3) No change in 2014’s upbeat estimate either. Even more impressive is that the earnings estimate for 2014 has been flat-lining around $123 per share for the past 15 weeks through last week, implying that industry analysts collectively expect earnings to grow 11.3% next year. As I noted last week, S&P 500 forward earnings has risen to another new record high of $118.84 per share.

Today's Morning Briefing: Summer Doldrums. (1) Tailwinds and headwinds. (2) Bernanke is reassuring. (3) Dovish Evans is ready to taper QE with the hawks. (4) Federal deficit has been tapered, leaving room for Fed to taper. (5) Lots of commotion in Washington this fall. (6) CFI sectors continue to lead the charging bull. (7) Not much happens during doldrums. (8) Latest earnings season leaves 2013 and 2014 estimates unchanged. (9) Believe them or not: Analysts see more upside for margins in all 10 S&P 500 sectors. (10) Valuations are getting stretched in some sectors and industries. (11) “The Attack” (+ +). (More for subscribers.)

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