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over 4 years ago1 min

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Yup: another earnings season will soon be upon us 🙄 On average, analysts predict that the largest US companies will report a 2% decline in second-quarter profit. The anticipated abatement is worse for those which have a bustling international business, however – while those which are domestically focused are expected to grow earnings…

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What does this mean?

Combined with analysis from Genuine Impact, which looked at the direction of analysts’ annual earnings estimates for the world’s largest companies over the last three months, a few trends come to light 💡

The number of analysts raising (blue) vs. lowering sector estimates (orange)
The number of analysts raising (blue) vs. lowering sector estimates (orange)

Analyst forecasts for consumer staples companies have risen, likely thanks to once-elusive product price increases taking hold. Furthermore, the necessity of their products means their growth is likely to be less hampered by a global economic slowdown. And tech stocks’ forecasts rose too, perhaps thanks to momentum from their first quarters.

While these are both global sectors, several big consumer staples and tech companies do the majority of their business stateside – like Campbell Soup or Amazon. That’s contributed to predictions of profit growth for US-focused stocks overall this quarter 📈

Amazon’s sales breakdown by country (Source: Statista)
Amazon’s sales breakdown by country (Source: Statista)

Why should I care?

Picking individual stocks is a difficult task, even for the pros – check out our Stock Picking Pack to learn how they do it. Combining multiple analyses is one way in which investors can potentially identify winning stocks 🤔

Strong previous earnings updates may have catalyzed analysts’ raised estimates for Walmart and Verizon’s 2019s. And the most recent results from the likes of Apple and Alibaba may have shown analysts were too pessimistic about the effect of the US-China trade war on earnings.

The number of analysts raising (blue) vs. lowering company estimates (orange)
The number of analysts raising (blue) vs. lowering company estimates (orange)

Still, analysts are notoriously right only half the time. Blindly following their advice can cost you, so it’s wise to look – in detail – before you leap.

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