Earnings expectations have been cut so low they might just get beat

Earnings season unofficially kicked off on Wednesday night with aluminum giant Alcoa reporting earnings per share that topped expectations on revenue that missed estimates.

Overall, analysts have a downbeat forecast for earnings season, having cut expectations by 8% in the 3 months leading up to earnings season.

But this bar has been taken so low, companies might just be able to clear it.

In a report on Wednesday, Savita Subramanian at Bank of America Merrill Lynch notes that earnings estimates for S&P 500 companies in the energy sector have declined by 50% this year.

Excluding energy, however, earnings estimates have declined 5%, a bit worse than the 3%-4% decline seen during most quarters, but Subramanian noted that in recent weeks about 70% of companies have beat on earnings as expectations have begun falling more slowly.

Subramanian added that Bank of America's GLOBALcycle indicator shows global growth tracking at around 3.5%, and with 60% of multinationals surprising on the upside, there appears to be potential for earnings to beat expectations by about 2%.