And they are off … Earnings Season that is, AKA 90 day Treadmill

Earnings are the ultimate driver of stock prices. Yaa yaa, the Federal Reserve as we know all too well also has a hand, but that is a different story.

Most publicly traded companies report in a public venue quarterly. Several years ago we coined the term, 90 day treadmill as it comes at you fast AND can cause short-term knee jerk reactions … another story for a different time.Treadmill

Earnings Season Under Way

As of today we are a little over 10% of the was through, using the S&P 500 as our benchmark.

So how have we done? … Awful, BUT not as bad as expected.

This from our friends at Factset:

  • Earnings Scorecard: Of the 56 companies that have reported earnings to date for Q1 2015, 77% have reported earnings above the mean estimate and 46% have reported sales above the mean estimate.
  • Earnings Growth: For Q115, the blended earnings decline is 4.1%. If the index reports a year-over year decline for the quarter, it will be the first time since Q3 2012 (-1.0%).
  • Earnings Revisions: On March 31, the estimated earnings decline for Q1 2015 was -4.7%. 
  • Valuation: The current 12-month forward P/E ratio is 17.0. This P/E ratio is based on Thursday’s closing price (2104.99) and forward 12-month EPS estimate ($123.94).

Broadly management teams are meeting earnings expectations while still in search of sales!

Just by chance we stumbled upon a terrific interview last week that rhymes with our views by a very famous person on Wall Street. Much of the interview explains eloquently some of the economic growth woes.  Watch for a multiple part weekly Wednesday series!

Have a Great Monday!

John A. Kvale CFA, CFP
8222 Douglas Ave # 590
Dallas, TX 75225


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