The 3rd quarter earnings report season is about over, allowing analysts and investors to incorporate both the company results and outlooks into their thinking. On Monday we examined the Dow Jones Industrial Average (DJIA) overall. Today we will see how individual firms have fared.
As we know, the 3rd quarter was filled with discussion and worry about reduced economic growth forecasts and their effect on future earnings. However, we need to remember that in the spring there was an opposite situation in which the growth projections were rising. Therefore, the best way to get a sense of what’s happened is to view the changes for the entire year.
The DJIA 30 picture
Looking at the 30 Dow Jones Industrial Average stocks, we see a wide range of changes for both 2011 and 2012 earnings estimates.
[click to enlarge charts]
The 2012 forecasts are especially important because they are driving the stock market today. Perhaps surprisingly, 7 of the DJIA 30 have had double-digit increases this year.
How about valuation?
Comparing the top 7's average measures to the median DJIA stock shows superior growth, desirable valuation and similar yield. In other words, the 7 do not seem to have become favored (i.e., higher valued) even though analysts have seen significantly improved prospects.
The bottom line
In spite of the recently lowered economic growth forecasts, many companies have had their earnings estimates raised this year. With good overall earnings growth anticipated for 2012, the 7 top stocks offer an attractively valued, diversified list.
Disclosure: I am long CAT, HD, INTC.
Additional disclosure: Positions held: U.S. stocks and U.S. stock fundsOther DJIA 30 stocks held: JPM, KO, MRK, XOM
