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By Jeremy Glaser | 10-29-2014 04:00 PM

Doll: High-Single Digits Doable for Earnings and the Market

Despite some high-profile misses, earnings overall have been good, if unspectacular--and investors should expect similar growth for the market, says Nuveen's Bob Doll.

Jeremy Glaser: For Morningstar, I'm Jeremy Glaser. I'm joined today by Bob Doll. He's a senior portfolio manager and also the chief equity strategist at Nuveen Asset Management. We're going to look at corporate earnings and how it could impact the stock market.

Bob, thanks as always for joining me.

Bob Doll: Thank you, Jeremy.

Glaser: So, we have a lot of the blue-chip earnings that have already come out. How do you characterize this earnings season so far?

Doll: Good. Not great, but good enough. You have revenue growth that has been this much and operating earnings this much and earnings per share this much. And all of a sudden, you're up to an eight number, which given the environment is not all that bad.

Glaser: But we have seen some pretty high-profile misses: McDonald's (MCD), Coca-Cola (KO), and Amazon (AMZN) amongst others. How do you think about that? Is that a sign that there is a softening of the consumer?

Doll: Softening? I don't know. I do have three companies you just mentioned that are in front of the consumer, so you have to ask the question. Look, I think consumers have had some issues because how many new jobs have there been? The absence of real wage gains. My hope is, as job growth has picked up, as oil prices have fallen, as interest rates are falling yet another notch, all that is a tailwind for the consumer even if they don't get a raise. So, I think the consumer is going to be OK.

Glaser: So, what's your outlook for earnings then over the next, say, year or so? Can this high-single-digit growth continue or there are going to be more headwinds?

Doll: I think it can. And, again, how do we build that? It's a revenue number that's kind of mid-single digits; it's a couple of more points for operating growth as margins continue to strengthen a bit. And then the buybacks put another point or two on it, and then all of a sudden, you get earnings per share that's high single digits, which I think is what we should expect out of the market. You can't ask for a lot more in P/Es. So, if the market can follow earnings, the stock market will be fine. Not great, but good enough.

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