Corporate earnings update – Sept. 22, ’12 – Little change to forward earnings as we await q3 ’12 numbers

Due to some pressing matters, the blog post will be short and sweet this weekend.

The “forward 4-quarter” earnings estimate for the S&P 500 as of Friday, was $108.00 even, versus a slightly lower number last week, as the forward estimates continue to hover around the $108 – $109 level.

The recent high was $111 around July 14th, and the recent low for this key metric was $105 as of late March, 2012.

Q3’12 numbers start getting released around October 10th, and the 3rd quarter estimates continue to expect -1% to -2% year-over-year eps growth on flat to -1% revenue growth. These numbers havent changed in some time.

The q4 ’12 eps estimate for the S&P 500 is still expecting +10 growth.

We continue to believe that q3 ’12 will be the nadir in terms of earnings for this post ’08 – ’09 rally, and that earnings should continue to grow in q4 ’12 and into 2013.

This week, we hear from Lennar Monday morning before the bell, and then Nike on Thursday and Walgreen’s on Friday.

I continue to be impressed with how the stock market absorbs bad news. Check Rockwell-Collins (COL) action on Friday. The defense company pre-announced on Friday morning thanks to fiscal cliff issues and the stock finished up on the day on heavy volume. KB Home reported earnings Friday morning, and had a monster day – up 16% – on 6(x) average volume. We previewed Lennar’s results over on Seeking Alpha, and may have been too conservative. The issue with the homebuilders (in my opinion) is “normalized earnings” – most of these companies sport effective tax rates that are abnormally low. Currently, many of the homebuilder stocks – like LennarĀ  – are trading off 2014 and 2015 valuations. But we are very early in the cycle too.

Here is our Lennar earnings preview, from Seeking Alpha.

We’ll be back with a post to this blog sometime mid-week or later.

Thanks for stopping by.

Trinity Asset Management, Inc. by:

Brian Gilmartin, CFA

Portfolio manager





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