My husband, brother-in-law and friends will never forget one Saturday afternoon spent at “The Big House”. University of Michigan was playing Toledo and was expected to win by a large margin as they usually did against their regional MAC opponents. I remember this particular game because they had much-coveted press box seats and sideline passes that my brother-in-law acquired in a charity auction. They were expecting more excitement from the prestige of visiting the sidelines and sitting in the press box than from the game. Little did they know what was in store that day. For the first time ever Michigan lost to a MAC team with a score of 13-10!
The fourth quarter 2012 earnings season started much like the fans’ attitudes for Toledo before this game. People were dismissing it as a lost quarter and game before it even began. After Hurricane Sandy and the Fiscal Cliff debacle, many thought earnings would be a bust before they were even reported. However, a little more than half way through corporate earnings releases, stocks are soaring for the year (at least as of writing this) and earnings are looking half-way decent.
- Revenue Growth has been solid, up 3.3% so far. Cost cutting continues to be the name of the game here. 70% of companies that have reported have beaten revenue forecasts, which are above average (66%).
- Demand from emerging markets has fueled growth at large multinational companies.
- A Narrowing Trade Deficit for the fourth quarter as reported by the U.S. Commerce Department means we are exporting more and importing less. This keeps more dollars in the U.S. and has also helped boost corporate earnings.
So, while positive earnings are usually the earliest released, it still should be a very decent show for corporate earnings for the end of last year. Luckily for investors and the University of Toledo critics they now understand, “That’s why we play the game.” As for my husband and his friends, they did enjoy the excitement of watching kick-off from the sidelines and the free snacks in the press box, if not a Michigan win!
Angela Palacios, CFP®is the Portfolio Manager at Center for Financial Planning, Inc. Angela specializes in Investment and Macro economic research. She is a frequent contributor to Money Centered as well asinvestment updates at The Center.
Links are being provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website’s users and/or members. The information contained in this report does not purport to be a complete description of the securities, markets or developments referred to in this material.
The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Any opinions are those of the authors and not necessarily those of Raymond James. Investing involves risk and investors may incur a profit or a loss. Investing in emerging markets can be riskier than investing in well-established foreign markets. The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market. Keep in mind that individuals cannot invest directly in any index and index performance does not include transaction costs or other fees, which will affect actual investment performance. Individual investor’s results will vary. Past performance does not guarantee future results.