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
$1 buys you full access to ALL of TheStreet's Subscription Services! Learn More

Expect Strong Earnings From S&P Firms

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

By Bill Stone of PNC Wealth Management.

NEW YORK ( TheStreet) -- Third-quarter 2011 earnings season for S&P 500 companies gets under way this week. The majority of S&P 500 constituent firms will report third-quarter results over the next few weeks.

Consensus estimate S&P 500 earnings per share are $24.68 for the third quarter, representing a 17.1% increase over last year's third-quarter EPS of $21.89. For 2011, the S&P 500 EPS are estimated to be $99.28, which would represent 15.9% growth over 2010's $85.81.

Core EPS for the S&P 500, excluding financials, are forecasted to increase 17.3% year over year for the third quarter to $20.76. Core earnings for the S&P 500, excluding financials, for full-year 2011 are estimated to rise 16.2% vs. last year. Energy and materials are estimated to show the strongest rate of profit growth in the third quarter.

Energy in particular, is forecasted to show earnings growth of 53.7% for the period vs. third-quarter 2010, aided disproportionately by the large oil firms. Amid much scrutiny financials continue to be the uncertain wild card, with a lack of confidence from the investor community of the sector's growth prospects - banks in particular.

Follow TheStreet on Twitter and become a fan on Facebook.

Revenues for the S&P 500 are expected to grow 8.9% for the third quarter year over year. In the second quarter, revenues were up a very strong 13.6% vs. the year-earlier quarter.

Our Outlook for Third-Quarter Earnings

We expect third-quarter results will likely deliver another quarter of positive earnings surprises. Analyst estimates for the third quarter have tempered 3% since peaking in July. This suggests estimates are conservative and allows for stronger-than-expected results should macroeconomic concerns, which have played a role in driving bearish sentiment, not translate into weak corporate results. Uncertainty regarding the U.S. sovereign debt situation this summer, the ongoing sovereign debt crisis in Europe and questions about the pace of the U.S. economic recovery played into an extremely volatile market over the past quarter.

This tone has kept investors cautious, despite the relative health of corporate earnings. In addition, recent data suggest economic expansion could exceed the first-half 2011.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

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
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

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
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, 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
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

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

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
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!
DOW 17,817.90 +7.84 0.04%
S&P 500 2,069.41 +5.91 0.29%
NASDAQ 4,754.8920 +41.9220 0.89%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

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