http://www.bespokeinvest.com/thinkbig/2013/1/28/earnings-and-revenue-beat-rates-for-q4-2012.htmlThis week we'll reach the mid-point of the fourth quarter reporting period, and so far, the results have been pretty good. As shown below, 63.9% of the companies that have already reported earnings have beaten earnings estimates. If this level sticks, it will be the highest beat rate seen since the fourth quarter of 2010.
Even better than the earnings beat rate is the revenue beat rate. As shown in the second chart below, 60.8% of companies have beaten revenue estimates so far this season. While 60.8% is about inline with the average reading seen over the last ten years, it's a very big jump from the sub-50% readings seen in the prior two quarters.
Comments
Here is another related document with sectors data.
I recall earnings guidance numbers had been reduced overall last fall for forward (at the time) reporting, which would have changed the benchmarks.
Not suprising that the beat rates continue ... look how much expectaions have been rolled back.
For 2012 many feel that full year trailing earnings will come in at about $98.00 to $100.00 per share for the S&P 500 Index. Currently, from what I have been reading, 2013 full year forward earnings are projected at $112.50. I wonder, how much will get cut from these expectations?
Certaintly, if they cut enough the beat rate will continue.
Good Investing,
Skeeter
Hi,
At the individual stock level it is the beating of the whisper number EPS that matters. If the company does not make it, the stock will probably decline. Companies typically try to guide the future estimates lower and the whisper number is generally higher than that. In the end, if the company beats the whisper that is what matters. If the company does not even make its own guidance, than it is really really bad.
What you are alluding is that stock prices are getting ahead of the earnings. In other words, the rise is stock prices is not in line with earnings. It may be. We will know if the P/E ratios rise. Currently, the forward P/E for 2013 is around 13 and for 2014 is around 11. Typically trailing P/E is higher but if we even maintain P/Es at that level stock prices are probably warranted.
Positives are often ignored in this board while negatives are extensively discussed. There has been a number of positive, encouraging economic news that has been favorable to the markets. Trend is in the direction of continuing improvement with occasional setbacks and detours.
I think if the political issues surrounding the budget and debt ceiling is addressed we might be looking at a good year and pessimists will probably be wrong again. However, stock market can still be subject to declines especially consumer and investor psyche is influenced easily by the very public political battles. We might see some small corrections along the way. It can happen today or it can happen 9 months down the road. I personally think maintaining a balanced exposure is the way and when such corrections happen going counter trend is often beneficial (but often very hard to do for most people)