by Dr. Ed Yardeni, Yardeni Research
Another earnings season is starting, and industry analysts are preparing for it by once again lowering their estimates. And once again, this may set the stage for lots of positive earnings surprises. However, this time their downward revisions may reflect fundamental weakness in business for companies with exposure to Europe. In this case, there might be fewer positive and more negative surprises.
The consensus forecast for S&P 500 operating earnings during Q2 fell to $25.45 per share during the week of June 14. That’s down $0.70 from the end of the previous earnings season at the end of April. The estimates for Q3 and Q4 have also been revised down over this period by $0.51 and $0.40, respectively.
As a result, the estimate for all of 2012 is now down $1.24 since the end of April to a new low of $105.31. The 2013 estimate is also down to a new low of $118.18. That’s still above the $110 number that Joe and I are using for next year. Since rising to a new record high during the week of June 1, S&P 500 forward earnings has stalled around $110. (more)