Earnings are the ultimate driver of higher equity/stock prices. All other items being equal (which they rarely are, but go with me here) better earnings lead to higher stock prices.
Sometimes a low bar that can be stepped over leads to better prices.
As you can see by this busy chart… earnings estimates tend to fall as the year passes.
If we happen to not have a decline in earnings as the year goes on…a surprise based on everyone getting too negative, maybe prices will trend higher? or at least current higher prices are justified? Not forecasting, only saying!
Check this chart out from FactSet:
Revenue growth has been hard to come by…actually almost impossible, but as this chart notes something is going on… Could a turn be in the mix?
Another reason never to get too negative or two positive…somewhere in the middle!
Have a Great Day!
John A. Kvale CFA, CFP
Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth