US Companies Post Better than Expected Profits

When earnings are better than expected for US companies, this usually means good news for the share price. But there may still better investment opportunities in Europe

Coutts 11 July, 2014 | 10:00AM
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This article is part of Morningstar's "Perspectives" series, written by third-party contributors. Here, James Butterfill, global equity strategist at Coutts says US profits to beat low-ball forecasts.

With the US summer earnings season about to kick off, the signs so far suggest results will beat low-ball estimates, supporting our view that equities will make modest gains this year and outperform bonds.

Of the 70 companies that have reported third-quarter results so far, 60% have beaten expectations, which – as usual – were downgraded by analysts in the run-up to the reporting season. This negativity may have been caused by economic data generally missing expectations. The tech sector has seen 16 out of 17 companies beat expectations while the discretionary sector has been a little more disappointing with 13 beats and 14 misses.

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Coutts  Coutts provides customised solutions for clients private banking and wealth management needs.

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