First the Bad News: the beat/miss ratio moved closer to the Miss side.

As of last the prior week 24.0% of companies fell short of analysts estimates. As last week 27.4% of companies missed EPS estimates. It was slight shift, but even 2 or 3 too many earnings misses can have a big effect. The ill effects are magnified when unemployment remains high.

Now the Good News: the earnings bar continues being raised.

As of last look, when about 50% of the S&P 500 companies had posted results, the earnings projections was US $19.75/shr in Q-2. As of August 4th, with 84% of the S&P 500′s stocks having reported, that projected EPS is now US$20.98 (on an operating basis – the GAAP EPS is on pace to be US$19.78, Not to bad.)

On the other side, earnings estimates for Q-3 and beyond were have been ratcheted down a bit to reflect less-optimistic outlooks, not a game-changer.

As for valuation, with the S&P 500 trading at 1120.77, the trailing operating P/E ratio is a mere 15.23, while the GAAP/reported P/E ratio is 16.68; both are near the extreme low end of their historical ranges.

Looking ahead, from Q-3 Y2010 through Q-4 Y2010, the S&P 500′s earnings projections translate into an operating P/E of 12.74, and a GAAP P/E of 15.01.

Again, both are at the extreme end of historical scales, and yes, both are based on high assumptions, and even if actual results fall 10% short of estimates going forward, stocks are still priced at very low values.

Know what, the fear mongering “noise” from the media’s talking heads of the day is getting stale. Earnings are improving, and growth is getting better, and FYI slowe growth is not contraction. Stay tuned…Paul A. Ebeling, Jnr. www.livetradingnews.com

Posted by Shayne Heffernan on Aug 8th, 2010and filed underEquities, Latest News, Markets, News & Events, USA.You can follow any responses to this entry through theRSS 2.0You can leave a response by filling following comment form or trackback to this entry from your site