Citigroup’s Steve Wieting believes S&P 500 companies on average will beat earnings expectations during Q4 earnings season, which unofficially kicked off yesterday.
This was a sentiment shared by Deutsche Bank’s Binky Chadha.
Specifically, Wieting notes that Citi’s Q4 S&P 500 EPS estimates are 6.4% above the consensus estimate. Obviously, some sectors are expected to do better than others.
Indicators we track suggest upward EPS surprises largely because of excessively large cuts to 4Q estimates, and are likely in the Consumer Discretionary, Industrials, and Energy sectors, and perhaps others. In contrast, estimates in the Materials sector seem to have lagged behind a modest drop in industrial materials prices during the quarter, and seem to pose a risk of disappointment (see figures 3-4).
Photo: Citi Investment Research & Analysis