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Q4 Earnings Drop Below 10%

Posted By Barry Ritholtz On February 12, 2007 @ 11:45 am In Data Analysis,Earnings,Investing,Markets,Technical Analysis | Comments Disabled

With 362 S&P500 companies reporting Q4 earnings, year over year growth is now 9.3%.

An interesting take on this how earnigns are being reported as the Quarter progresses. Birinyi Associates [1] notes that "last quarter, earnings growth steadily climbed to 22.8% as more and more companies reported. This quarter, however, the number has steadily declined since early January."

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click for larger chart

Sp500_earnings_21007 [2]

Chart courtesy of Birinyi Associates [1]

From today’s FT:

"The percentage of US companies
failing to meet Wall Street’s earnings expectations has reached the highest
level in more than two years, fuelling fears that corporate America’s record run
of profit growth will come to an abrupt end.

Concerns of a slowdown in
corporate profitability – one of the key reasons for the stock market’s
record-breaking streak – have been heightened by companies’ increasingly bearish
outlook on business prospects.

More than 22 per cent of the
400-plus S&P 500 companies to have reported results for the fourth quarter
of 2006 failed to meet Wall Street expectations. This is the highest level of
"misses" since the third quarter of 2004, according to Reuters Estimates.

The spike in earnings
disappointments increases the chances that corporate America will end a
three-and-a-half year run of quarterly double-digit profit growth in the last
quarter of 2006 rather than at the beginning of 2007, as widely expected."

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Sources:
US slowdown looms as groups miss targets [3]   
Francesco Guerrera 
FT 1:40 a.m. ET Feb 12, 2007   
http://www.msnbc.msn.com/id/17104615/


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URL to article: http://www.ritholtz.com/blog/2007/02/q4-earnings-drop-below-10/

URLs in this post:

[1] Birinyi Associates: http://www.birinyi.com/

[2] Image: http://bigpicture.typepad.com/.shared/image.html?/photos/uncategorized/sp500_earnings_21007.png

[3] US slowdown looms as groups miss targets: http://www.msnbc.msn.com/id/17104615/

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