| NEW YORK, April 28
NEW YORK, April 28 U.S. companies have easily
beaten expectations for first-quarter earnings so far in the
reporting season, but nearly half of the members of the S&P 500
are yet to announce results and they are unlikely to be as
With results in from 271 of the S&P 500 companies,
year-over-year earnings growth is projected at 3.9 percent,
compared with a forecast for 1.5 percent growth at the start of
the earnings season, Thomson Reuters data shows. That figure
includes those that have reported and analyst estimates for
those who have not.
The companies yet to report are expected to post an
aggregate earnings decline of 0.4 percent, according to Thomson
Reuters data - whereas the companies that have already reported
have posted growth of 6.1 percent.
Among the biggest companies yet to report are Dow components
Wal-Mart Stores Inc and Home Depot.
Some 69 percent of the S&P 500 have beaten forecasts, once
again conforming to the pattern of lowering expectations enough
to "surprise" by beating them. The 69 percent figure exceeds the
long-term average of 63 percent. This has been the pattern for
the last 15 quarters, with growth estimates at the beginning of
earnings ultimately being beaten by at least a full percentage
From April 1 to April 24, S&P 500 earnings growth
expectations fell 170 basis points for the second quarter, 130
basis points for the third quarter and 70 basis points for the
"If this recent pattern holds, you're going to find that
those beats will continue and therefore lead earnings season to
be one of continued positive surprise," said Mark Luschini,
chief investment strategist at Janney Montgomery Scott in
So far, this has been good enough for investors. Since
earnings season began with Alcoa's report on April 8, the S&P
500 has gained 1.2 percent, and it closed Friday less than 1
percent from its all-time high of 1,593.37 reached on April 11.
So far this year, it has climbed nearly 11 percent.
GOING FORWARD, WITH CAUTION
Even though profits have been better than expectations,
revenue forecasts have declined, a sign, once again, that
companies are exceeding results on the bottom line because of
reduced expenses, and not because of stellar sales. So far, just
42 percent of companies are beating revenue expectations, below
the long-term average.
First-quarter revenue now is expected to fall 0.3 percent,
which is worse than the forecast for 1 percent growth when the
That means companies - yet again - have been able to squeeze
out higher profits through cost-cutting and other measures. But
that does not bode well for hiring and stands as a potential
headwind to the economy in coming quarters.
"It does concern me. It's not sustainable over the medium or
the long term. There's only so much companies can do to sustain
growth without increasing sales," said Paul Zemsky, head of
asset allocation at ING Investment Management, in New York.
There are plenty of examples of major companies that were
deeply reserved about the second quarter or the remainder of the
Among those were Apple Inc and Amazon.com Inc
. Apple, until recently the world's biggest company by
market value, saw its first quarterly profit decline in a decade
and issued a soft outlook for the second quarter that fell short
of investor hopes. The stock has lost about 40 percent of its
value since September.
"The market was telling you the numbers were too high," BGC
analyst Colin Gillis said of Apple's outlook, adding that it was
"pretty much even worse than even I was expecting."