Earnings Season update for February 25th
Bottom Line: With stocks on one of their best runs to start a year ever – and Warren Buffet talking about wanting to make an “elephant sized” acquisition, but being concerned about value, I thought it’d be a good time for a reality check.
Earnings season for corporate America is just about over. Early on there were serious concerns about whether earnings had peaked and perhaps even a recession could be around the corner. Obviously, that was all nonsense. But what about earnings and the overall health of American companies...?
For companies that have reported so far in this season,the news has been outstanding. Here's where we stand so far...
- 89% of companies have reported
- 69% have reported positive earnings surprises
- 61% have topped sales targets
- Earnings growth is averaging 13.1%
Any questions? What’s more is that despite the recent run up, which if it continues would soon lead us to record highs in the markets once again, is still providing plenty of value. Because earnings have continued to grow so effectively in the best economy in a generation, overall PE (price to earnings) ratios are still lower today than they’ve been over the previous five years. I don’t know exactly what comes next, but information and pragmatism always beats the alternative.