The December 6, 2013 Thomson Reuters’ “This Week In Earnings” (pdf) report has notable commentary regarding 4th Quarter S&P500 revenue and earnings estimates.
Below is commentary found on page 2, under the heading “Observations: Company Issued Guidance At Its Most Negative Level On Record” :
Now that the majority of S&P 500 companies have reported their third quarter earnings results, investors are looking ahead to the fourth quarter earnings season. Currently, analysts expect earnings to grow 7.8% over the fourth quarter of 2012. This estimate is down from the 10.9% estimate at the beginning of the quarter. Given the 0.4% expected revenue growth, it may be difficult to achieve profit increases of the magnitude currently expected.
Companies have been expressing concerns about high fourth quarter expectations in the form of earnings guidance. So far, S&P 500 companies have issued negative guidance 103 times and positive guidance only 9 times. The resulting 11.4 negative to positive guidance ratio is the most negative on record by a wide margin. The highest N/P ratio prior to this quarter was Q1 2001, at 6.8.
StratX, LLC offers the above data and projections for informational purposes only, and does not necessarily agree with information provided by these outside parties.
ProfitabilityIssues.com is published by StratX, LLC (stratxllc.com). StratX, LLC is a management consulting firm and strategic advisory that focuses on the analysis of current and future business conditions, and given these conditions, offers corporations and businesses advice, strategies, and actionable methods on how to optimally increase revenues and profitability.