Managing earnings or managing earnings expectations

John Robertson

Managing earnings or managing earnings expectations? Nearly three quarters of the S&P 500 companies reporting for the June quarter (94% of the total number) have supposedly met or beaten their earnings forecasts but estimates had already been cut by 10% since July 2012 resulting in an earnings rise of 4% over the last 12 months rather than the originally anticipated 19%. Fed policy has helped offset this source of potential disappointment. Right now, S&P 500 earnings are forecast to rise by 14% over the coming year. If the same pattern of downward revisions occurs in the coming 12 months, as reporting dates loom, this time without the help of the Fed, the S&P 500 could start to look expensive. Revenue improvements (possibly helped by stronger growth in Europe) are becoming more critical by the day.

John Robertson

John Robertson is Chief Investment Strategist for PortfolioDirect a provider of resource sector investment stock ratings and portfolio strategies for mining and oil and gas investors. He has worked as a policy economist, corporate business...


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