Recap of Spring Earnings Season 2011

U.S. companies have seen a fairly strong first quarter, complete with earnings gains that surprised many Wall Street analysts. While other quarters in the last few years have seen growth, this most recent period saw revenue growth driving the gains, rather than pure cost cutting. Check out this video for the full story here. Revenue growth despite a lagging job market is a positive sign from an economy in dire need of some good news. The previous two years saw Wall Street pull down profits by cutting costs — primarily jobs — as consumer demand dipped. Increased consumer demand, represented through increased revenues across the board, could point to growth and a potential economic turnaround. It also means that stocks might hold their value, despite a high number of unemployed and an uncertain governmental financial situation. Take a look, for example, at Apple AAPL. Apple has seen its year-on-year revenue increase for each of the last five quarters. Apple is expected to show $100 billion in revenues this year, and even with that ambitious target, March sales growth was eight percent. In other words, there is a lot of meat backing up the stock and its earnings. Another stock that surprised was General Electric GE, which actually showed the biggest revenue surprise in Q1 among the industrial stocks. General Electric posted a revenue miss despite beating earnings in five of its last eight quarters. Caterpillar CAT was even more surprising and lucrative for stockholders. Caterpillar beat its sales target by 11 percent, its highest amount in two years. Revenues were up a surprising 57%, year over year. That gain drove a massive profit surge and raised their guidance numbers. What does all of this revenue growth and the revenue beats mean to you, the investor? Mainly, it shows that the earnings quality is better, and getting better each quarter. That points to stronger earnings going forward. This is doubly true for the favored sectors — technology and industrial stocks.