Earnings Season Ending on Positive Footing

As the first-quarter earnings season recedes in the rearview mirror, some are speeding ahead in reaction to data showing results beat Wall Street forecasts by an average of 3.2% as strong consumer spending helped underpin the economy, according to Thomson Financial/First Call.

Wrapping up the earnings season this week are some stragglers, including consumer products giant Procter & Gamble Co., energy trader Dynegy Inc. and Cigna Corp., the No. 3 U.S. health insurer.

Financial road signs are pointing to even better results ahead. Early indications suggest the second-quarter pre-announcement period, when companies predict whether they will meet forecasts, may prove to be the strongest on record.

Of the 388 pre-announcements collected so far, 39% have been positive and 43% have been negative. That’s the strongest ratio since First Call began collecting such data in 1995.

But market watchers note the strength is mostly in small and mid-size consumer-related companies, while larger firms that sell to businesses are still struggling to meet earlier projections.