by Bespoke Investment Group
Earnings season kicks off after the close today when Alcoa (AA) reports second quarter results. In assessing sentiment heading into earnings season, there seems to be a dichotomy between analysts and investors. As we noted last week, sentiment on the part of analysts has been in the dumps with a seemingly relentless stream of decreased optimism.
Investors, on the other hand, seem to be more optimistic. On an anecdotal basis, there seems to be a popular view among commentators that last quarter's strong earnings reports will carry over into this quarter and help investors forget about the debt issues going on in Europe. However, while last quarter's earnings results for S&P 500 companies was impressive (74% EPS beat rate), the results for all US companies was much less robust. In fact, last quarter was the first time since Q4 2008 that the EPS beat rate for all US companies was below 60%. So, while the largest companies in the US seemed to be cruising last quarter, among a broader universe of stocks, there were several more companies stalled out on the shoulder.
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