Q4 Earnings Update: Not Bad for an Economic Malaise

This post is by Denis Ouellet at News to Use.

Earnings season is almost over with 84% of S&P 500 companies having image reported. 73% beat earnings expectations and 53% beat revenue expectations. Revenue growth reached 7% last quarter.

Best earnings growth were in Financials (+64%), Consumer Discretionary (+21%) and IT (+20%).

Q4 operating earnings total $17.34 or $69.36 annualized although trailing 12 month eps are $57.04, weighted down by the $10.11 eps in Q1. Q4.Q3 eps are up 10%.

2010 estimates keep rising and are now $78. Only getting rid of Q1 2009 will boost the 2010 figure by $7. Nevertheless, analysts imageforecast Q4 2010 eps to rise 22% YoY, obviously a tough goal if US final demand does not recover. Inventory restocking will only go so far.

In fact, analysts have become more cautious recently and Q1/2010 earnings revisions have been trending down in 7 of 10 sectors.

Corporate executives are not as cautious, however, as earnings guidance is very strong.

When I did my last equity valuation post on December 8 (US EQUITIES VALUATION ANALYSIS: DUCK, YOU (HAPPY) SUCKERS!), Q4 2009 estimates were $16.75; actual eps came in 3.5% higher. Estimates for 2010 have risen 4% since then while the S&P 500 Index is essentially unchanged.

I will soon take another look at earnings and valuations.

What are your insights from Q4 earnings? Any companies which you think are leading or lagging? Share your thoughts in the comments section below or click here to join the discussion in our new Forum.