Global Company Earnings to Grow Faster-Than-Estimated 18%, Citigroup Says

Global per-share earnings will rise 18 percent this year, faster than an earlier forecast, amid stronger revenue growth and sustained margins, according to Citigroup Inc.

Earnings per share, or EPS, are estimated to increase 11 percent in 2012 and 9 percent in 2013, analysts led by Robert Buckland, Citigroup’s chief global strategist, wrote in a report yesterday. The brokerage had predicted in September earnings- per-share growth of 12 percent this year.

The MSCI All Country World Index may end the year at 380, higher than an earlier forecast of 360, the analysts said. The MSCI index rose 0.2 percent to 344.60 as of 12:02 p.m. in Singapore. The index has jumped 21 percent in the past 12 months and is valued at 12.6 times estimated profits, compared with the average of 13.8 times over the last four years.

“Companies are generating faster revenue growth than we originally expected,” Buckland said in the report. “In addition, cautious cost management means that current margins are at least sustainable for now.”

Among the 471 members on the Standard & Poor’s 500 Index that have released quarterly results, about 67 percent have beaten analyst estimates, according to data compiled by Bloomberg. Analysts’ average estimates for S&P 500 companies have risen 9.3 percent this year, according to Bloomberg data.

UBS, RBC

UBS AG lifted its estimates for combined profit by companies in the S&P 500 for this year and 2012 on productivity growth, share buybacks, rising oil prices and strength in emerging markets.

Their recommendations contrast with that of Myles Zyblock, the chief institutional strategist at Royal Bank of Canada, who said in a note to clients yesterday that investors should reduce their U.S. equity holdings because weaker-than-forecast economic data suggest earnings estimates are too high and a stronger U.S. dollar is threatening exports.

Dell Inc. (DELL), the world’s second-largest personal-computer maker, reported on May 17 first-quarter profit that topped analyst forecasts, bolstered by corporate technology spending. Vivendi SA (VIV), the owner of the world’s biggest music and video- game companies, said this month first-quarter profit rose 29 percent, joining other European companies from PSA Peugeot Citroen to Ericsson AB in beating analyst estimates.

“Recent reporting seasons in the U.S. and Europe have been strong,” said Buckland in the report. “We continue to believe that we are in the stage of the market cycle when stock prices grind higher with EPS.”

To contact the reporter on this story: Weiyi Lim in Singapore at wlim26@bloomberg.net

To contact the editor responsible for this story: Darren Boey at dboey@bloomberg.net

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