US reporting season update
Investment Matters of 22-Jul-16 provided a snapshot on the US reporting season. As July wraps up, their reporting season is well progressed.
According to Thomson Reuters Earnings Aggregates Report (dated 4-Aug-16), 403 of 500 companies have reported. 82% of S&P500 companies that have reported to date have met or beat earnings expectations - and actually 70% have reported results above expectations.
From one perspective, this is a very positive outcome - expectations have been exceeded more often than has occurred on average in the past.
However, with revenue growth of -0.1% and earnings growth of -3.1% for the quarter (data also from the Thomson Reuters Earnings Aggregates Report dated 4-Aug-16), growth - from listed companies anyway - is benign. We will look for earnings from S&P500 listed companies to bounce back strongly in coming periods to thereby support the current elevated market valuation (P/E of the S&P500 = ~17x).