Earnings Season – April 14, 2021
Q3 and Q4 earnings season easily exceeded analysts’ low earnings estimates.
- In hindsight, analysts failed to incorporate the strong economic recovery into profit estimates.
- Most companies topped a low hurdle.
During the first quarter, analysts were busy ratcheting up earnings estimates, according to Refinitiv.
- S&P 5002 profits are forecast to rise 25% versus one year ago.
- That compares with a 16% forecast on January 1.
But the big runup in stocks suggests investors are also looking for upbeat guidance from individual companies.
Such guidance was lacking last year as the pandemic reduced clarity.
Investors corner
Investors have bid up stocks for several reasons including—
- Reopening the economy,
- Expected favorable impact from vaccines,
- Government stimulus, and
- A super easy money policy from the Federal Reserve.
An improving economy aids profits, which is a key driver of stocks.
Might strong profit numbers already be priced into stocks? We don’t believe it’s possible to consistently time the market.
We strongly believe that a well-diversified financial plan that’s tailored to your individual goals is the best path to long-term wealth creation.
If you are adhering to such a plan, we congratulate you because you have chosen the narrow path.
Created 2021-04-14 15:27:57
