2013-02-04
Fourth-quarter earnings season is about halfway through. Earnings of companies listed on the Standard & Poor’s 500 Stock Index are holding up, although we are not getting the robust surprises that we have grown used to throughout this recovery. With 34% of companies reporting as of 31 January, we have seen 65% of them reporting upside surprises.
Margins are also steady, and we are seeing the best results from the consumer staples, technology and health care sectors.
The most important part of this earnings story is revenues, however. These reports seem to be the telltale signs for the rest of 2013. Expectations are for 1% annual revenue growth. However, if you subtract out the energy sector, which is a pretty big sector, you’ll find that revenues are growing over 4%. Thus far, 63% of reporting companies have announced upside revenue surprises.
Companies in the energy sector have been hit by a decline in oil and gas prices. While this drop is a negative for the sector, it is a positive for consumers, who will now have more disposable income. But this must be balanced against the coming drag on the economy caused by the resumption of the payroll tax and new taxes on high-income earners.
Elsewhere, we have seen stabilization in corporate revenues in Europe and in emerging markets, where we have been witnessing a pickup, particularly for companies involved in China and other large emerging market countries.
All in all, this earnings season is showing us that the US economy continues to expand. And it is in this environment that companies are able to log very good earnings, maintain margins that are close to all-time highs and produce balance sheets that are in strong if not robust shape.
No forecasts can be guaranteed.
The views expressed are those of James Swanson and are subject to change at any time. These views are for informational purposes only and should not be relied upon as a recommendation or solicitation or as investment advice from the Advisor.
24070.63
And the beat goes on
Fourth-quarter earnings season is about halfway through. Earnings of companies listed on the Standard & Poor’s 500 Stock Index are holding up, although we are not getting the robust surprises that we have grown used to throughout this recovery. With 34% of companies reporting as of 31 January, we have seen 65% of them reporting upside surprises.
Margins are also steady, and we are seeing the best results from the consumer staples, technology and health care sectors.
The most important part of this earnings story is revenues, however. These reports seem to be the telltale signs for the rest of 2013. Expectations are for 1% annual revenue growth. However, if you subtract out the energy sector, which is a pretty big sector, you’ll find that revenues are growing over 4%. Thus far, 63% of reporting companies have announced upside revenue surprises.
Companies in the energy sector have been hit by a decline in oil and gas prices. While this drop is a negative for the sector, it is a positive for consumers, who will now have more disposable income. But this must be balanced against the coming drag on the economy caused by the resumption of the payroll tax and new taxes on high-income earners.
Elsewhere, we have seen stabilization in corporate revenues in Europe and in emerging markets, where we have been witnessing a pickup, particularly for companies involved in China and other large emerging market countries.
All in all, this earnings season is showing us that the US economy continues to expand. And it is in this environment that companies are able to log very good earnings, maintain margins that are close to all-time highs and produce balance sheets that are in strong if not robust shape.
No forecasts can be guaranteed.
The views expressed are those of James Swanson and are subject to change at any time. These views are for informational purposes only and should not be relied upon as a recommendation or solicitation or as investment advice from the Advisor.
24070.63
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