US Q-1 Earnings 98% in, Not Really Very Good
$DIA, $SPY, $QQQ, $VXX
As of Wednesday, Q-1 earnings reports are 98% complete with 495 of the 500 companies in the S&P 500 reported.
Headlines were generally positive with 72% of companies beating expectations, about average. But, nothing else about the earnings season looks to be very good.
Most companies beat expectations when the adjusted EPS numbers are considered. If companies are held to generally accepted accounting principles (GAAP), only 36% of companies beat expectations.
Companies are increasingly reporting non-GAAP numbers that remove certain charges they believe investors should ignore.
For example, when the USD is strong, many companies ask investors to overlook the adverse impact that Key component has on profits.
I do not believe that investors should ignore the impact of a weak or strong USD on the bottom line, it is a fact.
Using adjusted earnings, the companies in the S&P 500 reported EPS of 98.70 for the past 12 months. EPS are weighted to account for the stock’s market value.
This is the lowest level since Q-1 of Y 2013 when EPS were 98.35.
Using GAAP, the story is worse. GAAP earnings for the past 12 months were 86.50, their lowest level since Q-2 of Y of 2012.
However, the weak earnings, on a GAAP or non-GAAP basis, have not held the S&P 500 down.
Since the Q-1 of Y 2013 the index has delivered a total return of 43% and investors have enjoyed a 67% gainer since June 2012.
The Big Q: Can the indexes continue to gains without earnings growth?
The Big A: Value investors answer “No”
Key contributing factor: US Fed Chairwoman Janet Yellen is unlike anyone ever seen at the central bank before, as she fuels this long in the tooth Bull Market even as EPS’ continue to decline.
Wednesday, the US major stock market indexes finished at: DJIA +66.77 at 18005.05, NAS Comp +12.89 at 4974.64, S&P 500 +6.99 at 2119.12
Volume: Trade was below average with about 840-M/shares exchanged on the NYSE
- Russell 2000 +4.7% YTD
- S&P 500 +3.7% YTD
- DJIA +3.3% YTD
- NAS Comp -0.7% YTD
|HeffX-LTN Analysis for DIA:||Overall||Short||Intermediate||Long|
|Bullish (0.32)||Bullish (0.31)||Bullish (0.27)||Bullish (0.38)|
|HeffX-LTN Analysis for SPY:||Overall||Short||Intermediate||Long|
|Neutral (0.23)||Neutral (0.21)||Neutral (0.19)||Bullish (0.29)|
|HeffX-LTN Analysis for QQQ:||Overall||Short||Intermediate||Long|
|Bullish (0.33)||Very Bullish (0.54)||Bullish (0.31)||Neutral (0.14)|
|HeffX-LTN Analysis for VXX:||Overall||Short||Intermediate||Long|
|Bearish (-0.42)||Very Bearish (-0.51)||Very Bearish (-0.57)||Neutral (-0.1|