2011Q2 S&P500 Earnings— Weathering the Storm

Posted July 20, 2011 by CLeahey

[private]- With a lengthening list of macroeconomic risks, equity market participants are absorbing company earnings reports for the second quarter. Early indications are that major U.S. corporations are weathering the growth slowdown, spike in commodity costs, and Japan fallout through a combination of strong Emerging Market sales growth, cost cutting, efficiency gains, and high degrees of operating leverage.

– The early Decision Economics, Inc. (DE) look was for a solid quarter, with initial estimates well above Consensus expectations for S&P500 Operating EPS. The DE Sector and Industry earnings forecasting model’s bottom-up projections give $24.81 (+15.2% y/y), while accounting for Bank of America’s $8.5B charge puts the official DE forecast for Q2 at $24.35 (+12.5% y/y). This DE forecast represents a slowing of earnings growth from the 18% year-over-year result in 2011 Q1, consistent with patterns seen in almost every equity bull market over the last several decades.

DE-Q2EarningsBulletin[/private]