ahmedali3
عضو نشط
- التسجيل
- 7 يناير 2002
- المشاركات
- 48
Question:
I don't get it. The reason why so many companies are
beating their earnings estimates is that they warned a
few weeks ago and Wall Street cut their earnings
estimates down to a point where they could be easily
beaten. Isn't this whole practice of buying stocks based
on whether they beat their estimates now a big joke?
<> Answer:
You are correct - earnings reports have become
somewhat of a joke. We've seen several examples over
the past few weeks where the company warned 3 or 4
weeks ago and then released earnings that were
"above" expectations. The only problem is that these
earnings projects were recently reduced, but in 99%
of cases the company and the analysts who follow
these stocks do not point out this important fact.
The key now is not only to beat expectations, but to
beat them if they have NOT been reduced in recent
months. In fact, one of the more reliable indicators
for picking strong performing stocks is to buy stocks
that are seeing upside earnings revisions and which
end up beating these higher expectations when they
report their earnings. Finding these plays is quite
difficult, but in recent weeks, there are 3 basic sectors
where we are seeing a lot of this activity - healthcare,
defense and homebuilding. That's also why you see
many of the stocks in these 3 groups at or near their
yearly highs because the "quality" of the earnings are
much better in those groups.
- Christine
I don't get it. The reason why so many companies are
beating their earnings estimates is that they warned a
few weeks ago and Wall Street cut their earnings
estimates down to a point where they could be easily
beaten. Isn't this whole practice of buying stocks based
on whether they beat their estimates now a big joke?
<> Answer:
You are correct - earnings reports have become
somewhat of a joke. We've seen several examples over
the past few weeks where the company warned 3 or 4
weeks ago and then released earnings that were
"above" expectations. The only problem is that these
earnings projects were recently reduced, but in 99%
of cases the company and the analysts who follow
these stocks do not point out this important fact.
The key now is not only to beat expectations, but to
beat them if they have NOT been reduced in recent
months. In fact, one of the more reliable indicators
for picking strong performing stocks is to buy stocks
that are seeing upside earnings revisions and which
end up beating these higher expectations when they
report their earnings. Finding these plays is quite
difficult, but in recent weeks, there are 3 basic sectors
where we are seeing a lot of this activity - healthcare,
defense and homebuilding. That's also why you see
many of the stocks in these 3 groups at or near their
yearly highs because the "quality" of the earnings are
much better in those groups.
- Christine