Scott Peterson: Investors digest a successful earnings season

Most of the companies in the Standard & Poor’s 500 (S&P 500) Index have reported third quarter earnings per share (EPS), which is the profit earned per share of stock outstanding during the period. Many have done quite well.

With more than 90 percent of companies reporting, the total EPS growth rate for the S&P 500 has exceeded expectations, reported FactSet. In aggregate, the growth rate accelerated from 3.1 percent on September 30 to 6.1 percent last week.

It’s interesting to note companies that sell more products and services outside the United States experienced significant increases in EPS when compared to companies that sell more at home. S&P 500 companies with:

More than one-half of sales in the United States had an aggregate growth rate of 2.3 percent.

Less than one-half of sales in the United States had an aggregate growth rate of 13.4 percent.

The disparity owed much to the weaker U.S. dollar and faster economic growth in other countries, including emerging markets.

Investors weren’t all that appreciative of strong corporate performance. They rewarded positive EPS surprises less than average and penalized negative EPS surprises more than average. On November 10, FactSet explained:

“...it may be due to the high valuation of the index relative to recent averages. As of today, the forward 12-month P/E [price-to-earnings] ratio for the S&P 500 is 18.0… Prior to the month of October, the forward 12-month P/E had not been equal to (or above) 18.0 since 2002. Thus, despite the number and magnitude of positive earnings surprises in recent quarters, the market may be reluctant to push valuations even higher in aggregate.”

THE WINTER HOLIDAYS ARE ALMOST HERE.

It’s that time of year when people search and search for just-the-right gifts at just-the-right-prices for friends and loved ones. The National Retail Federation expects holiday sales to rise by 3.6 percent to 4.0 percent this year and total about $680 billion. The average consumer expects to spend about $970 on the holidays. Here are a few gift ideas for the hard-to-buy-for individuals on your list:

For coffee lovers. It’s an experience shared by coffee drinkers everywhere. You pour a cup, doctor it up, and before you can take a sip, you are called away. By the time you return, the coffee is cold. A ceramic mug with a microprocessor-controlled heating system can solve the problem.

For the insomniac. Know someone who has trouble sleeping? A white noise machine or an air purifier with a fan can provide constant, soothing sound that may help lull them to sleep.

For the vision impaired. There are all kinds of gadgets that can make life a little easier for people with low or no vision. Try a wristband that shakes to give directions or a new “feeling fireworks” display that simulates the visual experience through touch.

D. Scott Peterson is CEO and head investment manager for Peterson Wealth Management. If you wish to contact him please call 775-673-1100 or visit PetersonWM.com.