Alger on the Money - Is this trend your friend ?
This earnings season, Wall Street analysts expect S&P 500 EPS growth up 12% year-over-year in 1Q17, marking the longest period of earnings acceleration in over five years as well as the highest growth rate. The trend remains positive for several reasons.
- The consensus forecast for this quarter’s earnings per share (EPS) growth is the highest in five years and the longest period of consecutive improvement.
- This optimism is fueled by the large percentage of recent earnings reports that have exceeded estimates, 77%, compared to the 5-year average of 68%.
- Continued strength after this quarter is expected based on positive-trending macroeconomic data such as the Leading Economic Index, which registered a record high for March (see p.13 in Capital Markets–Earnings Resurgence). Further, tax reform could be a catalyst for future earnings growth.