Earnings Beat Rate Sticking at 62%

Another 682 US companies reported earnings this week, bringing the overall total reported this earnings season up to 1,903.  Next Thursday marks the end of the first quarter reporting period when Wal-Mart releases their numbers.  As shown below, 62% of the companies that have reported have beaten analyst earnings per share expectations.  With only a handful of companies left to report, the "beat rate" is sure to hold above 60%.  The fact that the "beat rate" has been able to increase as more and more companies have reported has helped the market trade higher throughout earnings season.  Last quarter's "beat rate" was a bear market low of just 55.5%.  As shown in the bottom chart below, this earnings season will be the first quarter over quarter increase since the third quarter of 2006.  When the "beat rate" started to decline in 2007, it was definitely a warning signal for the market, and this quarter's increase is hopefully the start of a new positive trend.

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Comments

[AV]

Huh.. an indicator that doesn't indicate anything.

How do you like that?

[Nick]

Businesses have been shedding jobs as if they're going out of style, not to mention drawing down inventories.

Won't these two factors contribute to worse or flat earnings in Q2?

[ap]

Analysts know that the market will advance when companies perform better than expected, so estimating the worst results will lead to a better market performance.

[svg]

Gee...sounds like someone is long.Great site - but please try to stay neutral in your analysis. Last few weeks' entries sound like beating on the bull drum.