Earnings 2011

Over 80% of S&P500 companies have reported earnings for the 3rd quarter.  80% have beat earnings estimates that were previously lowered, an indication of how well companies are managing the estimates of the analysts who cover them.  In the third quarter of 2009, how many companies beat estimates?  79% (source) – pretty close to this year’s third quarter.

In September of this year, Standard and Poors reported that 2011 earnings estimates for the S&P500 fell below $100 after peaking at about $105 in early August.  2012 earnings estimates have been lowered from $111 to $108.  The S&P index closed about $1250 this past Friday, giving a forward P/E ratio of almost 12, a fairly conservative ratio.  These estimates, however, do not take into account any debt contagion from Europe. In a recent interview Nick Raich, Director of Research at Key Private Bank, projected an estimate of $85 in 2012 if there are no solutions found to the debt crisis in Europe.

Investors Friend has an article summarizing past S&P500 earnings and the difficulty of estimating earnings as there are several versions of earnings – GAAP and operating being two of the most frequently cited.

Yesterday Standard and Poors issued an update of third quarter earnings results.  Pay particular attention to the downward revisions for next year’s earnings in each sector.

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