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Is it too soon to talk about fourth-quarter earnings? I know, I know. The paint is barely dry on Q3 — another expectations-topping quarter, the tenth in a row — but the earnings folks over at Brown Brothers Harriman are already thinking ahead to Jan. 9, 2012, when Alcoa gets things going on Q4 earnings. And by their reckoning, we’re due for another nice earnings “surprise.”
How do they know? Because as analysts have responded to the parade of third-quarter earnings announcers, many of them have continued to ratchet down their Q4 expectations, even as companies clearly proved their mettle in Q3. (See accompanying chart.) That gives companies a nice, low bar to step over come mid-January.
Maulin Thaker of BBH adds: “Although not shown in the chart, this phenomenon remains true for not only 4Q11, but also for [full-year 2012] estimates . In our view, 4Q cuts are being overdone, which is a likely set up for another round of usual upside surprises.” Keep in mind, too, that seasonally speaking, fourth quarters tend to be generally good quarters for company earnings. Add it all up, and you may as well pencil that nice earnings rally into your calendar now. The only question is: if we know in November that it’s happening, is it still a surprise?
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Investor above wrote and he is absolutely correct, but the market is more of a casino than an investment place.
All you can do is invest in good companies. It’s like betting on the seven and in the long run you’ll win.
I don’t understand the obsession with beats or surprises. Should the absolute value be more important or relative to the last quarter?
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