Following U.S. analysts' earnings estimates can make for a dizzying game, as forecasts for distant quarters routinely start out high, steadily fall, and then, once earnings season actually arrives, rise as companies "surprise" the market.
Interestingly enough, there is a point in this rollercoaster ride when the forecasts - really guesses, given these estimates are for a quarter that hasn't even taken place yet - matches the end result. It's at about eight weeks before the quarter actually starts, according to a Reuters analysis of data beginning in 2009.
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The current earnings period falls into this pattern. S&P 500 first-quarter growth forecast started at 14.1 percent, based on Thomson Reuters data. It then fell to 5.1 percent on November 8, about eight weeks before the first quarter even began.
The earnings forecast is now at 5.3 percent - based on a combination of actual results for more than 90 percent of companies and estimates for the rest.
Still, many companies see their stocks rise when their results beat analysts' estimates.
"It's the same thing every quarter," said Ken Polcari director of the NYSE floor division at O'Neil Securities in New York.
"They make all of these fancy projections and as we move into the earnings season, they cut all of their numbers and then when the companies report, they go, 'Wow, look at us, we beat the number, how great is that.' And there's no reference to, well, we beat the much lower number, but we missed the original number by boatloads."
Many investors have become numb to the earnings numbers game, but say the overly cautious corporate outlooks sometimes can cost participants if they react to changes in estimates.
Looking ahead to the second quarter, the estimate began at about 14.4 percent and has been falling steadily in recent weeks as more companies warn on second-quarter results. It now stands at 1.9 percent.
If the pattern of previous quarters holds, it should bounce back and end at about 6.5 percent, where it was on February 8, or about eight weeks before the quarter began.
This pattern does not hold for every quarter, according to Greg Harrison, Thomson Reuters corporate earnings research analyst. In fact, fourth quarter 2009's numbers were excluded from the data because the earnings one year previous were awful, coming during the height of U.S. financial crisis. Earnings dropped 67.2 percent in that quarter.
On average, 70 percent of S&P 500 companies have beaten estimates since 2009. In the first quarter, 67.2 percent of S&P 500 companies have beaten analyst forecasts.
(Reporting By Caroline Valetkevitch; Editing by Nick Zieminski)