Tuesday, August 6, 2013

An Earnings Reality Check

Earnings season is coming to a close, now that 393 of the companies in the S&P 500 have made their reports. And it's been a superficially successful one, with 74 percent of the reporting companies having surpassed the Wall Street estimates for their earnings.

But there are plenty of disappointing numbers as well. The earnings growth rate for the S&P 500 companies is 1.7 percent, which is positive but not impressively so. It's almost identical to the earnings growth rate for those 393 companies in the first quarter, and down from 2.7 percent growth for those companies in the fourth quarter of 2012.

An even bigger problem is that all those earnings are coming from one place: the financial sector. Among the financial companies in the S&P 500 that have already reported, earnings are up 28 percent. For all the other S&P 500 stocks, earnings are down by 3.9 percent.

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