S&P 1500 Earnings Estimate Revisions

With the equity markets currently in the earnings off season, investors who want to get a read on expectations can track the pace of analyst earnings estimate revisions. If the pace of revisions is increasing heading into earnings season, it implies that analysts are turning positive on the prospects for the companies they cover. Each week in our Earnings Estimate Revisions Report (sample), we summarize these trends for sectors and major groups over the last four weeks. When the ratio is positive it indicates that more companies in each sector are seeing increases in estimates as opposed to decreases.

The chart below summarizes estimate revisions for the S&P 1500. As shown, the current pace of revisions is higher now than at any other point in the last two years (red line). While analysts are typically thought of as being behind the curve, this year they have actually been leading the market. Revisions actually bottomed late last year and then failed to make a lower low in February when the equity market was in the middle of its last leg lower (blue line).

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Comments

[Steve Pasq:]

Earnings revisions magically go up when the mark to market rules were abandoned in April.

Sep 04 05:36 PM

[highlarche:]

Not so fast my friend. People need money to foster a consumer driven economy like the U.S.

Sep 05 09:21 AM