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Q2 Earnings Season Review: Things Are Looking Up
Second-quarter earnings season is showing a dramatic improvement, providing support for the bulls.
Michael Comeau    

This article was originally posted on the Buzz & Banter where subscribers can follow over 30 professional traders as they share their ideas in real time. Want access to the Buzz plus unlimited market commentary? Click here to learn more about MVPRO+.

On Friday, FactSet released its latest update for second-quarter earnings season, and with 446 of the S&P 500 having reported, we're getting a pretty good look at the prevailing trends:

-73% of companies have beaten earnings estimates, slightly above the 1-year average of 72%.
-Companies are beating by an average of 4.2%, above the 1-year average of 3.2%.
-Q2 earnings growth is 8.4%, up from an expected 4.9% on June 30.
-This is the second-highest earnings growth rate since Q4 2011.
-The strongest sectors for upside earnings surprises have been health care (especially biotech) and information technology, while consumer staples is the weakest.
-Traders have been selling the news. Companies that beat on earnings saw their stocks declined 0.1% from the two days before earnings through the two days after. Over the past five years, upside surprises were greeted with 1.0% increases during the same time period.
-64% of companies exceeded sales estimates, well above the one-year average of 55%.
-Companies are beating sales estimate by an average of 1.7%, well above the one-year average of 0.6%.
-The strongest sectors for upside sales surprises have been energy, health care, and utilities. Consumer discretionary has been the weakest.
-Q2 revenue growth is 4.3%, well above the 2.8% expected on June 30.
-For Q3, 24 companies issued positive guidance and 56 issued negative guidance. The 30% ratio is awful on the surface but it's actually an improvement from recent quarters.

It would be healthy to see more of the 'risk on' sectors like financials and consumer discretionary leading the way on the sales side.

But overall, this is a nice turnaround from recent trends. Q2 earnings estimates had shown serious deterioration [subscription required] yet growth ended up coming above the 6.8% forecast back on March 31. And Q1 earnings growth [subscription requred] barely broke 2%.

And in the context of an S&P eyeballing the 2,000 mark, improved earnings momentum couldn't come at a better time. In an extended market, earnings have to move up to match stocks, or stocks have to move down to beat earnings.

On a relate note, on Thurday, I mentioned the possibility of a polar vortex hitting in September. I would keep that possibility in mind, as it could make for a repeat of the big utilities stock boom seen earlier in the year. (see the chart below)


Twitter: @MichaelComeau

Follow the markets all day every day with a FREE 14 day trial to Buzz & Banter. Over 30 professional traders share their ideas in real-time. Learn more.
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No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Q2 Earnings Season Review: Things Are Looking Up
Second-quarter earnings season is showing a dramatic improvement, providing support for the bulls.
Michael Comeau    

This article was originally posted on the Buzz & Banter where subscribers can follow over 30 professional traders as they share their ideas in real time. Want access to the Buzz plus unlimited market commentary? Click here to learn more about MVPRO+.

On Friday, FactSet released its latest update for second-quarter earnings season, and with 446 of the S&P 500 having reported, we're getting a pretty good look at the prevailing trends:

-73% of companies have beaten earnings estimates, slightly above the 1-year average of 72%.
-Companies are beating by an average of 4.2%, above the 1-year average of 3.2%.
-Q2 earnings growth is 8.4%, up from an expected 4.9% on June 30.
-This is the second-highest earnings growth rate since Q4 2011.
-The strongest sectors for upside earnings surprises have been health care (especially biotech) and information technology, while consumer staples is the weakest.
-Traders have been selling the news. Companies that beat on earnings saw their stocks declined 0.1% from the two days before earnings through the two days after. Over the past five years, upside surprises were greeted with 1.0% increases during the same time period.
-64% of companies exceeded sales estimates, well above the one-year average of 55%.
-Companies are beating sales estimate by an average of 1.7%, well above the one-year average of 0.6%.
-The strongest sectors for upside sales surprises have been energy, health care, and utilities. Consumer discretionary has been the weakest.
-Q2 revenue growth is 4.3%, well above the 2.8% expected on June 30.
-For Q3, 24 companies issued positive guidance and 56 issued negative guidance. The 30% ratio is awful on the surface but it's actually an improvement from recent quarters.

