S&P 500 Quarterly Operating Earnings
Chart of the Week for Aug 29, 2008 - Sept 4, 2008
One of the factors that influence stock prices is the earnings or profits of companies. Rising earnings generally lead to higher stock prices. As such, many investors and analysts track earnings to gauge trends in earnings power and to estimate future earnings providing an indication of possible future stock prices. The above chart illustrates recent actual and estimated quarterly operating earnings of companies in the Standard & Poor's ("S&P") 500 Index. The data through the 1st quarter 2008 reflect actual results. Starting with the 2nd quarter 2008, estimates are provided. However, the 2nd quarter estimate is based on the actual reported results of 96% of companies in the index.
The year-over-year results ending in the 2nd quarter 2008 reflect a drop of 29%, which is the fourth straight quarterly year-over-year loss. However, the estimate for the 3rd quarter 2008 reflects a gain of 4% from a year earlier. The estimate for the 4th quarter 2008 reflects a large increase of 62% as firms took billions of dollars of losses in the 4th quarter last year. While earnings estimates as reported by S&P for the remainder of 2008 are positive, those earnings estimates are often revised. Downward revisions could put pressure on stock prices while actual results near or above estimates could provide stock prices some strength.
This illustration was compiled by information from outside sources. These companies are not affiliated with ICMA-RC. This information is being provided for educational purposes and is not intended to be construed as or relied upon as investment advice. ICMA-RC does not offer specific tax or legal advice. Individuals are advised to consider any new investment strategies carefully prior to implementing.
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