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Analysts Overly Pessimistic on 1Q Earnings?

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    S&P Capital IQ senior manager Christine Short weighs in on earnings season so far.

  • Duration 3:00
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All right as you know we're in the thick of it first quarter earnings season about halfway over cell powered beings stacking up let's get a status check with Christine short Christine is a senior manager at S&P capital IQ Christine thanks to -- -- have you on the show.

Thank you so everybody's been recently surprised to the upside lot of optimism a lot of outperforming earnings why do you think we got it wrong here initially.

Well exactly what you're saying we S&P -- -- here at the beginning of the quarter in January it was expecting growth of only four and a half percent.

And if you remember which ticked down almost about half percent growth is what we're expecting south.

Investors' confidence plummeted everyone was thinking this is gonna be either a low growth -- -- negative growth quarter.

But in fact -- popped back up Brad about six point 7% growth as it stands right now and that's of course -- 70% of companies beating.

I certainly think analysts were a little overly pessimistic on this one would do tend to see analysts come down about two to 3% -- their estimates right before earning season.

As we can see this month popped up so much it really just points analyst being overly pessimistic.

And overall company's just giving really uncertain diets for for this quarter.

But I was reading your research -- that if you exclude apple.

Any earnings growth the overall S&P 500 growth is only four point 2% down from the six point 8% -- just said so considering apple is such a heavy weight.

May -- the analysts weren't so pessimistic.

Can you really get excited about the health of corporate America I know talked about a cheap stock market for some time now but put that to some perspective for me -- well.

Really think it's of.

Important of course to be aware -- -- number.

-- I think that -- at about four and a half percent now if you exclude apple including today's reports.

Up to six point seven if you include apple so I think it's important to be aware that it does go down -- we really -- -- look at the index as a whole were really comparing the whole S&P 500.

Index not just individual companies to what it was in -- about.

But -- that said Jack apple certainly hasn't been waiting on the index.

But every quarter we do have one company that's sort of not as much as apple but we do have a reforms that big surprise and then some to say the least for apple on your predicting return to double digit earnings growth by the end of the year what's gonna drive that.

That's right so what -- -- expected for awhile the first half there was going to be very slow there is uncertainty surrounding Europe.

Analysts tended to think that in the third quarter we were going to be around 6% growth.

And then by the end of the year they were really expecting sort of all the uncertainty around Europe to be solved we -- gonna look for 16% growth in the fourth quarter.

And that's expected to continue throughout two -- that 2013.

What if that she drops -- -- and and you know considering what happened that last week and we are seeing about.

You know eight countries in the eurozone now they downgraded again Spain downgrade again in recession.

It's possible that that might change so I think the -- sort of changing we're seeing Europe on the front burner -- I'm at the end of last year and the beginning of the first quarter and kind of it wasn't so much on the on the front burner in and so now that we're seeing come back into the picture.

I wouldn't be surprised C analyst downgrade their estimates accordingly we'll see what happens Christine short were up to speed for now thanks again -- -- thank you very much.

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