Here’s a quick update on the Q2 earnings and revenue beat rates courtesy of FactSet:
To date, 104 companies in the S&P 500 have reported revenues and earnings for the second quarter. Of these 104 companies, 74% have reported actual EPS above the mean estimate. This percentage is slightly higher than recent averages. Over the past four years on average, 68% of companies have reported actual EPS above the mean EPS estimate at this same point in time in the earning season.
However, only 45% of companies have reported actual revenues above mean estimate. This percentage is well below recent averages. Over the past four years on average, 56% of companies reported actual sales above the mean sales estimate at this same point in time in earnings season.
The disappointing sales beat rate doesn’t mean you should be running for the exits:
It is interesting to note that the market has typically not reacted negatively in previous earnings seasons when the percentage of companies reporting sales above estimates has been below average. During the Q2 2009, Q4 2009, Q3 2010, Q4 2010, and Q4 2011 earnings seasons, the percentage of companies reporting sales above estimates was below the 56% average at this stage of the earnings season. However, the S&P 500 finished higher the month after the end of the quarter for four of these five earnings seasons.
Here’s chart of the revenue beat rate since 2008: