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Earnings growth target dips to 2.9%-Thomson Reuters' Harrison

Monday, July 08, 2013 - 03:33

July 8 - As earnings season gets underway, companies have warned they are having a tough time growing revenue, putting downward pressure on profit growth,says Thomson Reuters Greg Harrison. Bobbi Rebell reports.

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It is her work at time for corporate America let's talk to Reuters -- great Harris and he is the corporate earnings research analyst you're welcome. Thank you so how are things looking to. As we get started. So so 422 companies have reported their second quarter earnings results -- the S&P 500. And of these 64%. Has been narrowed their earnings estimates that only 45% of people that revenue estimates. So this is kind of continue that trend we've seen over the last several quarters where companies are beating earnings estimate that pretty normal rates. But struggling on the top line why is that -- Both the concerned because without strong revenue growth. It's difficult to maintain earnings growth. So companies have been able to do that so far through cost cutting and restructuring. Different initiatives to improve their margins. There's probably limit to how far they can do that without top line growth. I it has also been our what's the driving that have a second pair of previous quarters in terms of the trend that we're seeing any guidance has been very negative. There's been 97 negative preannouncement for a second quarter earnings. Only fifteen positive. So this ratios at about six and a half to one. Which is farm are negatives than than normal ratio of 2.4 to one. So. Companies that are out there saying we're gonna have a hard time and these targets and analysts are putting out. And there given a lot of different reasons for that. Europe China. To the big ones but just general macro economic slow growth. Is Olympics and having hard time growing top line and -- the bottom line sooner than overall where we stand today how things look of problem. It looks like analysts -- now have two point 9%. Estimate for earnings growth. One point 5% for revenue so that earnings growth estimates come down from six point one at the beginning of the quarter to the current level. That's in part due to all the negative guidance that's because analysts do. To cut their testaments. Found let's look on the positive side of what sectors but restaurants. We're looking at eighteen point 7% predicted girlfriends telecoms sector. A lot of that is due to sprint. Having a less smaller loss than a year ago so that's improvement. On top of that the financials. Looking at seventeen and a half percent growth. That that's in large part due to the improving housing market in the US refinancing activity. Has generated a lot of fees for the banks' books to big banks and regional banks. And then also trading volumes have been out as a stock market's been which is has benefited a lot of brokerages and then conversely where he sees problems. The difficulty looks like it's in the materials sector. Negative seventeen. I'm sorry seven point 2% growth there. And that's just a reflection of slowing. Economic activity worldwide. We've seen China has had a huge demand for. Raw materials over the last several years that's slowing down depressing prices and materials and within that sector. We see. The steel industry expected to see an 81% decline in earnings. So prices there have been hit and the earnings of the companies that produce fields are expected to take a nation as well. All right thanks for the update thank you. Our thanks to Thomson Reuters Greg Harris and I'm Bobbi -- this is orders.

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Earnings growth target dips to 2.9%-Thomson Reuters' Harrison

Monday, July 08, 2013 - 03:33