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Earnings On Pace To Decline In Q1

Published 04/22/2014, 12:12 AM

There are still a lot of companies left to report earnings, but so far, first quarter earnings haven’t been stellar.  83 companies from the S&P 500 have reported earnings as of this writing, and after incorporating these numbers into estimates, analysts now expect first quarter earnings to decline by 1.3% compared to the same quarter last year.  This would be the first quarterly decline since the third quarter of 2012.

On paper, 66% of companies have beaten estimates, but in reality this doesn’t mean that first quarter earnings are better than expected.  Estimates have been lowered quite a bit since just 11 weeks ago.  On January 31, analysts still expected Q1 '14 earnings to grow by 2.2%.  The bar has been lowered since then, which helps companies to report “surprisingly” good earnings.  For this reason, when looking at earnings, “beats” and “misses” don’t mean a whole lot.

Only three sectors have done better than the expectations that were published on January 31.  A 1.3% decline in earnings is disappointing, especially at these prices.

Q1 Earnings Estimates January Projected vs April Projected

Disclosure: The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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