Earnings Outlooks Getting Mildly More Positive
Earnings optimism grows - Analysts aren't cutting estimates as much as usually do, says Goldman Sachs.
Could there be a sea change afoot in the tired "let's lower earnings expectations so we can beat them" game that's dominated quarterly results over the past few years?
Top corporate executives are getting a little more optimistic about earnings in the second quarter, and that's leading analysts to not lower estimates as much as they usually do, notes Goldman Sachs in a recent report. The firm points out:
Guidance this quarter has been less negative than in recent quarters, and commentary noted improving business activity in March and early April. Analyst expectations for the remainder of 2014 are unchanged. Historical revisions imply 2Q 2014 EPS estimates should have fallen by 1%.
While negative earnings outlooks for the second quarter seem high, they're actually about average for a change. About 71% of S&P 500 Index (SPX) (SPY) companies providing a second-quarter earnings outlook guided below the Wall Street consensus at the time. That's well below the more than 80% of negative company outlooks at this time last quarter.
Courtesy of MarketWatch