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3Q Earnings Scorecard -- which sectors are outperforming and which ones are most optimistic

We're pretty well along into earnings season and this is a good time to take stock of how the numbers are stacking up.

Below is a table that lists each sector shows the results as of Tuesday's earnings reports:

Sector Earnings Beats Y-o-Y Earnings Increases Y-o-Y Revenue Increases Upside Guidance Total Providing Guidance Total Number of Stocks Reporting
Basic Industries 24 26 35 5 13 40
Capital Goods 51 51 51 15 34 59
Consumer Durables 36 34 38 9 28 46
Consumer Non-Durables 26 28 29 6 14 34
Consumer Services 44 47 49 6 35 69
Energy 23 18 22
6 31
Finance 80 70 36 4 9 106
Health Care 25 25 36 8 25 43
Miscellaneous 13 10 11 1 10 15
n/a 1 1 1
1 1
Public Utilities 20 18 20 4 13 26
Technology 95 94 106 19 72 121
Transportation 17 27 25 1 3 27
Grand Total 455 449 459 78 263 618

A cursory glance gives the impression this earnings season has been pretty decent. The next table makes things a lot clearer.

This following table converts the numbers above into percentages:

Sector % Upside Guidance % Earnings Beats % Y-o-Y Earnings Increases % Y-o-Y Revenue Increases
Basic Industries 38% 60% 65% 88%
Capital Goods 44% 86% 86% 86%
Consumer Durables 32% 78% 74% 83%
Consumer Non-Durables 43% 76% 82% 85%
Consumer Services 17% 64% 68% 71%
Energy 0% 74% 58% 71%
Finance 44% 75% 66% 34%
Health Care 32% 58% 58% 84%
Miscellaneous 10% 87% 67% 73%
n/a 0% 100% 100% 100%
Public Utilities 31% 77% 69% 77%
Technology 26% 79% 78% 88%
Transportation 33% 63% 100% 93%
Grand Total 30% 74% 73% 74%

In percentage terms, this earnings season looks quite strong. Looking at the Grand Total line, aggregate numbers are definitely good.

Looking at the individual sectors (and leaving out Miscellaneous and n/a), Capital Goods has had the most earnings beats followed by a group of sectors in the high 70% range including Tech, Consumer Durable, Consumer Non-Durables and Utilities.

Similarly to last quarter, the high percentage of revenue increases shows that the earnings increases are not primarily due to cost cutting.

Another interesting fact is related to Upside Guidance. Where we had Tech providing so much upside guidance last quarter, this quarter the Tech number is merely 26%. Most surprising to me is that one of the highest percentages is in Finance sector. While the banks bellyache about the new Dodd-Frank financial regulation laws, many are predicting better times ahead. Looking further across the Financial line, it jumps out that almost twice as many companies had earnings increases than had revenue increases. I suspect that in many cases this is the result of simply reducing bad loan reserves, not any increase in profitable business.

So looking back on the 3rd quarter, the majority of companies seem fairly healthy. Looking ahead based on forward guidance, things look a little anemic. The optimism of the Financials stands in contrast to the conservative outlook of Tech, for example. Time will tell which sector outperforms next quarter.

Disclosure: none

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