Earnings Update: Just Five (Plus One) Charts - A Complete Disaster

So far, 91 companies have reported 1Q results (28% of total S&P 500 market capitalization). 37% of companies reporting have beaten earnings estimates (below the historical average of 47%) and 13% have missed estimates (vs. average of 15%). The average EPS surprise has been 3.4%, below the 4.8% historical average. Excluding Financials, there are similar positive surprises (37%) and similar negative surprises (13%). Excluding Financials and Utilities, 21% of companies reporting have beaten sales estimates (below the historical average of 38%) and 24% have missed estimates (vs. average of 18%). The average revenue surprise has been -0.1%, below the 1.3% historical average. In short, things are not going according to plan - though we assume this just means the Q4-fantasy-hockey-stick explosion of revenues, earnings, and margins will just get bigger.

So where do we see Green Shoots?

Earnings Beats... nope...


Revenue Beats... nope...


Revenue Misses... nope...


Average EPS Surprise (%)... nope...


Average Revenue Surprise (%)... nope...

(averages based on last 40 quarters)

Seems to us like 5-out-of-5 is not good...

And some more from Goldman:

After the first major week of the 1Q earnings season, 104 firms in the S&P 500 have now reported results (33% of market cap). Three takeaways so far: (1) Financials beat earnings estimates, but investors were disappointed with the quality of those beats (2) Half of firms have reported earnings results in-line with consensus expectations (3) After improvement last quarter, revenue results are disappointing again. Next week is the biggest reporting week of the 1Q 2013 season. 169 firms representing 34% of S&P 500 market cap will report results including XOM and AAPL.

  • Financial results disappoint despite beating earnings estimates

    Only one-third of Financials companies that beat earnings expectations outperformed the S&P 500 on the next trading day compared with 76% of non-Financials firms. Underperformance reflects disappointment with the quality of earnings beats.

  • Half of earnings results in-line with consensus expectations

    36% of firms beat consensus earnings expectations by more than one standard deviation, below with the 10-year average of 47%. 13% of firms have missed earnings estimates by that magnitude, vs. 15% historically.

  • Almost one-third of firms missed revenue estimates

    Only 14% of firms beat consensus sales expectations by more than one standard deviation versus the 10-year historical average of 36%. This is similar to the 2Q and 3Q 2012 reporting seasons.

And the plus one chart: the only time EPS surprises were this bad in the past 40 quarters this many days into the earnings season? Last quarter's horrendous earnings season.

in short: a complete disaster.


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