Q3 Estimates Beginning to Slip
financialsense.com / Sheraz Mian / 07/29/2014
Earnings remain front and center in today’s session even as we move into the second half of the Q2 reporting season, which has broadly offered a positive and reassuring picture of corporate profitability. Beyond earnings, the start of the Fed’s two-day session today and an eventful economic calendar the rest of this week will take the spotlight. Tomorrow’s Fed announcement and the GDP read and Friday’s jobs and ISM reports are key market-moving events.
On the busiest earnings day of this reporting cycle thus far with 45 S&P 500 companies releasing results, we’ve gotten solid numbers from big players in the Medical sector this morning with Pfizer (PFE), Merck (MRK) and Aetna (AET) posting better-than-expected results. UPS (UPS), on the other hand, came up short in its report, though its weakness appears largely due to increased investments in infrastructure and logistics that should be beneficial to results in the long run.
Including most of this morning’s reports, we now have Q2 results from 264 S&P 500 members that combined account for 63.9% of the index’s total market capitalization. Total earnings for these companies are up 8.9% from the same period last year on 5.2% higher revenues, with 70.1% beating EPS estimates and 60.6% coming out with positive revenue surprises.
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As we have been saying repeatedly in our earnings commentary in recent days, this is better earnings performance than we have seen in other recent quarters — the growth rates are better, more companies are beating estimates, and there is even some modest improvement on the guidance front.
