From Cynthia Scott of OMC Financial Services:
This quarter’ earning season for the S&P may tell investors what to expect for the rest of 2012.
- Earnings for the 2nd quarter have not been as bad as expected; earnings are the profits after all of the expenses have been deducted
- Of the number of companies that have reported earnings to date 71% have reported earnings above expectations; only 42% have reported sales above expectations
- The highest earnings have come from financials and utilities and the lowest from the energy and material sectors
- Depending on the industry revenues have been lower than expected because of:
- Lower sales
- Expense cutting is not as robust as previous quarters
- Increased competition
- Cost of raw materials is higher
- Currently 76 companies has indicated negative guidance for 3rd quarter earnings and only 20 have issued positive expectations
- Global economies, especially China, need to expand to see revenues increase. Investors should remain cautious and selective in their investment choices.
