Skip to main content

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

Comments

Popular posts from this blog

Brazil - in a bubble or on a roll?

A couple of years ago, no one recognized the real estate bubble even though it was under everyone's nose. Now, analysts and bloggers are seeing bubbles everywhere they look. One of them, they say is in Brazil whose Bovespa stock market index has doubled in the last 12 months. Does the bubble accusation hold water? I don't think so and here are 7 reasons why Brazil is by no means a bubble economy: Exports have held up over the past year thanks to demand from China for Brazil's soya exports and iron ore. This was helped by the the Brazilian government's drive to improve trade links with Asia and Africa. Export diversification, spurred by a more active trade policy and increased focus on "south-south" trade under current president Lula, helped mitigate the decline in demand from OECD (Organization for Economic Co-operation and Development) countries A "sensible" economic framework has been in place since the 1990's. This has included inflation

Trade Radar gets another update

Some of our data sources changed again and it impacted our ability to load fundamental/financial data. In response, we are rolling out a new version of the software: 7.1.24 The data sourcing issues are fixed and some dead links in the Chart menu were removed. So whether you are a registered user or someone engaged in the free trial, head over to our update page and download the latest version. The update page is here:   https://tradingstockalerts.com/software/downloadpatch Contact us if you have questions or identify any new issues.

Interactive Ads - Google one-ups Yahoo again

Google's ( GOOG ) press release describing the expansion of a beta program for what are being called Gadget Ads has again shown that Google is unparalleled at melding technology and advertising to benefit its bottom line. Gadget Ads are mini-web pages or "widgets" that can be embedded within publisher pages. I have written in the past on Yahoo's ( YHOO ) Smart Ads and how, by more precisely targeting site users and adjusting ad content accordingly, they provide a much desired evolution of the banner or display ad format. Though Smart Ads and Gadget Ads are not really the same, I think it is fair to say that Google has seen the challenge of Smart Ads and has chosen to leapfrog Yahoo by rolling out its own update to the display ad format. The evolution of the Gadget Ad -- One of the trends on the Internet over the last year or so involves software developers creating "widgets" which can be hosted within web pages and blogs. Widgets can be pretty much anything