Market Overview

Bernstein's Q3 Earnings Scorecard: S&P 500 Companies Overperforming On Earnings, Underperforming On Revenue

Bernstein's Q3 Earnings Scorecard: S&P 500 Companies Overperforming On Earnings, Underperforming On Revenue

  • Ann Larson of Bernstein commented in a note that through November 11, 88 percent of S&P 50 companies reported their third-quarter earnings – of which, 79 percent beat or met analysts' earnings estimates.
  • From a historical perspective, only 75 percent of companies managed to beat or meet analysts' earnings estimates.
  • Larson also added that only 44 percent of companies managed to meet or beat revenue estimates – well below the historical average of 55 percent.
  • According to Ann Larson of Bernstein, 88 percent of S&P 500 companies have reported their third-quarter results (through November 11). Of those that have reported, 79 percent reported an in-line or better-than-expected earnings print. From a historical perspective, the analyst noted that only 79 percent of companies manage to beat or meet analysts' earnings expectations.

    Related Link: Energy Pair Trade? Credit Suisse Downgrades Phillips 66, Hikes Chevron Targets

    Meanwhile, companies are "struggling" to report a better-than-expected top-line, as only 44 percent of companies that have reported their third-quarter earnings managed to meet or beat revenue estimates. This also happens to be "significantly" below the historical average of 55 percent, and the lowest seen since the third quarter of 2012.

    This Quarter's Numbers Thus Far

    "Earnings estimates were reduced, while sales had been revised up till the beginning of Q3 earnings season, which could partially explain why the earnings beat percentages have been more impressive than on the top-line," Larson wrote.

    Larson also pointed out that, on average, companies who missed estimates saw their stock fall by 3.2 percent within five days. On the other hand, companies who beat (or met) estimates were "rewarded," but with a "smaller" magnitude of 0.7 percent gain. This indicated that investors "were more sensitive to downside risk in earnings growth."

    Pair Trade Strategy

    Larson suggested that a "simple strategy" of buying stock that met or beat on both earnings and sales, while shorting companies that reported a miss on both the top and bottom line led to a return of 5.9 percent.

    Naturally, this is a hypothetical example, as it is unfeasible for investors to successfully identify every winner and loser. Nevertheless, the strategy "demonstrates how stocks have been rewarded or penalized this earnings season."

    Image Credit: Public Domain


    Related Articles

    View Comments and Join the Discussion!

    Posted-In: Ann Larson Bernstein Earnings Earnings Beat earnings estimates revenueAnalyst Color Analyst Ratings Best of Benzinga

    Latest Ratings

    CTASRBC CapitalMaintains360.0
    MDTTruist SecuritiesMaintains120.0
    ATEMaxim GroupInitiates Coverage On1.0
    MNPRMaxim GroupInitiates Coverage On11.0
    RDS/BScotiaBankInitiates Coverage On34.0
    View the Latest Analytics Ratings
    Don't Miss Any Updates!
    News Directly in Your Inbox
    Subscribe to:
    Benzinga Premarket Activity
    Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
    Market in 5 Minutes
    Everything you need to know about the market - quick & easy.
    Fintech Focus
    A daily collection of all things fintech, interesting developments and market updates.
    Thank You

    Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at