With results from 110 of the S&P 500 companies as of Thursday, 85.5% beat analysts’ estimates for earnings per share, according to data from Refinitiv.
Although it is still early in its earnings period, a record percentage of first-quarter earnings reports from major US companies exceed analysts’ expectations.
Earnings are rebounding from the lows caused by last year’s pandemic, but many companies have held back on providing guidance, making it harder for analysts to estimate results for this year. Some strategists have argued that higher-than-expected earnings could help support the market even if valuations are considered expensive.
With results from 110 of the S&P 500 companies as of Thursday, 85.5% beat analysts’ estimates for earnings per share, according to data from Refinitiv. If this trend continues throughout the reporting season, it would be the highest beat rate ever recorded until 1994.
An average of 78% of companies exceeded earnings estimates over the past four quarters.
Stronger-than-expected results from major banks and other companies strengthened the outlook for the quarter. Earnings are now expected to rise 33.3% in the first quarter from a year earlier, up from 24.2% at the start of the month, based on data from Refinitiv.
This is expected to be the highest quarterly earnings growth since 2010 following the financial crisis.
To be sure, the S&P 500 has grown by less than 1% since mid-April, when the earnings period kicked off. Wall Street tumbled Thursday as sources said US President Joe Biden will propose to raise taxes on the rich next week to fund about $ 1 trillion in investments.
A resurgence of coronavirus cases globally has added to investor concerns.
Also, earlier this week, Netflix Inc said slower production of TV shows and movies during the pandemic hurt subscriber growth in the first quarter and its shares dropped sharply.
Despite some high-profile disappointments, “the momentum for corporate earnings looks positive,” Mark Haefele, UBS AG’s chief investment officer global wealth management, wrote in a statement this week.
“Overall, the US earnings season has started well.”