Analysts Overstate Earnings Once Again

Wednesday, July 30, 2008 | 07:20 AM

General072808 We have been noting that earnings expectations are way too high for the second half of the year (Q3 +20%, Q4, +50%).

It turns out that they were also way too high for Q2:

"Halfway through earnings season, banks are still a drag, tech firms are doing OK while the overall outlook remains cloudy.

With 249 of the S&P 500 companies reporting results, second-quarter profits are on track to decline 17.9% vs. a year earlier, according to Thomson Reuters.

"I'd rate (earnings so far) as pretty bad," said Sam Stovall, chief investment strategist at S&P Equity Research. S&P forecast a 10% drop at the start of the quarter but now sees about a 20% shortfall, he said."

Interestingly enough, the chart of earnings from IBD also includes a line for earnings ex-financials

If they were trying to illuminate the earnings picture, they might have also shown earnings ex-energy. As Bloomberg noted earlier this quarter, "Take away Exxon Mobil Corp., Chevron Corp. and ConocoPhillips and profits at U.S. companies are the worst in at least a decade."

One would think showing an ex-negative might be balanced by showing the ex-positive. (One would be wrong)

And it is somewhat odd that I don't recall IBD showing SPX earnings in 2005-07 period ex-financials. If they were truly astute, they might have shown how artificially pumped up earnings were over that period. Had they done so, it would have revealed exactly how artificial those profits were, and could have saved their readers untold billions.

No matter. Such is the money losing ways of the perennial cheerleaders. Read and watch them at your own financial risk . . .


S&P500 Profits Ex 3 Oil Cos = Awful (May 2008)

S&P500 ex-Risk (November 2007)

S&P Earnings So Far Falling Short Of Q2 Projections 

Yahoo version:;_ylt=AsXoU7pADMvBKUZx1OAKreWyBhIF

Wednesday, July 30, 2008 | 07:20 AM | Permalink | Comments (18) | TrackBack (1) add to | digg digg this! | technorati add to technorati | email email this post



TrackBack URL for this entry:

Listed below are links to weblogs that reference Analysts Overstate Earnings Once Again :

» Why the Bear Is Alive and Well from The Big Picture
A column in the Sunday NYT purports to look at Why the Bear Is Alive and Well. While the main thrust of the column is on point -- namely, stocks remain too expensive for a true bear market bottom. However, it does revive the meme that won't die -- name... [Read More]

Tracked on Sep 7, 2008 8:51:37 AM


money ex-wealth

dollar ex-purchasing power

Posted by: SINGER | Jul 30, 2008 7:52:03 AM

The comments to this entry are closed.

Recent Posts

December 2008
Sun Mon Tue Wed Thu Fri Sat
  1 2 3 4 5 6
7 8 9 10 11 12 13
14 15 16 17 18 19 20
21 22 23 24 25 26 27
28 29 30 31      


Complete Archives List



Category Cloud

On the Nightstand

On the Nightstand

 Subscribe in a reader

Get The Big Picture!
Enter your email address:

Read our privacy policy

Essays & Effluvia

The Apprenticed Investor

Apprenticed Investor

About Me

About Me
email me

Favorite Posts

Tools and Feeds

AddThis Social Bookmark Button

Add to Google Reader or Homepage

Subscribe to The Big Picture

Powered by FeedBurner

Add to Technorati Favorites


My Wishlist

Worth Perusing

Worth Perusing

mp3s Spinning

MP3s Spinning

My Photo



Odds & Ends

Site by Moxie Design Studios™