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Thursday
Feb032011

Earnings Beat Rates and Guidance

So far this earnings season (through yesterday), 658 companies have reported their quarterly numbers.  As it stands now, 68.4% of these companies have beaten earnings per shares estimates.  Below we highlight how the earnings "beat rate" has changed as earnings season has progressed.  At about a week into earnings season on 1/18, the beat rate stood at just over 70%.  Over the last two weeks, this number has drifted ever so slightly lower to its current level of 68.4%.  For whatever reason, we typically see the beat rate drift lower from the beginning of earnings season to the end, so it's unsurprising that it is happening this quarter as well.

The percentage of companies raising guidance also typically drifts lower as earnings season progresses.  As shown below, we began to see the drift lower last week as it fell from 11.1% to 9.0%.  But this week, however, guidance has been strong, and the percentage of companies that have raised guidance this season has risen back up to 10.8%.  This is certainly a welcome sign and one that we'll continue to follow closely for the next couple of weeks.

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