Earnings Trend
Keep a close eye on earnings. Best place to find unbiased information about earnings is Zacks. Post holidays the market attention will turn to earnings. Some of the stocks will start breaking out in anticipation of earnings. Also keep an aye on sectors showing good earning momentum.
Positive surprises have outnumbered disappointments by almost 4:1.
With almost 94% of S&P 500 companies reported, the summer earnings season is all but complete and the results have been surprisingly positive. The median second quarter reported growth rate is an impressive 13.2% and positive surprises have outnumbered disappointments by almost 4:1.
The top-performing sector for the second quarter was Energy, with a median year-over-year EPS gain of over 65%. From here however, growth in the sector is expected to slow, with analysts expecting median earnings growth for all of 2006 to be just over 30%. Much tougher comparisons due to the anniversary of last years storms are the cause of the growth slowdown. Looking into 2007, analysts are expecting median growth for the sectorÂ’s companies of 16.2%. No tree grows to the sky, but this is still very impressive given the gains of the last few years in the sector. This would push Energy just under the Tech sector, where analysts are expecting an ambitious 18% median growth rate for 2007.
The Industrials, Telecom and Materials sectors also performed well in the quarter, with 19%, 17%, and 15% median earnings growth, respectively. For the Material, metals producers like Alcoa (AA) and Nucor (NUE) lead the charge, with EPS growth rates of 87% and 43% respectively. Growth in this sector, unlike in Energy, is expected to hold strong for the remainder of the year. For 2007 however, analysts are expecting a slight cool down, with median EPS growth for the sectorÂ’s companies expected to be just under 13%.
Positive surprises have outnumbered disappointments by almost 4:1.
With almost 94% of S&P 500 companies reported, the summer earnings season is all but complete and the results have been surprisingly positive. The median second quarter reported growth rate is an impressive 13.2% and positive surprises have outnumbered disappointments by almost 4:1.
The top-performing sector for the second quarter was Energy, with a median year-over-year EPS gain of over 65%. From here however, growth in the sector is expected to slow, with analysts expecting median earnings growth for all of 2006 to be just over 30%. Much tougher comparisons due to the anniversary of last years storms are the cause of the growth slowdown. Looking into 2007, analysts are expecting median growth for the sectorÂ’s companies of 16.2%. No tree grows to the sky, but this is still very impressive given the gains of the last few years in the sector. This would push Energy just under the Tech sector, where analysts are expecting an ambitious 18% median growth rate for 2007.
The Industrials, Telecom and Materials sectors also performed well in the quarter, with 19%, 17%, and 15% median earnings growth, respectively. For the Material, metals producers like Alcoa (AA) and Nucor (NUE) lead the charge, with EPS growth rates of 87% and 43% respectively. Growth in this sector, unlike in Energy, is expected to hold strong for the remainder of the year. For 2007 however, analysts are expecting a slight cool down, with median EPS growth for the sectorÂ’s companies expected to be just under 13%.
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