bloomberg). Their profits rose 4.2% compared to last year, better than expected (plus 2.6% forbes).
This earnings growth rate is respectable in the face of the fact that the U.S. economy has stagnated in Q4 (GNP minus 0.1%) and Europe stuck in a recession. It seems that the analysts are too pessimistic. They underestimate the growing efficiency of the S&P Companies who had restructured in the last 2 recessions (2001/2 and 2008) and have been reducing their costs significantly. This leads to efficiency gains which translate into rising profits even in a sluggish economy.
Analysts also underestimate the tailwinds from China and other emerging markets. A fast rising middle class in Asia & Latin America shows a growing appetite for products & services and generates expanding markets for Starbucks, McDonald`s and other S&P companies.