Latest posts by Michael Vodicka (see all)
- S&P 500 Up 15% in 2019 – More Gains in Q4? - October 3, 2019
- US Stocks Ready for New 52-Week High – Does China Still Matter? - September 13, 2019
- S&P 500 Just Below the 52-Week High – Rebound or Head Fake? - September 8, 2019
Second quarter earnings season has arrived. This is one of the most important events of the quarter. The earnings results – and even more important earnings outlook – should guide the stock market for the next few weeks and months.
Although earnings season is just getting started, so far results have been mostly in line with expectations.
Here’s a look at the early earnings results with data from Zacks Investment Research.
- Total earnings for the 44 S&P 500 members that have reported Q2 results already are up +1.1% on +2.6% higher revenues, with 81.8% beating EPS estimates and 61.4% beating revenue estimates.
That revenue and earnings growth doesn’t jump off the page – but here’s the good news.
The results are in line with expectations so Wall Street is not disappointed.
Here’s more good news on the earnings front.
In the long run – earnings growth is expected to bottom out this quarter and begin trending higher for at least the next five quarters.
Take a look at this great chart from Factset Data Systems. You can see how earnings growth is expected to accelerate in the next year.
With this earnings backdrop, the S&P 500 is having a very solid year.
The index rallied hard in the first quarter of 2019. After a small decline in May, investors were quick to step in and buy the dip, sending the S&P 500 back to an all-time high.
And that’s where US stocks are right now – at the all-time high with the S&P 500 up 21% on the year.
Take a look at the action below.
Looking forward I am optimistic about second quarter earnings season. I am expecting results in line with expectations and a fairly optimistic outlook and I expect that to drive the S&P 500 into a new all-time high.
Further out, the projected steady earnings growth in the next 12 months tells me that the global and US economies are relatively healthy. I expect that to be supportive of stocks as well.
Disclaimer: This report is for entertainment purposes only. Every investor should consult with an investment advisor before making investment decisions. The Vodicka Group, Inc. is not a broker/dealer. We do not receive compensation for mentioning stocks. At various times, the clients, publishers and employees of Vodicka Group, Inc., may buy or sell the securities discussed for purposes of investment or trading.