Second quarter earning season is almost behind us now. As of the close of business on Friday, 462 out of the 500 companies in the S&P 500 Index had reported their earnings. What kind of season was it? Well, that depends on which numbers you look at. Two thirds of the reporting companies, exactly 67 percent, have beaten the analysts' estimates for their earnings, which is pretty good. On the other hand, the overall earnings growth rate has been just 4.9 percent, which is fairly weak.
Part of the reason for this discrepancy is that, as Thomson Reuters has found, companies tend to talk big on their first earnings forecast, then ratchet down expectations over time. Thomson Reuters' first iteration of consensus earnings for the second quarter of 2013, compiled way back during the second quarter of 2012, forecast growth of 14.4 percent. Over time, companies scaled that back severely, to the point that the final consensus numbers, issued on July 1 of this year, predicted just 2.9 percent growth. That was the number that most of the reporting companies were able to beat.
No comments:
Post a Comment