The Dow Jones Industrial Average
Earnings season isn't quite over yet for the Dow, as the last company, Hewlett-Packard, reports later this week. But among the 29 companies that have reported, the news appears pretty favorable. Let's take a closer look.
Initially, analysts had low expectations for the first quarter. After a long sequence of weak comparisons leading out of the financial crisis, many investors expected earnings growth to come to a near standstill.
But looking at the actual results, it's clear that lackluster predictions greatly underestimated the prospects of the vast majority of companies in the Dow. According to Yahoo! Finance, 25 Dow stocks beat earnings estimates, while two matched expectations and only two fell short.
One of the biggest winners was the first company to report. Alcoa
ExxonMobil posted a modest miss on earnings, but the big loser appeared to be Bank of America
That wasn't so for CLSA analyst Mike Mayo, though, who downgraded the stock to a sell even as many analysts raised price targets and upgraded B of A. Mayo sees the bank as not living up to its potential, citing weak management as a big factor in failing to get profits back up to their pre-recession levels. Since the report, B of A stock has plunged about 20%, giving back much of its gains from the first quarter.
Time to look ahead
Overall, investors should be happy about the first quarter's earnings season. The problem, though, is that with the second quarter getting off to a rocky start, you can't be sure these gains will be sustainable. For more answers, we'll have to wait until July starts the cycle all over again.
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