Analysts: Earnings beat all but certain, but growth path uncertain

Corporate earnings are virtually certain to beat estimates for the first quarter, analysts told CNBC on Tuesday. The question is when economic and labor market conditions will create sustained profit and revenue growth.

Company reports are expected to show a 6.9 percent decline in S&P 500 earnings per share for the first three months of the year, according to Thomson Reuters I/B/E/S data. EPS for S&P 500-listed companies fell 2.9 percent in the final quarter of 2015.

Steven Wieting, global chief investment strategist at Citi Private bank, said Tuesday he believes earnings will be "substantially" better than negative 7 percent.

"We've had upside surprises in earnings reports for the current reporting quarter since mid-2009. Every single quarter has been an upside surprise, on at least a quarter looking back," he told CNBC's "Squawk Box."

The market and earnings outlooks are currently clouded by uncertainty around the impact of diverging monetary policy on currency exchanges as well as the Federal Reserve's insistence on clinging to low rates at a time when the employment picture is improving, Wieting said.

But macroeconomic data are strengthening into the second quarter and the worst of the energy sector losses are in the rearview mirror, so it's unlikely investors will see a "massive" earnings decline in the first half of 2016, he said.

"The estimates themselves have been cut more than we had seen at any point last year, and conditions are probably moving in a slightly more favorable way," Wieting said. He warned, however, that the biggest earnings gains in the current business cycle are behind investors.

Jack Ablin, chief investment officer at BMO Private Bank, cautioned that analysts have missed big on forward-looking earnings estimates. He noted that as recently as last June, analysts had expected a 10 to 12 percent increase in earnings for the first quarter of 2016, but they now project a decline.

While earnings will likely surpass the low bar that's been set, the whole scenario could repeat itself

"The problem is if you look out two or three quarters, they're still back at the 10 percent increase, and my sense is as we get closer to these quarters, they're bringing these estimates down," Ablin told CNBC's "Squawk Box."

The key to this earnings season will be whether companies themselves say they expect revenue growth.

"Company management hire accountants like movies stars hire plastic surgeons. They're not really nipping and tucking at revenue. What they're doing is changing the bottom line," Ablin said. He noted that the spread between reported earnings and earnings on a GAAP basis has widened.

In the end, about two-thirds of companies will likely beat earnings expectations this season, and the overall earnings decline will probably be 3 percent, said David Bianco, chief U.S. equity strategist Deutsche Bank.

Investors shouldn't expect to see decent earnings growth until the back half of 2016, and only after oil prices move higher, the dollar does not surge and U.S. investment spending improves, he told "Squawk Box."