Here Comes Earning Season !

Source: Bianco Research


Don’t look now, but a hotly anticipated — and in some quarters, feared — earnings season is upon us.

Of the first 25 “real” companies reporting, things have actually been pretty decent. The counter is that these are banks (JPM, WFC), who are much freer in the leeway in their returns, and non consumer sensitive stocks, like Johnson and Johnson and Yum Brands.

Bloomberg, on the other hands, notes that earnings pessimism is at its highest levels since the crisis:

“Earnings pessimism among U.S. chief executive officers is climbing to levels last seen when the Standard & Poor’s 500 Index was mired in bear markets. Over the last four weeks, the ratio of companies saying profits will trail estimates compared with those saying they will exceed them climbed to 4.3, according to 69 earnings previews compiled by Bloomberg. The rate matches peaks reached in February 2009 and October 2001, the data show.

Warnings that estimates are too high by companies from Intel (INTC) Corp. to Caterpillar (CAT) Inc. came even as analysts lowered predictions for third-quarter income growth by 10 percentage points this year. Bears say the 0.9 percent decrease in profits predicted by analysts, the first quarterly retreat in three years, will limit gains in equities.”

Its still early in Q3 reporting season — but with the market in rally mode these days, anything can happen once the numbers come in.

Profit Pessimism at 2009 High on Intel, FedEx Forecasts
Lu Wang
Bloomberg, Oct 12, 2012 4:44 PM

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