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Bespoke: Earnings & Revenue Beat Rates by Quarter through April 26, 2013
Perhaps the links below might provide some insight on where the stock market might be heading. I know I am currently towards the low range in my equity allocation as I feel caution is somewhat warranted at this time.
Both the levels and the growth rates of S&P 500 revenues and US nominal exports are highly correlated. Nominal exports remained in a volatile flat trend during the first two months of the first quarter. This might be one reason why revenues have been lower than expected during the first quarter’s earnings season. Of the 270 S&P 500 companies that have reported, 56% had negative revenue surprises. Nevertheless, analysts’ consensus revenue estimates are holding up surprisingly well for this year and next year with gains of 3.0% and 4.6%, respectively.
S&P 500 profit margin estimates are also holding up, with 9.8% expected this year and 10.5% expected next year. I expect margins to remain flat in 2013 and 2014. So earnings should grow at the same pace as revenues. For earnings, I am still predicting $110 per share this year, up 5.9% y/y, and $118 next year, up 7.3%. Obviously, I am more optimistic about the prospects for revenues than the analysts. However, because they are more optimistic on margins, they are currently predicting that earnings will be $111 and $124 this year and next year.
"One thing's for sure - the over-confidence and complacency that we typically see when the market is nearing a top is the complete opposite of what we're seeing right now." - Bespoke Investment Group
Comments
we typically see when the market is nearing a top is the complete
opposite of what we're seeing right now." - Bespoke Investment
Group