Positive profit surprises

Q:  It seems nearly every company I follow has delivered better-than-expected June-quarter earnings. Just how prevalent are positive profit surprises?

A: Corporate managers have long been adept at managing earnings and expectations. Often what drives a stock price is not the level of sales or earnings, but how those figures compare to expectations. While positive surprises tend to lift stock prices, companies that miss Wall Street’s profit targets often see their shares slump. To answer your question: Among companies in the S&P 500 Index, more than 80% delivered per-share earnings that beat expectations in their most recent quarter. Over the last 50 quarters, on average of 75% of S&P 500 stocks reported better-than-expected earnings.

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