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Caution Signs in Third-Quarter Earnings

Earnings season pointed to a growing economy, but a few red flags were raised.

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Third-quarter earnings season has come and gone with a whimper and not a bang. Earnings reports were almost universally overshadowed by the seemingly endless stream of bad news coming out of Europe. And it didn't help that, overall, earnings were not that terribly exciting in the third quarter. Most firms reported results that were within spitting distance of analyst estimates, and there were only a handful of big surprises.

Before earnings season started, I outlined the key factors I was going to keep an eye on to determine if the economy is still in recovery mode or if there are signs of sputtering. In general, results were consistent with a slow but real recovery. However, there were more than a few signs that management teams are being cautious as global uncertainty mounts. Here's what I saw in the seven categories I focused on.

Bearemy Glaser does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.