Beating expectations has become the 1Q norm. The consenus among financial analysts was that corporate America had already squeezed as much profit as it could from a weak economy.
The analysts couldn’t have been more wrong. So far most companies have reported better than expected earnings. And by most, I mean about 8 out of 10.
It started with Alcoa, which reported a profit of $94 million, or 9 cents a share. Analysts were expecting a loss of 4 cents per share. On Tuesday, Apple surprised the experts with a profit of $11.6 billion, a whopping $12.30 a share. Analysts predicted $10.06 per share.
In between a slew of other companies have reported positive earnings.
If the experts could be so wrong about 1Q earnings, maybe the economy is doing better than they’re telling us. Or maybe this will be the highwater mark for 2012. I’m thinking the economy is slowly getting better and profits will be the norm this year.
Here’s a different view from Randall W. Forsyth writing for Barrons.com:
Restaurant chain Ruby Tuesday Inc. reports earnings today after the markets close. According to a Motley Fool report, analysts expect the Maryville-based company to report an increase in revenue, but a loss of about 6 cents per share.
Aluminum company Alcoa Inc., which has a major manufacturing plant in Blount County, reports Monday. Analysts expectations are mixed. Alcoa is traditionally the first of the major companies to release its quarterly report.
Today’s market rally is boosting a couple of stocks of local interest that have struggled to hold their value in recent weeks.
Shares of Maryville-based restaurant chain Ruby Tuesday were up about 3.3 percent at midday to $6.92. Shares of Green Mountain Coffee Roasters, which has a major roasting and distribution operation in Knoxville, were up about 3.6 percent to more than $51.
However, RT stock remains close to its 52-week low, and GMCR has seen its share price cut in half in the last two months. Check out these online commentaries about Kevin Clayton’s recent purchase of RT stock; and Green Mountain’s rapid price drop.
Concern about the global economy has Wall Street tumbling today, but not all the market news is quite so scary. Consider the profit expectations for aluminum maker Alcoa Inc.
Bloomberg says Alcoa, which has a large presence next door in Blount County, may report that its second quarter profit more than doubled on rising global demand. Alcoa is benefiting from the growth of companies like General Motors and Airbus.
Earlier this month, aluminum maker Alcoa reported a profit of $136 million, a reversal of fortune from a loss of $454M a year ago. Even First Horizon National Corp., parent of First Tennessee bank, has returned to profitability with a slender profit of $2.7 million, or 1 cent per share.
Will the trend continue? Will analysts predictions be any better?
The Dow is lower in early trading Tuesday, after edging above 11,000 for the first time in 18 months on Monday. Experts blame the dip on Alcoa Inc. kicking off earnings season by coming up short of analysts’ expectations.
Maybe it’s just me, but it seems corporate earnings are always lower or higher than analysts’ expectations. When’s the last time you saw the headline: “Analysts’ expectations exactly on target”.