With 33% of the S&P 500 market cap having reported, earnings season has had mixed results thus far. Earnings are pacing 4.1% ahead of expectations - 2.8% excluding financials; company guidance was generally negative leading into earnings season, and thus companies are beating lowered estimates and "clearing low hurdles." Early revenue results have been weaker than bottom-line numbers with revenues missing already lowered expectations by 0.3%. However, As Morgan Stanley's Adam Parker notes, three things stand out: negative guidance persists with negative-to-positive guidance surging to a multi-year high of 4.7; Margin expansion expectations remain at multi-year highs; and the consensus EPS for the S&P 500 is being marked down slowly by 0.6% and 1.1% for 2013 and 2014 respectively. With Apple set to report, and its huge relative weighting in many of the indices still, these 'expectations' could shift dramatically.
The Ratio of Negative-to-Positive Guidance relative to Consensus Expectations is surging...
[4]
Margin Expansion Expectations remain in full hockey-stick mode...
[5]
but Earnings Estimates are being revised down...
[6]
But apart from that - it's all good, right?
Charts: Morgan Stanley