Tuesday, August 27, 2013

S&P 500 Earnings Estimate Remains High (excerpt)

The second quarter’s earnings season was disappointing. S&P 500 operating earnings rose only 4.0% y/y, and actually fell 1.4% excluding the Financials sector. Revenues rose, but by only 2.1% y/y.

The earnings results beat expectations, by $0.68 per share, as they often do after analysts lower their estimates going into earnings seasons. However, analysts must have heard enough bad news to significantly lower their estimate for Q3 by $0.74 per share. Even their estimate for 2014 fell to a new low, which recently stalled the record-setting ascent of forward earnings.

So why no panic? The consensus analysts’ earnings estimate for 2014 is still very high at $123.01 per share, a gain of 11.1% over their estimate of $110.70 for this year.

Today's Morning Briefing: A Paucity of Panic. (1) Is the bull on anti-depressants now rather than steroids? (2) Moving sideways since mid-May. (3) Nothing to fear but fear. (4) Some fearful issues to worry about. (5) US economy continues to grow at stall speed. (6) The bad and the good in earnings. (7) Another round of fiscal follies in the fall. (8) Republicans debating defund vs.delay strategies for Obamacare. (9) Greece is still in the euro zone. (10) Everyone is bullish on Europe. (11) Focus on overweight-rated Industrials. (More for subscribers.)

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