Several features of the S&P500 first quarter earnings results have worrying market implications

John Robertson


Several features of the S&P500 first quarter earnings results have worrying market implications. Both sales per share and earnings fell 3% in the quarter for reporting companies. The gain over the year was only 6%. Once again, nearly 70% of reporting companies beat estimates but earnings forecasts have been cut back 10-12% in each of the last three quarters before the reported results beat expectations. Current earnings estimates now point to a 16% gain over the coming year. That would be strong enough to validate further market gains but another round of similarly sized downgrades would give the market another single digit result for the year making it tougher to sustain existing valuations.

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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