Thanks to the continued strength of the U.S. economy and improvement in most Asian nations, profits are up 14.8 percent from the second quarter of 1998. Over the past five years, an average of 56 percent of the companies beat estimates. That's a marked improvement from the 26 percent average over the past five years. Chuck Hill, First Call's research director, views the positive surprises with a note of skepticism. The quarterly earnings releases are the final play in a long, complicated game between companies, analysts and investors.
Companies can, and often do, guide analysts to estimates they know they'll be able to beat.
And once in a while, analysts simply misjudge the situation. So far this quarter, corporate profits are beating estimates by an average of 4.2 percent. That's down from a margin of 5.6 percent in the first quarter, as analysts continued factoring in the Asian financial crises that hampered earnings in 1998, even after most companies had begun rebounding. Tech surprises Overall, Hill said, technology companies turned in the biggest surprises, ending up about 6 percent ahead of analysts' estimates. Health care and transportation companies lagged, but only because many companies came in right on target.