My note today focuses on how S&P earnings so far have disappointed investors. Of the 77 S&P components that have reported 4Q11 results, 43 have beaten estimates, 26 have missed and 9 have met Consensus. To put this into some kind of historical perspective, this means that although 56% of the companies have beaten expectations, this is way below the 70% rate that we experienced in the first 3 quarters of 2011 and is below the 62% historical average.
Well, one might counter this and say investors are not as focused on near term earnings, but more so of future earnings (i.e. guidance). Of the 108 companies that provided earnings guidance last quarter, 68 have missed and 13 have matched their estimates. What this tells me is that investors are going to scrutinize their earnings estimates for 2012, as investors weigh in earnings vs. macroeconomic factors that are trending favorably. Ultimately, I look for this to result in more volatility in the coming months once earnings season ends.
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