It would be healthy to see more of the 'risk on' sectors like financials and consumer discretionary leading the way on the sales side.

But overall, this is a nice turnaround from recent trends. Q2 earnings estimates had shown serious deterioration [subscription required] yet growth ended up coming above the 6.8% forecast back on March 31. And Q1 earnings growth [subscription requred] barely broke 2%.

And in the context of an S&P eyeballing the 2,000 mark, improved earnings momentum couldn't come at a better time. In an extended market, earnings have to move up to match stocks, or stocks have to move down to beat earnings.

On a relate note, on Thurday, I mentioned the possibility of a polar vortex hitting in September. I would keep that possibility in mind, as it could make for a repeat of the big utilities stock boom seen earlier in the year. (see the chart below)


Twitter: @MichaelComeau

Follow the markets all day every day with a FREE 14 day trial to Buzz & Banter. Over 30 professional traders share their ideas in real-time. Learn more.
< Previous
  • 1
Next >
No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
More From Michael Comeau
Daily Recap
Q2 Earnings Season Review: Things Are Looking Up
Second-quarter earnings season is showing a dramatic improvement, providing support for the bulls.
Michael Comeau    

This article was originally posted on the Buzz & Banter where subscribers can follow over 30 professional traders as they share their ideas in real time. Want access to the Buzz plus unlimited market commentary? Click here to learn more about MVPRO+.

On Friday, FactSet released its latest update for second-quarter earnings season, and with 446 of the S&P 500 having reported, we're getting a pretty good look at the prevailing trends:

-73% of companies have beaten earnings estimates, slightly above the 1-year average of 72%.
-Companies are beating by an average of 4.2%, above the 1-year average of 3.2%.
-Q2 earnings growth is 8.4%, up from an expected 4.9% on June 30.
-This is the second-highest earnings growth rate since Q4 2011.
-The strongest sectors for upside earnings surprises have been health care (especially biotech) and information technology, while consumer staples is the weakest.
-Traders have been selling the news. Companies that beat on earnings saw their stocks declined 0.1% from the two days before earnings through the two days after. Over the past five years, upside surprises were greeted with 1.0% increases during the same time period.
-64% of companies exceeded sales estimates, well above the one-year average of 55%.
-Companies are beating sales estimate by an average of 1.7%, well above the one-year average of 0.6%.
-The strongest sectors for upside sales surprises have been energy, health care, and utilities. Consumer discretionary has been the weakest.
-Q2 revenue growth is 4.3%, well above the 2.8% expected on June 30.
-For Q3, 24 companies issued positive guidance and 56 issued negative guidance. The 30% ratio is awful on the surface but it's actually an improvement from recent quarters.

It would be healthy to see more of the 'risk on' sectors like financials and consumer discretionary leading the way on the sales side.

But overall, this is a nice turnaround from recent trends. Q2 earnings estimates had shown serious deterioration [subscription required] yet growth ended up coming above the 6.8% forecast back on March 31. And Q1 earnings growth [subscription requred] barely broke 2%.

And in the context of an S&P eyeballing the 2,000 mark, improved earnings momentum couldn't come at a better time. In an extended market, earnings have to move up to match stocks, or stocks have to move down to beat earnings.

On a relate note, on Thurday, I mentioned the possibility of a polar vortex hitting in September. I would keep that possibility in mind, as it could make for a repeat of the big utilities stock boom seen earlier in the year. (see the chart below)


Twitter: @MichaelComeau

Follow the markets all day every day with a FREE 14 day trial to Buzz & Banter. Over 30 professional traders share their ideas in real-time. Learn more.
< Previous
  • 1
Next >
No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
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