The following is an excerpt from YUVAL ROSENBERG | August 10, 2012 | Thefiscaltimes.com |
We’re not quite done with earnings season yet, but with second quarter results in from 89 percent of the S&P 500, the overall picture of corporate profitability has become clear – and it’s surprisingly good. In fact, earnings from April through June are on pace to set an all-time record. Of the 445 companies in the S&P 500 that have reported earnings as of Thursday morning, 64 percent have posted profits that topped expectations – better than the 62 percent average over the past 10 years, according to S&P Capital IQ.
Contrary to forecasts that had corporate profits shrinking, earnings growth for the S&P 500 overall is on pace to come in at under 1 percent. “At the beginning of the season we were expecting negative growth of like 2 percent,” says Christine Short of S&P Global Markets Intelligence. “So although it’s not as positive as we’d like to see and certainly not as positive as we’ve gotten used to over the last 10 quarters, it still is a surprise to see it pop up into positive territory.”
Overall, earnings per share for the 500 companies are on track to total $25.68, outpacing the record $25.46 posted in the second quarter of 2011. “In a difficult economy,” says Howard Silverblatt, senior index analyst at S&P Dow Jones Indices, “these companies have managed to set an all-time record, whichever yardstick you want to use.” For the full year, the S&P 500 companies are projected to earn about $103 a share, up from last year’s record of $99.
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