Factset – Earnings Insight, February 10, 2012
Estimated Earnings Growth Rate for Q1 2012 Falls to 0% Today.
The blended earnings growth rate for the S&P 500 for Q4 2011 currently stands at 5.5%. If this is the final earnings growth rate for the quarter, it will mark the end of the streak of consecutive quarters of double-digit earnings growth at eight. However, the streak of consecutive quarters of overall earnings growth will extend to nine. Looking ahead to the current quarter, what is the projected earnings growth rate for Q1 2012? Are analysts expecting the streak of consecutive quarters of earnings growth for the S&P 500 to continue? Based on the current estimates, the answer is no. As of today, the estimated earnings growth rate for the S&P 500 dropped to 0.0%. The growth rate has steadily dropped from 8.0% on September 30 to 3.0% on December 30 to 0.0% today. Four sectors are predicted to see earnings growth in Q1 2012, while six sectors are predicted to see earnings decline. It is interesting to note that while earnings expectations for Q1 2012 have declined since the start of the quarter (to 0.0% from 3.0%), the price of the market has continued to rise. Since December 31, the price of the market has increased 7.5% (to 1351.95 from 1257.60).


The following slides show an update of our series of earnings charts. The story remains that this earnings season is not good. Stocks are simply rallying on the hope of a growing QE world and QE3 specifically. Printed money is a powerful force for risk assets. According to Bloomberg, 370 of the S&P 500 companies have reported earnings for the recently completed quarter. Only 63% beat expectations, one of the lowest “beat rates” of the last decade.
Revenues are doing even worse. As the next chart shows, of the 366 companies that have reported revenues through February 15, only 43% beat expectations. Overall, revenues estimates tend to be lower than earnings estimates as companies do not game revenues as much as earnings.

Click to enlarge:


Bianco Research
Charts Of The Week
February 15, 2012

Category: Earnings, Markets

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

9 Responses to “Earnings Season Update – Still Not Good”

  1. Pantmaker says:

    Barry-this is the nuts and bolts of investing right here. Great post, but seriously…shhhhhhh…still haven’t put out all of my shorts….don’t want to start a stampede yet.

  2. Anja says:

    you forgot 1 thing: the influence of Apple. Take Apple out of it and the picture gets much worse. Food for thought

  3. VennData says:

    “… Are analysts expecting the streak of consecutive quarters of earnings growth for the S&P 500 to continue? Based on the current estimates, the answer is no….” and their record has been what, on predicting the future?

    It’s wonderful when someone can get into the collective heads of all investors ahd determine that global capitalism is somehow stymied and “… Stocks are simply rallying on the hope of a growing QE world and QE3 specifically…”

    Why bother with charts with all that mind reading ability?

  4. crunched says:

    ‘Stocks are simply rallying on the hope of a growing QE world and QE3 specifically.’

    And whoever it is that thinks there is going to be a QE anytime remotely soon with oil at 105 is completely insane. People… THE ONLY REASON THE MARKET IS GOING UP IS BECAUSE SOMEONE IS PUSHING THE ES FUTURES UP DAY AND NIGHT. And from there the little trade-bots at work in every stock take their cue. How can someone not look at the trading channel of the Nasdaq, SP-500, APPL, LOW, you name it… and not see the imprint of something completely unnatural and mechanized, is beyond me.

    The trajectory of all these trend channels is not healthy to say the least.

  5. Theravadin says:

    None of this says much of anything about corporate health. It simply says that:
    - the normal post recession rebound has finished
    - Analysts are as smart as a rampaging herd of rabbits. Earnings kept exceeding estimates, so it was safe to run with the herd and keep pushing estimates up. None of that reflected any real analysis, intelligence about business conditions, etc.
    If you look at actual economic performance, corporate balance sheets, etc., things look much better. Not great, but better.

    Every trader ought to carry around a big copy of the Hitchhiker’s Guide to the Galaxy, and spend an hour a day staring at the cover. DON’T PANIC!

  6. radicall says:

    And these are estimates lowered in response to the dour news from last year

  7. Greg0658 says:

    not sure what triggered this wonder – maybe 13,000 for the 19th time
    is there a chart of peoples cash extraction expectations from stocks on a generational basis?
    aged in their 40′s 50′s 60′s 70′s 80′s .. that info seems 1>very private &2>would be nice to know &3>destructive if not balanced

  8. Jim67545 says:

    How much of what we have seen in US markets in last 90 days is due to increased foreign demand meeting stagnant supply? As we (as US centric as we might be) might invest in BRICs or others, would there be any wonder that all of the oil wealth, Chinese instant millionaires, UK old money, etc. puts a bit of their wealth into the US market? An equity play? An income play? A currency play? Who knows/cares.

    Any stats what might confirm/disapprove this supposition?

  9. [...] corporate earnings growth has been very good and profit margins have been at historic levels. In the latest earnings season, however, the growth of both revenue and earnings has been week. Investors have been betting on [...]