Q1 Earnings: A Stronger Weakling than Originally Thought
We are past the halfway mark in the 2014 Q1 earnings season, with results from more than half of the market capitalization of the S&P 500 already out. Not many surprises at this stage – growth remains weak, fewer companies are beating revenue estimates and guidance is for the most part on the negative side. That said, results are modestly better in some respects relative to the extremely low levels to which estimates had fallen in the run up to the start of the reporting season. More on that a little later……
We are still in the heart of the reporting season, with more than 900 companies reporting results this week, including 134 S&P 500 members. The focus this week is on Energy, Utility and Industrial companies, with a number of industry leaders like Exxon (NYSE:XOM-Free Report), Chevron (NYSE:CVX-Free Report), Cummins (NYSE:CMI-Free Report), Eaton Corp (NYSE:ETN-Free Report) and others reporting results.
The Energy companies aren't expected to spring any surprises, with their Q1 results largely following trends in the underlying commodities. But it will be interesting to see if the Industrial companies see any improvement on the horizon. The strongCaterpillar (NYSE:CAT-Free Report) report was largely a function of better cost controls and some improvement in the construction end markets, but the overall outlook for the mining and large-scale infrastructure development still remains tepid.
Scorecard for 2014 Q1 (as of Friday, April 25th)
Total earnings for the 240 S&P 500 members that have reported results are up 2.0% from the same period last year, with a 'beat ratio' of 67.2% and a median surprise of +3.1%. Total revenues are up +3.7%, with a revenue 'beat ratio' of 47.3% and the median company missing top-line expectations by 0.1%.
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