Will this Earnings Season be a Wake Up Call for Investors? - Real Time Insight

By
A A A

For the last few quarters, the market has shrugged off weak revenue and earnings growth in anticipation of big growth in the second half of 2013. But the odds of this growth materializing are slim.

According to Standard & Poor's , earnings on the S&P 500 are expected to grow +3.8% this quarter compared to the same quarter in 2012. But Q4 earnings are expected to surge +27.2%.

But in looking at the two charts below, it seems to me that this big expected jump in earnings growth in the second half is unrealistic:

I find it hard to believe that corporate earnings are going to soar with profit margins already at record highs and revenue barely growing amid a struggling world economy.

Of course, earnings watchers like myself have been pounding our fists on the table about this for months now, but the market continues to creep higher nonetheless.

But now that second quarter earnings season is getting underway, perhaps investors will begin paying attention to the second half of 2013. And maybe this earnings season will finally provide the "wake up" call that causes the market to dramatically lower its growth expectations.

According to CNBC , the ratio of negative pre-earnings announcements to positive ones so far this earnings season (more than 6:1 as of Monday) is the highest since the first quarter of 2001.

So do you think this will be the earnings season that the market finally starts to realize that the odds of exceptional second half earnings growth are slim to none? Perhaps more importantly, do you think the market will even care?

Chime in below.



SPDR-DJ IND AVG (DIA): ETF Research Reports

NASDAQ-100 SHRS (QQQ): ETF Research Reports

SPDR-SP 500 TR (SPY): ETF Research Reports

To read this article on Zacks.com click here.

Zacks Investment Research



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Earnings

Referenced Stocks: DIA , QQQ , SPY

Zacks.com

Zacks.com

More from Zacks.com:

Related Videos

Stocks

Referenced

Most Active by Volume

91,252,153
  • $13.78 ▼ 4.31%
68,133,496
  • $12.93 ▲ 6.77%
57,268,074
  • $46.13 ▲ 2.47%
43,432,023
  • $105.22 ▲ 0.37%
40,880,685
  • $13.46 ▲ 8.90%
40,712,405
  • $98.62 ▲ 0.82%
39,776,976
  • $16.72 ▲ 0.72%
34,688,871
  • $11.16 ▲ 3.05%
As of 10/24/2014, 04:15 PM

Find a Credit Card

Select a credit card product by:
Select an offer:
Search
Data Provided by BankRate.com