Earnings vs. Revenues

August 8, 2012 8:30am by

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MarketBeat – Charts of the Day: Beware if Earnings History Repeats
As if there weren’t enough warning signs flashing from earnings season, the always thoughtful John Mauldin offers a one-word assessment of the future for corporate profits: Beware. “Currently, profit margins are cyclically high, near historical highs, and already at unsustainable levels, with projected further increases over the next two years,” Mauldin, president of Millennium Wave Securities, wrote in his weekend newsletter. “Beware.” More than 4/5 of S&P 500 companies have reported earnings for the latest reporting period. About 67% of those companies have reported earnings above analyst expectations, which is higher than normal, according to Thomson Reuters. But only 41% of companies have posted revenue above analyst expectations, which is well below normal levels. That has raised concerns that the slowing economy and Europe’s debt crisis is hindering growth for U.S. companies.

Comment

The first story above cites Thomson Reuters as its source for earnings and revenue surprises, but the charts above highlighting Bloomberg data paint much the same picture. While roughly two-thirds of companies are beating earnings expectations, the revenue data is much bleaker.

Source: Bianco Research

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For more information on this institutional research, please contact:

Max Konzelman
max.konzelman@arborresearch.com
800-606-1872

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