Despite Earnings Season Beats, Analyst Expectations Have Barely Budged

Tyler Durden's picture

Authored by Bryce Coward via Knowledge Leaders Capital blog,

By most accounts the Q2 earnings reporting season has been a good one, with most companies surprising to the upside and some offering improved guidance for future numbers.

In fact, according to FactSet, more companies have posted a positive sales surprise in Q2 than any quarter going back at least five years (chart 1).

One would think the top line beats would find their way into analyst estimates for the next twelve months of sales and earnings, but that hasn’t happened.

Despite all the positive surprises analyst have only raised the the next twelve month sales estimate by .69% for the median US mid and large cap company over the last month (blue bars).

The analysts have been a bit more generous for their EPS estimate revisions, but not by much.

The median mid and large cap US company has only had its forward EPS estimate raise by 1.6% over the last month (red line).

We are also seeing a lack of momentum in the breadth of estimates.

Regardless of the 73% of companies that beat sales estimates so far in Q2, only 55% of have had its forward sales estimate improve compared to a month ago and only 54% of companies have had its EPS estimates improve over the last month.

This suggests analysts are looking through Q2 results with an expectation of more of the same.

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Too-Big-to-Bail's picture

Real Price Discovery is a bitch these days. Those analysts are shootin' from the hip now.

DoctOZ's picture

Been that way for a long time where have you been

SethPoor's picture

Shootin shit out their ass; ANALysts

NihilistZerO___'s picture

Price Discovery in bonds will be quite a thing as balance sheet normalization takes hold over the next year. Why buy a market top in stocks when all those bonds and MBS will be seeking buyers at increased yields. Bye bye Housing Bubble 2.0 and the current bull run in stocks.

I also wonder how many of the Wall Street firms renting SFHs were playing with ZIRP/QE money? They will now have to refinance at higher rates crushing their cap rates or sell into a correcting housing market.

Hkan's picture

"Honesty" so rare the word better be terminated....

Ouagadoudou's picture

There is that ... and CB going full speed behind the rethoric (hangseng up 10% in a month)

Trucker Glock's picture

Where is all this money coming from to drive sales higher?  World economy all fixed?  Central Banks' balance sheets all normalized?

hola dos cola's picture

Time to watch gold. Soon, if not now, to turn towards 1220, maybe lower.

DoctOZ's picture

KEEP SCREAMING BEAR ZH. LET THE SMART TRADERS MAKE MONEY WHILE MOST ON ZH ARE NOW PENNILESS. 

SHEPWAVE GETTIN THE TRADES RIGHT THAT IS ALL THAT MATTERS. 

NICE SELL OFF IN THE RUSSELL 

PeeramidIdeologies's picture

Zerohedge market analysis is a joke. They would have gone under years ago without the pity fucks they get from the internet.

brown_hornet's picture

Lower estimates are easier to beat.