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Tuesday
Jan282014

Earnings Beat Rate Strong Early, But A Long Way To Go

As earnings season has progressed we've seen some big misses (ACAT), and some big beats -- including NFLX's beat on top line, bottom line and increased guidance.  But what percentage of companies have been beating?  It's often easy to get lost in the headlines featuring big names or big moves.  Below is a chart detailing the cumulative beat rate as earnings season has progressed.  

With few companies reporting early, the beat rate jumped as high as 70% before falling back down to 58% on January 15th.  Since then we've seen it stabilize and solid beat rates late in the week of the 17th have taken us to a range around 65% since the Martin Luther King Day long weekend.  As of this morning, 66% of firms reporting have beaten their consensus EPS estimates, which is better than the last two fourth quarter reporting periods (61% in 2012 and 60% in 2011).  Since the start of the current bull market in early 2009, the average quarter has had a beat rate of 62%.  If the current quarter continues at this pace, we will log the highest EPS beat rate since this reporting period in 2010.  But keep in mind that less than 300 names have reported.  With over 80% of the market waiting in the wings, this earnings season is far from over.