Another Peek at Earnings Trends

 | Oct 21, 2011 | 7:53 AM EDT  | Comments
  • Comment
  • Print Print
  • Print

As we hit the meat of earnings reporting season, I am checking up on the earnings estimate trend for the S&P 500. The estimate revision trend exerts a strong influence over stock-market performance, so it is worth looking at regularly. At the end of September, I noted that a challenging divergence was in place. The index had plunged, yet the 2011 operating earnings-per-share estimate was holding up quite nicely. That sort of situation is usually unsustainable: Either the market will rally, or earnings will roll over.

A month later, the earnings estimate is down slightly, but essentially has held up. Earnings season is when the estimates are usually revised meaningfully, on the flow of new information. With earnings holding up, the market is up substantially from the low (albeit with ugly volatility).

S&P 500 Earnings Estimates
Source: FactSet

So far, the earnings trend is fitting with my position that we will see very modest drift upward, punctuated by violent Europe-driven swings. We still have a couple more weeks of earnings to go, so we can't declare victory yet -- but so far, so good.

Columnist Conversations

Chinese markets jumped today as the regulators in China attempted to stem the free-fall in their markets. Un...
I have potential support and timing for a low in AAPL....What I don't have just yet is a buy trigger telling m...
Had the CEO in studio today -- continue to be very impressed by how he and his team are approaching the market...
Market having rough start of the week and month as Asia is at lowest level of the year and markets in Greece l...



News Breaks

Powered by

Columnist Tweets


Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data provided by Interactive Data. Company fundamental data provided by Morningstar. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by Interactive Data Managed Solutions.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

IDC calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.