S&P 500 Profit Season Has Worst Start in Years: Chart of the Day
U.S. companies that beat analysts’ earnings estimates are an exception, rather than the rule, for the fourth-quarter reporting season getting under way.
Only 47.1 percent of companies in the Standard & Poor’s 500 Index that posted quarterly results between Dec. 1 and yesterday exceeded the average projection, according to data compiled by Bloomberg. Citigroup Inc. and JPMorgan Chase & Co. are among those that trailed estimates.
As the CHART OF THE DAY illustrates, so-called positive surprises have surpassed 50 percent at a comparable point in every other quarterly reporting period for the past four years. The previous low was 51.5 percent in the third quarter of 2008, when a global financial crisis was taking hold.
“Early reporters’ results” are one of two reasons to expect the current earnings season to be disappointing, Thomas M. Doerflinger, a strategist at UBS AG, wrote yesterday in a report. The other is that many companies are likely to cut estimates for this year.
Doerflinger, based in New York, drew the latter conclusion from a survey of 406 UBS analysts worldwide. The results, which were published last week, showed only 7 percent of the analysts predict companies will raise their projections. Forty-six percent were expecting reductions.
Earnings estimates for S&P 500 companies “should fall substantially” in the next month as they provide more precise guidance about their prospects, the report said. Doerflinger is anticipating a combined $99 a share for 2012. That’s the lowest projection among 11 strategists in a Bloomberg survey.
To contact the reporter on this story: David Wilson in New York at dwilson@bloomberg.net
To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net
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