Monday Money Memo discusses what to expect for the rest of 2012
Posted: 08.20.2012 at 12:18 PM
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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.