ARE EXPECTATIONS CATCHING UP WITH REALITY?<http://pragcap.com/earnings-update-12> 25 June 2009 by TPC 2 Comments
One of the primary drivers of the recent stock rally was the consistently “better than expected” economic news. But as analysts have become more and more optimistic we’ve seen more and more mixed news and a sputtering stock rally. Wall Street is an expectations game and as analysts increase their economic and earnings estimates we could continue to see more bumps in the road going forward. As we enter the very early portion of Q2 earnings season let’s take a moment to update the current outlook. As we mentioned last week<http://pragcap.com/will-further-cost-cuts-leader-to-q2-outperformance>there is a strong possibility that further cost cutting will lead to “better than expected” earnings in Q2. It’s important to note that this will not occur due to organic growth or strong revenue expansion, but unsustainable cost cutting. Thus far, companies have been able to outpace the revenue declines with their cost cuts. Don’t be shocked if we see the continuing trend of missing revenue estimates while beating EPS estimates. Analysts, unfortunately, have not accounted for the extreme cost cuts and have been behind the curve at just about every turn during this crisis. There is evidence, however, in the earnings and economic estimates that analysts are beginning to catch up with the ever changing investment landscape. To read entire article, please click on the title. -- Best Regards, Jay Shah "Expect The Unexpected" --~--~---------~--~----~------------~-------~--~----~ You received this message because you are subscribed to the Google Groups ""GLOBAL SPECULATORS"" group. To post to this group, send email to [email protected] To unsubscribe from this group, send email to [email protected] For more options, visit this group at http://groups.google.com/group/globalspeculators?hl=en -~----------~----~----~----~------~----~------~--~---
