Q1 Earnings Preview
"Analysts now expect Q1 earnings for the S&P 500 of $26.75 per share. (That’s the index-adjusted number. Each point on the S&P 500 is about $8.9 billion.) At the start of the year, they had been expecting Q1 earnings of $30.57 per share. So that’s a big cut in just a few months. If they’re right, then Q1 will have the smallest profit since Q2 of 2013. It will be just slightly below the profits from Q4 of 2014.
Let me be clear that this is merely a pause in earnings growth, not a broad-based decline like we would see in a recession. In fact, there was a similar pause in 2012-13. Looking at this upcoming earnings season is what has led me to stress the Strong Dollar Trade so frequently. The reason is that some sectors are being greatly impacted, while others barely feel the difference. For example, the Energy Sector is expected to see its earnings fall more than 62% for Q1. But healthcare is expected to show a 21% increase. As we often learn, stock prices and earnings may ignore each other in the short term, but they’re joined at the hip in the long term. The Energy Sector ETF (XLE) is currently more than 24% off its 52-week high, while the similar figure for Healthcare (XLV) is less than 5%" Eddy E.
nice for healthcare...tb