Earnings season early trends
The first quarter earnings season is underway, and is off to a spectacular start. While it is still very early, with just 371. of the reports in, the numbers so far have been very strong. Positive surprises are leading disappointments by a staggering 13:1 ratio. I think it is extremely unlikely that such a ratio will hold as the reporting season wears on. In the fourth quarter, the ratio of positive surprises to disappointments was just a hair under 3:1.
The emerging star with regards to estimate revisions is the Materials sector. The strength there is mostly among the metals companies, largely in response to record, or at least decades old highs, in metals prices. However the strength is not limited to the metals alone, and chemical and paper companies are also showing significant strength. For the first quarter, the sector is now expected to post median growth of 9.1%, while a month ago it was only expected to show 4.6% growth.
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