The earnings reports for the first quarter for the companies in the Essential Growth Portfolio have so far been much better than expected. Through today, 22 of our 35 companies have reported (we have many with other than calendar quarter ends). Of those 22, 16 have beaten consensus earnings estimates, 4 have met expectations and just two have reported earnings below consensus earnings estimates.

This was a quarter in which earnings faced many headwinds – dramatically lower consumer spending, historically high job losses, capital spending reductions and dollar strengthening. However, most of the companies we own have responded very quickly with cost reductions to keep their earnings at relatively solid levels.

While these cost reductions don’t bode well for the employment picture, they do point to better earnings ahead if consumer and business spending begins to pick up and the dollar begins to weaken, allowing companies’ top lines to grow.