Wednesday, September 12, 2012

Revenue And Earnings Growth Continue To Slow

One of the services provided by Thomson Reuters (TRI) is they aggregate financial data from analyst. TRI recently updated/aggregated all the analyst data as it relates to earnings and revenues for the S&P 500 Index companies for the third quarter. TRI notes:
"...companies in the S&P 500 are likely to post the slowest annual revenue growth rate [for Q3] in the last decade (barring the 2008/2009 financial crisis) and the trend seems to be getting worse, with more disappointments in store."
From The Blog of HORAN Capital Advisors

In order for companies to continue achieving earnings growth, they have focused on the cost side of their business. Unfortunately, companies can only cut costs for so long before this avenue to increase earnings comes to an end. Well, this reality may be setting in for Q3 2012 earnings. As the below chart details, Q3 earnings are expected to decline by 2.0%. It is likely, Q4 earnings are revised lower as well. The second chart shows the trend in fourth quarter earnings growth.

From The Blog of HORAN Capital Advisors

From The Blog of HORAN Capital Advisors

TRI discusses the potential consequences of this slowdown in the below video.


Idea of the Week: Analysts Cutting Their Q3 Revenue Forecasts
Thomson Reuters: Alpha Now
By: John Kozey
September 12, 2012

Disclosure: our firm is long TRI

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