Page 25 - ARUBA TODAY

BUSINESS Monday 27 noveMber 2017
A25

Of Mutual Interest:

Surprise: Companies are making bigger profits than expected

By STAN CHOE quarter, but not as high as
AP Business Writer Wall Street had forecast. Its
NEW YORK (AP) — Corpo- stock fell 3.9 percent on the
rate profits keep chugging day of its report.
along. Across the S&P 500, com-
Companies have lined up panies that fell short of Wall
in recent weeks to tell in- Street’s earnings forecasts
vestors that they earned have seen their stocks fall
more during the summer by an average of 3.6 per-
than Wall Street had fore- cent, from two days prior
cast, and the big numbers to the earnings release
offer some reassurance for through the two days fol-
the market’s skeptics. lowing. That’s worse than
Stock prices tend to track the average drop of 2.4
corporate profits over the percent over the last five
long term, so the better- years.
than-expected growth This reaction — where
helps to validate the stock the punishment for miss-
market’s record-setting run, ing earnings expectations
at least somewhat. Still, is much bigger than the
this earnings season also reward for topping fore-
includes some signs the casts — is typically seen
eight-plus-year rally is near- closer to the end of a bull
er the finish than the start. Specialist Anthony Rinaldi works on the floor of the New York Stock Exchange. For all the worries market than the beginning
Coming into this earnings about when the stock market will finally crack, one of the biggest reasons for its rise keeps chug- of one, said Jon Mackay,
ging along. Corporate profits continue to pile higher, and companies have been lining up in re-
reporting season, many cent weeks to tell investors that they made more during the summer than Wall Street had forecast. investment strategist at
analysts were forecasting (AP Photo/Richard Drew) Schroders. “That’s classic
a dud. Insurers forced to late-cycle behavior,” he
make big payout for hurri- panies in the S&P 500 have more companies than usu- Zoetis, which sells vaccines said. ”That indicates there’s
cane damage would drag reported their results for the al are also reporting higher and medicines for animals, a little bit of exhaustion to
earnings sharply lower for July-through-September revenue than analysts had reported higher revenue markets,” though he said it
the financial sector. Lower quarter, and they’ve been forecast. than analysts expected doesn’t necessarily mean a
commodity prices would so much better than fore- Strong sales growth has thanks in part to particularly drop in stock prices is immi-
pull down profits for raw- cast that Wall Street has been rare in recent years, strong growth from outside nent.
material producers. more than doubled its ex- a result of the generally the United States. Analysts expect the cycle
Just ahead of earnings pectations for third-quar- tepid global economy. But “They’re not doing it be- to last for at least another
season, analysts were pen- ter earnings growth to 6.8 markets stretching from the cause they repurchased a couple quarters. They’re
ciling in only 3.2 percent percent, according to S&P U.S. to Europe to Asia ap- bunch of shares or what- forecasting earnings
growth in earnings per Global Market Intelligence. pear to be hitting a higher ever,” Phil Orlando, chief growth for S&P 500 com-
share for companies in the Analysts are notorious for gear at the same time, equity market strategist at panies to accelerate to
S&P 500. Those same com- underestimating corporate which is feeding into higher Federated Investors, said 10 percent in the current
panies produced a robust profits, so it’s not unusual for sales. Sixty-six percent of of companies across the quarter and remain there
11 percent growth in earn- companies to turn in bet- companies have reported market. “Earnings quality in early 2018, according to
ings per share in the spring. ter results than expected. better revenue for the lat- driven by top-line growth FactSet. That is, if they don’t
Then JPMorgan Chase But the rate is even higher est quarter than expected, has been very encourag- underestimate yet again.q
kicked off earnings season this reporting season than well above the average ing. It’s been a high-quality
Oct. 12 and surprised Wall typical. Through last week, rate of 55 percent over the earnings season.”
Street with a better-than- 74 percent of the compa- last five years, according to Of course, not every com-
expected 7 percent rise in nies that reported results FactSet. pany is beating expecta-
earnings per share thanks topped analysts’ expecta- Apple, for example, said tions, and the laggards
to growth in loans and de- tions, according to FactSet. its revenue rose a stronger- have been harshly pun-
posits. In the weeks that fol- That’s better than the aver- than-expected 12 percent ished this reporting sea-
lowed, everyone from Ap- age rate of 69 percent over last quarter on gains for all son. Consider Philip Morris
ple to Zoetis followed suit. the last five years. its product categories, in- International, the ciga-
More than 400 of the com- What’s more encouraging cluding its services division rette maker that reported
to many investors is that that includes its app store. higher profit for its latest

Business events scheduled for the coming week

By The Associated Press INGTON — Standard & merce Department releas- WASHINGTON — Labor De-
Business events and eco- Poor’s releases S&P/Case- es third-quarter gross do- partment releases weekly
nomic reports scheduled Shiller index of home prices mestic product, 8:30 a.m.; jobless claims, 8:30 a.m.;
for the coming week: for September, 9 a.m.; The National Association of Commerce Department
MONDAY, Nov. 27 - WASH- Conference Board releases Realtors releases pending releases personal income
INGTON — Commerce the Consumer Confidence home sales index for Oc- and spending for October,
Department releases new Index for November, 10 tober, 10 a.m.; Federal Re- 8:30 a.m.; Freddie Mac,
home sales for October, 10 a.m. serve releases Beige Book, the mortgage company,
a.m. WEDNESDAY, Nov. 29 - 2 p.m. releases weekly mortgage
TUESDAY, Nov. 28 - WASH- WASHINGTON — Com- THURSDAY, Nov. 30 - rates, 10 a.m.q