Alcoa (NYSE: AA) is set to begin the first quarter earnings season on Monday and analysts are confident that Alcoa, along with other companies on the S&P 500, will be able to easily beat their Q1 2009 numbers.
The first quarter of 2009 was one of the worst periods during the recession. Since Q1 2009, the S&P 700 has gone up by 7.1% and the Dow 30 has risen by 13.2%. Companies on the S&P 500 have also seen a 37% profit growth according to data from Thomson Reuters. The reporting agency also placed a consensus target for the S&P 500 12 months from now at 1303.74.
For the market to continue to improve, companies will have to report better than expected earnings results, but that might be difficult, at least according to Barry Knapp, of Barclays Capital.
Knapp recently wrote in an a note to clients that “It does appear to us that stock prices have gotten ahead of analyst earnings estimate revisions, which implies some degree of investor disappointment this earnings season (beginning in a couple of weeks).”
Analysts generally expect about 13.2% in top-line growth for the two quarters of 2011. However, their estimates for the fourth quarter of 2010 and the first quarter of 2011 are relatively modest, between 6% and 7%.
