With the second quarter over, it is time to turn our attention to what the third quarter is going to look like. (Even though the actual quarter is two-thirds over, we are about six weeks shy of when the results really pour in). If taken at face value, the expectations are for median earnings growth to slow to high single-digits in the third quarter. However, we have been down this road before, in just about every quarter it looks like we will have a big slowdown before the results come in, and in every quarter the voice of Gomer Pile kicks in with "Surprise, Surprise, Surprise". At the same point in each of the last six quarters, earnings for the up coming quarter were supposed to slow significantly, and into the single digits in five of them. The actual range of expected median year-over-year growth has been exceptionally narrow. The worst expected growth was for the first quarter of this year at 8.33% (the actual was 10.0%) and the best was 10.1% for the fourth quarter of 2006 (actual was 12.9%). Given that history, it is hard to get overly concerned about the median expected growth rate for the third quarter being down at 8.7%, even if that is sharply lower than the 13.5% growth we enjoyed in the second quarter.
The last earning season is over and as per Zacks data we had 20 th quarter of double digit growth. Now the market will start turning its attention to next earnings season trends and analyst expectations.