Our current earnings season is about one-third finished, and so far U.S. companies are continuing to beat their estimates far more often than not, as shown by Bespoke Investment Group.
Below we highlight the percentage of US companies that have beaten earnings estimates as the days have passed this earnings season. At the start of last week, the beat rate was 73%, and it has trickled slightly lower to its current level of 71.1%. This season’s beat rate is currently 9 percentage points higher than the average of 62% since 1998.
Companies are always trying to low-ball the guidance they provide analysts, in order to magically ‘beat’ earnings estimates. That’s probably why 62% of the time companies have beaten their earnings estimates since 1998, rather than 50%. Yet this season’s rate of earnings beats is far higher than that for the average earnings season, thus you can’t just blow-off the high beat rate as ‘the same old managed expectations game’.
Companies are beating expectations, and far more often than you’d normally expect.