Is there something faulty about the way Wall Street analysts look at the companies they cover? Once again, with the latest quarterly earnings season about to end, the analysts have been wrong. This time, they have been way off the board wrong.
Thomson Reuters Research and Estimates finds that the blended growth rate for S&P 500 companies for the fourth quarter of 2008 now stands at -28.1 percent. The blended growth rate combines actual earnings reported with estimates of those yet to come. What a decline. On July 1st, the estimated growth rate for Q4 2008 was 59.3 percent; on October 1st, the estimated growth rate for Q4 2008 was 46.7 percent; and on January 1st, the estimated growth rate for Q4 2008 was -1.2 percent. If the final growth rate for Q4 2008 is -28.1 percent, it will mark the first time the S&P 500 has recorded six straight quarters of loss since Thomson Reuters began tracking earnings growth rates in 1998.
Downgrades to the profits forecasts for financials is driving the decline in earnings outlook for the S&P 500 stocks for the third quarter.