second quarter

Strong Second-Quarter Earnings Can't Keep the Bears at Bay

The second-quarter earnings season has gotten off to a strong start, but it's been no match for bears who are less than thrilled with future earnings prospects.

More than half of the companies on the Standard & Poor's 500 Index have reported second-quarter earnings results. And so far, they've been strong, with two-thirds of those companies beating earnings estimates, three-fifths beating on sales and almost half beating on both earnings and sales. 

As a result, the consensus second-quarter earnings per share estimate has climbed to $20.63 from $19.60 at the beginning of the month. Merrill Lynch analysts expect final second-quarter earnings per share to come in at $20.75 - a 5% sequential improvement from the first quarter.

That would be a deceleration from the 15% sequential growth seen between the fourth quarter of 2009 and the first quarter of 2010, but it's good growth nonetheless. In fact, it puts 2010 S&P 500 earnings at about $83 per share. And at current prices, that gives the market a price-to-earnings multiple of just 13.3-times - below the long-term historical average of 15. 

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