Earnings trends

At the beginning of every earnings season, bears put forth the argument, earnings are going to be bad, for over 20 quarters they have been wrong. See the current earnings trends from Zacks.

So far, 37% of the S&P 500 firms have reported (185 companies). The results have been better than most have feared, and over the past few days the results have been getting better. The median year-over-year growth rate has climbed sharply. We are now back in double digits, which if maintained would make this the 21st straight quarter of double-digit growth. Just last week, the median growth rate stood at 7.14%, the surprise ratio at 2.1:1 and a median surprise of 2.90%. Well, in just a few days, the median growth has jumped to 10.6%, and the surprise ratio to 2.56:1. The median surprise has declined slightly to 2.70%, but that is still a very healthy level. While the surprise ratio is still below the 3:1 that we have come to expect, it is not that far away anymore.

Every sector now has more positive than negative surprises. Energy is now in the lead with 25.8% median year over year growth. That, however, should fade since the unreported firms in the sector have a median expected growth rate of -7.3%. Both Energy and Telecom, which holds the number two slot on the leader board, have had relatively few companies report.

Health Care might be having the most impressive earnings season overall, with a median growth rate of 18.7%, a surprise ratio of 4.67:1 and a median surprise of 3.30%.