Chart o’ the Day: Earnings Surprises by Sector

We’re through the big week of earnings season and Savita Subramanian’s Equity and Quant Strategy team at BofA Merrill Lynch have some interesting stats for us:

1Q14 Earnings Season: Week 3
With the conclusion of Week 3, 239 companies representing nearly 60% of S&P 500 1Q earnings have now reported. While analysts had gone into the quarter expecting earnings to decline from year-ago levels, consensus now expects+2% YoY earnings growth, or +5% ex. Fins. and Energy. Bottom-up EPS is now $27.57, vs. $26.98 the prior week, suggesting a 2% earnings beat.

Sales are still slated to grow 3% YoY this quarter, or 4% ex. Financials and Energy.

54% of companies have beaten on EPS, 49% have beaten on sales, and 33% have beaten on both. This is an improvement from the prior week in all three metrics, and is just below the long-term average of 35% for top- and bottom-line beats. The focus appears to be shifting back to fundamentals, as post-reporting performance spreads widened over the last week. Companies beating on both EPS and sales have outperformed the S&P by 1.3ppt in the day after reporting, while misses have underperformed by 1.8ppt.

Great chart of surprises by sector below:

Regarding the market being led by utilities – we’ve barely seen any of their reports yet but those we have seen have all been upside surprises.

Source:

Week 3: Better results across the board
Bank of America Merrill Lynch – April 28th 2014