Ryan Lewenza: Earnings to the Rescue

Earnings to the Rescue

October 24, 2014

by Ryan Lewenza, CFA, CMT, Private Client Strategist, Raymond James

ā€¢ The Q3/14 earnings season is now in full gear with roughly 300 companies in the S&P 500 Index (S&P 500) reporting earnings over the next two weeks. So far, results have been solid, which we expect to continue over the reporting season.

ā€¢ Of the 178 companies to report so far, 142 companies have reported earnings above analystsā€™ estimates, resulting in a ā€œbeat rateā€ of 80%. This is well above recent quarters and the long-term average of 62%.

ā€¢ S&P 500 Q3/14 earnings are forecasted to be US$29.03/share, which would equate to growth of 6.4% Y/Y. We believe the final growth rate may actually come in stronger, possibly in the 8-9% range, as weā€™ve witnessed a consistent trend of upside earnings surprises over the last year.

ā€¢ More importantly, S&P 500 quarterly earnings are set to hit a new all-time high. While the ā€œbearsā€ like to claim that the Fedā€™s quantitative easing (QE) policies are the only thing supporting the equity markets, they must not be looking at corporate earnings, which have been very strong and are hitting new all-time highs.

ā€¢ We expect corporate earnings to remain healthy in the coming quarters, which should be supportive to equities.

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Read/download Ryan Lewenza's complete report below:

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