13 Feb Earnings Season 4Q14 Mid-Season Check-Up
S&P 500 EARNINGS SURPRISE STATISTICS
The stage was set for Earnings Season 4Q14’s gloomy guidance back in October after reporting 3Q14. So, it’s no surprise that as of February 6, 71% of the 260 S&P 500 companies reported exceeded their earnings estimates.
Actual earnings beat consensus estimates by 4.2% on average. Over the past 5 years, actual earnings have beat the consensus by 6.6% on average. Over the same period, actual earnings have exceeded expectations by as much as 17% and as little as 2%.
55.4% of the 260 companies reported better than expected revenues, beating consensus expectations by 1.5%. Over the past 5 years, actual revenues have beaten expectations by an average of .6%, revenues beating estimates by as much as 2.8% and as little as -1.2%.
SECTOR PERFORMANCE – EARNINGS
The S&P 500 has 10 sectors. Some sectors have reported 71.9% and other sectors have reported 13%. With that disclaimer, let’s look at the standout performers.
Information Technology, with stocks comprising 19% of the S&P 500 was expected to report ~9% growth. Actual YOY growth was 18.5%, or a 9% SURPRISE in YOY EPS.
Materials, with only 3% of the index was expected -1.6% negative growth. Instead the sector has reported 9.2% YOY growth, or an 11.1% SURPRISE in YOY EPS.
Consumer Discretionary, with stocks comprising 12% of the index was also expected to contract (-2.4%). Instead, the sector grew 3.5%, or a 6.1% SURPRISE in YOY.
SECTOR PERFORMANCE – REVENUES
The sector drill-down on revenues shows a few points of interest.
The Information Technology sector expected revenues to grow at 6.9%. The actual growth of the sector has been 10% so far.
The Utility sector was expected to show YOY revenue growth of 3.6%, but so far the actual results show 12.2% YOY revenue growth. In other words, a revenue surprise of 8.4%
The Energy sector was expected to contract and did. But expectation called for revenues to contract 21.1%. The actual revenue reports show contraction at 16.2%, or 5% less than expected.
Overall the 4Q14 mid-season checkup yielded positive results. Earnings & revenues were more positive than expected – and above their 5-year averages.