Steven Leuthold, "I believe there is some game playing going on"

By on November 27, 2009

Patrick Kennedy, writing for the Star Tribune, points out that companies have gotten much better about managing earnings expectations.

According to Bloomberg News, 80 percent of Standard & Poor’s 500 companies reporting earnings so far this 3rd quarter earnings season posted positive earnings surprises. Actual earnings exceeded the expectations of analysts, even though the year-over-year comparisons may have been negative. Only 13 percent have reported negative surprises.

In 2008 just 58 percent of the S&P 500 companies reported positive earnings surprises while 32 percent delivered negative surprises. That negative surprise number hadn’t been that high since 4th quarter of 1997, while the positive number hadn’t been that low since the 4th quarter of 2001.

Its gotten so lopsided towards positive surprises that some long-time market watchers are growing skeptical including Steven Leuthold, who doesn’t put a lot of weight on recent guidance figures. “Companies may have been overly conservative on setting expectations,” he said.


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