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Earnings Growth Could Double Forecasts: Analyst

Althea Chang
Big Data Download
Earnings Growth Could Double Forecasts: Analyst

Corporate earnings in the second quarter could be nearly double what analysts are expecting, and financial stocks could put in a particularly strong showing, according to one stock market expert.

Wall Street consensus estimates call for nearly 3 percent earnings growth for the quarter, but growth could actually reach between 6 and 7 percent, according to Christine Short, senior manager of global markets intelligence at S&P Capital IQ, who bases her estimates partly on the number of earnings surprises in the last 10 quarters.

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Of the 111 companies that have issued earnings guidance, 87 issued negative guidance, 16 issued positive guidance and eight guided in line with expectations, noted Short, who said she favors financial stocks in particular and expects that sector's earnings to grow by about 12.8 percent this quarter.

"Right now it's not so much of a big bank story as it was last quarter. We do have a couple of big banks, J.P. Morgan (JPM) and Citigroup (C) that are expecting very nice profit growth," Short told "Big Data Download." "However we are looking at Morgan Stanley (MS), we're looking at Bank of America (BAC) ... both expected to be negative 30 and 35 percent respectively. So it's not necessarily about the big banks."

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And with recent positive housing data, real estate development and management companies are also looking strong, Short said.

Meanwhile, earnings are expected to be down by about 4.4 percent in both the technology and materials sectors, Short said.

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