Equity analysts raised their earnings estimates for companies in the S&P 500 by 2.3% during the fourth quarter, to $36.93 from $36.10, as optimism continues to rise.
What it means: Q4 was the second straight quarter in which Wall Street analysts have raised their earnings expectations, a reversal of the typical trend.
The big picture: Q4 was just the fourth quarter since Q4 2010 in which EPS estimates have increased during the quarter.
By the numbers: "During the past five years, the average decline in the bottom-up EPS estimate during a quarter has been 4.5%," FactSet senior earnings analyst John Butters points out in a note to clients.
- "During the past ten years (40 quarters), the average decline in the bottom-up EPS estimate during a quarter has been 4.2%. During the past fifteen years (60 quarters), the average decline in the bottom-up EPS estimate during a quarter has been 5.2%."
Yes, but: "[I]t should be noted that analysts made substantial cuts to EPS estimates for Q4 during the second and third quarters (March 31 to September 30). During this period, the Q4 bottom-up EPS estimate declined by 17.4% (to 36.10 from $43.73)."