NEW YORK (TheStreet) -- Earnings are nearly over and most companies are surpassing consensus estimates. But there's considerable debate on StockTwits.com concerning whether the beats are really a bullish sign for the overall market.
According to a May 2 FactSet report, though nearly 75% of companies are beating on earnings, they're not doing it on strong sales. Only about half of companies that reported have topped Wall Street consensus estimates for revenue. The difference raises questions about whether the earnings beats are sustainable. After all, most companies can only cut so much fat before they slice critical operations too. Also, the companies beating are topping reduced estimates.
#Earnings expectations fell 4% during Q1. A decline of 0.4% is now anticipated. http://stks.co/r0Aec $SPX @CNBCAlex ? FactSet (@FactSet) Apr. 2 at 03:41 PMPerhaps more concerning, companies are not expecting stronger sales growth in the future. A majority of companies that reported by last week -- 53% -- issued negative guidance for the second quarter. Whole Foods (WFM) added to the negative guidance group Tuesday night when it missed consensus estimates on both earnings and revenue, and cut guidance. The stock fell nearly 22% by midday Wednesday. StockTwits' investors are split on the market's direction.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- 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 + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV