The Real Deal on Wall Street: Earnings Season

Wall Street market mavens love to add “buts” and “ifs” to any discussion on possible economic outcomes or future stock movements. A stock is cheap, “but” the year ahead will be challenging (so how cheap is the stock in the first place?). Shares of XYZ will rise “if” event ABC occurs, and even then it’s not guaranteed. All of the exceptions make investing a hair losing experience.

So in the Real Deal column appearing on Benzinga every Monday and Friday, I will look to give it to you straight on all things the market or on a stock call. I will do my best to not morph back into the former Wall Street analyst self by littering the virtual pages with “buts” and “ifs.” Feel free to call me out if I mistakenly slip back into old, bad habits!

Fourth Quarter Earnings Season Facts

•Only 19% of the S&P 500 has lowered their earnings guidance.
•Only 5.4% of the S&P 500 has raised their fourth quarter earnings guidance
•Not many companies have issued their 2012 outlooks.
•Consensus earnings for 2012 began to be marked down in the summer.
•We are following a third quarter in which an impressive 70% of companies surprised the consensus with their earnings. It will be hard to follow that.

The Real Deal is that in this present day market the two weeks until fourth quarter earnings season begins is a long time. With most companies having not provided their 2012 forecasts and the positivity that has crept into stocks since the start of the fourth quarter, it’s wise to play it close to the vest at least until the first earnings reports hit and we could observe the market’s reaction. Remember, the third quarter brought negative fundamental trends to the forefront, and things such as inventory de-stocking and cautious order taking are factors that don’t reverse in one quarter.