‘Old Economy’ Benefits From Profit Forecasts

Earnings momentum, one of the catalysts in the technology stock charge of recent years, now appears to be a factor fueling the drive into “old-economy” stocks.

Earnings tracker IBES International Inc. said Monday that first-quarter profit projections are heading higher for industrials, on average, while dipping slightly for tech names.

Analysts’ consensus earnings-per-share estimates have risen an average of 0.3% in the last month for old-economy stocks, according to IBES. For the quarterly reporting season that gets underway in earnest later this month, analysts expect 18.1% year-over-year EPS growth for old-economy stocks.

Meanwhile, estimates for “new-economy” companies have decreased negligibly--at a rate of 0.01%--in the last month. Still, analysts expect 27.6% earnings growth this reporting season for tech stocks.

So earnings for both technology and industrial companies appear to be “robust” overall, according to the latest report from IBES’ Joseph Kalinowski.

“Confession season” has been quiet thus far, he noted. Historically, 80% of total pre-announcements are negative, but this quarter, only about 60% have been negative.