5.18.14: EPS Up Revisions back above 50%

Thomson Reuters publishes a weekly table entitled, “U.S. Weekly Revisions” that details the total number of earnings estimate revisions for the fiscal year 1 period for all companies in the US over the previous 7 days.

This is all market-caps, not just the SP 500.

Here is the table, which we have been tracking for years:FC-eps estimate revisions.

In the spreadsheet, we have broken out or delineated the heaviest periods of earnings reporting, which is typically from the 10th of the first month of every quarter, through the middle of the next month.

In this latest reporting period, from mid-April, 2014 through this past week, note how the number of positive revisions has moved back over 50%, if only for a short period of time. This is the first time that the “50% bogey” has been met since last fall.

You can see the impact weather and currency had on the earnings estimates from January 15, 2014 through mid-February.

Analysis / commentary:  this is just an opinion, but analysts seem to be very tentative over forward estimates, possibly due to low-single-digit revenue growth, at least for the SP 500. (I do not get any earnings data on the individual indices outside of the SP 500,a nd this weekly revisions table is one of the few data points we get on the operating company universe in general.)

The SP 500 forward earnings data has strengthened the last 3 weeks, and as q1 ’14 actual earnings have shown, the 1% growth rate coming into the April reporting season was far too pessimistic given the 5% actual growth rate we are seeing for q1 ’14.

SP 500 earnings continue to come in stronger-than-expected (relatively speaking) but have not yet hit an absolute level of growth that is any different than the pattern of the last 2 – 3 years. We are still stuck in this 5% – 10% quarterly growth range (at least for the SP 500) that has been the case since early 2012.

We have seen a lot of market bearishness emerge the last few weeks, but it really shouldn’t come from worries over SP 500 earnings.

Trinity Asset Management, Inc. by:

Brian Gilmartin, CFA

Portfolio manager



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