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Monday
May122014

EPS and Revenue Beat Rates

Earnings season comes to an end on Thursday with Wal-Mart's (WMT) report.  More than 2,000 companies have reported earnings so far this season, and as shown below, 57.4% of them have beaten bottom-line EPS estimates.  Early on this season, the earnings beat rate was holding right around the 60% level for US stocks, but last week it took a nosedive down to 57.4%.  The largecaps report early on during the typical reporting period, while smaller cap companies typically report towards the end.  Last week, the earnings beat rate was weighed down by a large number of smaller cap names missing estimates.  If the current beat rate holds through Thursday, this would actually be the weakest reading we've seen during an earnings season since the bull market began in early 2009.

While bottom-line beats have been tougher and tougher to come by as earnings season has progressed, top-line revenue beats have actually been hung in there well.  As shown below, 56.7% of the companies that have reported this season have beaten revenue estimates.  Earlier this season, the reading was holding around the 50% mark.  If 56.7% were to hold through Thursday, the revenue beat rate would be well below last quarter's reading above 60%, but it would be above the readings seen in 5 of the last 7 quarters.

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