We Are Halfway Through Earnings Season; Here Are The Stats

In the ongoing reporting season, headline stats have continued to be mixed for large caps, while the trends “look better” for small and mid caps, Credit Suisse’s Lori Calvasina said in a report. She added that tech beat rates had been high, while guidance seemed weaker.

EPS Results

So far, 76 percent of large caps, 76 percent of mid caps and 68 percent of small caps have reported EPS ahead of expectations. However, only 51 percent of large caps, 55 percent of mid caps and 56 percent of small caps delivered sales results higher than consensus expectations.

“The large cap EPS beat rate has continued to come down as more companies report, but is still up slightly from last quarter. The large cap sales beat rate stills look weak vs. history. Trends look better for small and mid-caps where both EPS and sales beats have seen a meaningful improvement from last quarter,” Calvasina wrote.

Tech Results

Technology stocks have delivered the highest EPS and sales beat rates so far, versus other sectors, for both small caps and large caps. Within tech, trends were stronger for semiconductors compared to software and tech hardware.

“But guidance trends have been more disappointing as we've seen a downtick in the rate of upward guidance across all three groups,” Calvasina commented.

Downturn In Expectations

Expectations for 2017 have declined. For the S&P 500, the consensus 2017 expectations were currently at 8.5 percent, versus 9.2 percent as of Jan. 6, while for the Russell 2000, the 2017 expectations were currently at 10.5 percent, versus 11.2 percent as of Jan. 6.

“It is not unusual for estimates to move lower for a given year during the first calendar quarter. But if this trend persists, it is likely to present a challenge for equity markets given extremely high valuations and expectations for upward revisions this year,” the analyst noted.