Earnings Growth Forecasts May Require a Robust Economic Recovery
Earnings season begins to wind down this week. About 20 or so S&P 500 companies will report, compared with almost 350 companies that released results during the last three weeks. During this recent flurry of earnings activity, it's understandable that investors' focus has been squarely on the here and now. And their reaction to the news has been positive, as the bulk of the announcements have come in above the low expectations put into place prior to the beginning of the quarter. And even if, as in the overall economic data, the direction is still down for earnings (and, it's important to note, sales too) investors have been encouraged by this “less bad” news. But a concern that may sit not far from the here and now is that investors will eventually have to look ahead at the level of earnings that are projected for the next few quarters. This level of expected earnings may not produce the same amount of investor optimism and appreciation.
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