No one has an earnings crystal ball, least of all Wall Street traders and analysts.

But every quarter, Wall Street tries to flex its muscles by forecasting a company’s quarterly performance and suggesting how you should trade based on those estimates.

In this episode of The Bull & The Bear, I’ll tell you about trading on earnings and whether it’s a good idea or not.

Second-Quarter Earnings Are on the Rise

The second-quarter earnings season is in full swing, and a lot of companies have been blowing past Wall Street expectations.

Six of the 11 main sectors of the S&P 500 are reporting higher net profit margins for the second quarter of the year than the first. Some standouts are:

  • Information tech — 24.6% net profit margin in Q2 compared to 23.4% in Q1.
  • Communication services — 14.1% net profit margin in Q2 compared to 12.1% in Q1.

The numbers show that companies are growing.

Comparing second-quarter net profit margins to five-year averages shows that all sectors but real estate — which has no five-year average — grew at a faster rate in this quarter than over the last five years.

But does this suggest we should be buying and selling based on earnings? Check out this week’s episode of The Bull & The Bear to find out.

Pro tip: Chief investment strategist Adam O’Dell is bullish on biotech. I urge you to check out Adam’s presentation on what he calls “Imperium.” He's confident this DNA trend has the potential to be bigger than internet stocks in the ’90s. Click here to find out more, including the details on how to access Adam’s top four DNA stocks to buy today.

The Bull & The Bear

Led by Adam O’Dell and a team of finance journalists, traders and experts, Money & Markets gives you the information you need to protect your nest egg, grow your wealth and safeguard your financial well-being.

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Safe trading,


Matt Clark, CMSA®
Research Analyst, Money & Markets

Matt Clark is the research analyst for Money & Markets. He is a certified Capital Markets & Securities Analyst with the Corporate Finance Institute and a contributor to Seeking Alpha. Prior to joining Money & Markets, he was a journalist and editor for 25 years, covering college sports, business and politics.