Source: (The Reformed Broker)
Headlines consistently hype the high percentage of companies beating 1Q earnings expectations. What they don’t say is that more than 50% of companies have beat expectations in nearly every quarter for the past 20 years. Companies are becoming increasingly savvy at using obscure accounting methods to massage quarterly earnings results. Separately, most analysts now focus on what is termed, adjusted earnings, which seemingly allows companies to include one-time accounting gains while disregarding one-time losses.
Even if we take reported earnings at face value, the growth rate has clearly been slowing over the past two years. Although most companies will almost certainly continue to beat expectations, The Forthcoming Profit Recession may be approaching.
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