Guest post by Joe Hoft
We predicted that this would be one of the greatest quarters ever in the history of corporate earnings and we were right.
We reported on April 12th that “because of President Trump’s economic measures, the ‘bottom line’ or net profits for these companies will be the best 1st Quarter results ever!” We also said –
As a result of these tax cuts, most US Corporation will deliver a net income in their financial results that is 14% greater than prior year. This starts in the 1st Quarter of 2018 and the results for many major companies will begin being reported in the next few weeks. This means that for every large corporation reporting financial results in the US, the net income after taxes will be increased by 14% – an unheard of increase!
With many companies reporting their best year’s results ever in 2017, and the economy on fire, and taxes being cut by 14% – expectations are that the net income for these companies in the 1st Quarter of 2018 will be the best ever and this will continue from this point forward!
We were right!
Marketwatch reported yesterday that the first quarter’s earnings are the best in a quarter century –
According to Thomson Reuters I/B/E/S, of the 343 companies, or about 70%, of S&P 500 members that have reported earnings to date, 79.9% have reported earnings per share that were above analysts’ expectations, putting the season on track for the highest earnings beat rate on record, going back to 1994.
So far, the first-quarter growth rate for EPS is 22%, compared with consensus earnings growth of 16.3% as of April 12, according to Lindsey Bell, investment strategist at CFRA. That outperformance is underpinned by some of the most highly valued companies, including JPMorgan Chase & Co. JPM, -0.50% Apple Inc. AAPL, -0.44% Facebook Inc. FB, -0.32% and Amazon.com Inc. AMZN, -0.36%
Bell said recent quarterly results have seen outperformance of about 3 to 4 percentage points better than analysts’ consensus estimates on average, compared with the 5.7 percentage points earnings are currently running ahead.
Bell said what’s really impressive is that expectations were already lofty and this quarter represented the first in which the bar was raised to factor in fiscal stimulus measures such as corporate tax cuts, which took effect in late 2017.
“It’s significant because we haven’t seen a change like this from the very beginning to (the) start of reporting season,” Bell said.
MarketWatch went on to state that the markets haven’t reacted of late to this amazing news due partially to volatility in the markets, strengthening of the dollar and rising rates.
This may be accurate, but with results this good, the markets are due for another major burst into bull territory!
