In this podcast, we speak with John Butters, Senior Earnings Analyst for FactSet. We look back to get an overview of what happened this quarter and look ahead for a preview of Q4.
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Highlights from our episode:
Despite some high profile misses from companies such as Alcoa, Apple, and Goldman, most companies in the S&P 500 beat earnings expectations; approximately 72% of the index beat estimate but in many cases, companies beat estimates that were lowered throughout the quarter
There are three standout sectors this quarter that have driven the earnings growth rate: Energy, in which companies beat estimates by 66% with some very large upside surprises; Healthcare, in which 80% of companies beat the estimates; and the Tech Sector, in which 86% of companies beat the estimates
We're seeing lower guidance for Q4, more companies than the previous two quarters are guiding numbers lower
Estimates for Q4 are down about 4%, the sharpest decline over the first six weeks of a quarter since Q2 2009
All 10 sectors have seen Q4 estimate cuts, but the sharpest cuts are in Materials, Telecomm Services, and Energy sectors
Analysts are cutting estimates for the first two quarters in 2012, on the flip side we have seen the price of the market increase since September 30, thus valuations moved up and if the trends continue, the P/E ratio will increase, making stocks look more and more affordable as we move forward
