This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Wall Street Lowers Bar for Third-Quarter Earnings Season

Stocks in this article: AAPL ATI MS ICE CME HCP NBR ^DJI ^IXIC ^GSPC

NEW YORK ( TheStreet) -- Earnings season is upon us once again, and unsurprisingly Wall Street's growth expectations for the third quarter aren't quite as bullish as they were back at the peak of summer.

S&P Capital IQ says the consensus estimate for third-quarter operating earnings for the S&P 500 now sits at $24.43 per share, up 13% from last year's equivalent quarter but down 3.4% from $25.30 as of July 27. All 10 S&P sectors saw declines in expectations over that span with the financials (down 10.2%), telecom services (off 6.5%) and materials (sliding 5%) seeing the biggest drops.

The volatility in stocks since August has brought reined in optimism ahead of the flood of third-quarter reports. The major U.S. equity indices are all still off more than 10% from their late April highs, and economic data was dismal through the end of the summer, only recently showing some signs of life. Add in the uncertainty about the sovereign debt situation in Europe and it's no wonder estimates have come down in the past three months.

That may make it tough for stocks to rally much, even if results come out ahead of consensus, which typically seven of out of 10 companies are able to do.

" T he bar has been set quite low, possibly allowing narrow 'beats' to garner favorable responses," wrote Sam Stovall, chief equity strategist at S&P, in recent commentary. "Yet, the enthusiasm could be short lived as forward estimates remain cautious."

For the whole of 2011, the S&P 500 is now seen earning $99.32 per share, a dip of 1.2% from $100.52 per share as of July 27, but up 16.4% year-over-year. Two of the 10 S&P sectors saw increases in estimates since summer, consumer discretionary (up 0.6%) and health care (rising 0.4%).

The sectors seen generating the highest year-over-year gains in the third quarter are energy, where earnings are expected to jump 50.1%; materials, seen delivering profit growth of 29%; and consumer discretionary, where earnings are expected to rise 18.8%. The only sector anticipated to see earnings fall from last year's levels is utilities, estimated to be down 2.3%.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,191.37 -195.84 -1.13%
S&P 500 2,002.16 -27.39 -1.35%
NASDAQ 4,637.9940 -43.5030 -0.93%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs