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Nick Raich, Investment Analyst, was Recently Featured in CNBC Article on the Stock Market

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In an article published by cnbc.com providing insight to the current state of the stock market, Investment Analyst and member of our investment committee, Nick Raich, discusses what investors can expect moving forward:

Are Big Earnings Beats Here to Stay?

Fortunately, earnings estimates for the third quarter have also been rising. “Q3 earnings estimates have risen fairly close in tandem with Q2 estimates,” CNBC’s Robert Hum reports.

But don’t expect earnings beats of 20% to become the new normal.

“This [20% earnings beats] will not be a permanent feature,” Nick Raich, who tracks corporate earnings at Earnings Scout, told me. “Long term, the beat rate will come down to the more historic norm of 5%. But it could take a year to get back to normal. What will bring that down is more guidance from the companies. Those 20% beats are only happening because the guidance has been fuzzy. Once it gets sharper, analyst estimates will get closer to the actual guidance.”

Raich is urging investors to focus less on the beat rate, and more on the revisions. You want estimates to keep rising.

“The peak percentage rate of growth is likely in the second quarter. But I am looking for peak optimism, which is based on how much the estimates are going up after companies report. It’s not just the direction, it’s the magnitude. If estimates go up at a decreasing rate, that’s when we know we hit peak optimism,” he said.

Click here to read the entire article on cnbc.com! 

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