Not all earnings forecasts are equal

Added 16th May 2016

Company earnings are reflecting a very bearish scenario at the moment, argues Gavin Marriott.

But, while consensus earnings expectations have been significantly hit by concerns about global growth, the product manager for global and international equities at Schroders believes that many companies have actually made concerted effort to take costs out of their businesses.

As a result, he said: “Even a marginal uptick in the aggregate level of growth will be supportive for earnings.”

Asked what is going to drive that forward earnings growth, Marriott said it is likely to be self-help in the main.

“We are definitely in an environment of slower top line growth and lower growth generally, so it is companies that have taken costs out of the business and companies where they have preserved and, in some cases, enhanced margins that are really going to be the beneficiaries.”

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