We’ve got the beat

earnings-beat-rate

Corporate America has its groove back on the earnings front.

This earnings season companies are turning in impressive beat rates of Wall Street forecasts for earnings-per-share and revenue.

As of Feb. 6, some 65% of companies have beaten their consensus analyst estimates for earnings per share, according to an analysis by the Bespoke Investment Group.

The beat rate for top-line revenue is 56%, according to Bespoke.

 

Source: Bespoke Investment Group

Source: Bespoke Investment Group

 

 

Tech Rules

Overall, US companies have on average reported a 65% beat rate on consensus EPS forecasts and 56% for revenue predictions.

The technology sector leads the pack with an 81% beat rate on consensus EPS forecasts, followed by healthcare (70%), industrials (66%) and financials (66%).  

Less impressive are the telecom, real estate and utilities sectors that turned in relatively low beat rates.

Corporate America is expected to report positive earnings growth for all of 2016, snapping a multi-year losing streak.

The research firm FactSet sees earnings on pace to rise 4.2% year-on-year.

 

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Valuations

Whether this earnings rebound translates into higher stock prices is another matter.

US stocks, with the Dow Jones Industrial Average now hovering around the 20,000 mark, are anything but cheap.

According to FactSet, the S&P 500 trades at roughly 21 times the past 12 months of earnings. The 10-year average is about 16 times earnings.

Photo Credit: PICS by Marty via Flickr Creative Commons