This morning we did a post highlighting historical earnings beat rates for US companies during earnings season. Below we dive into sectors with a few additional data points.
The first chart below shows the average price change that stocks in each sector typically experience on their earnings reaction days. (For companies that report in the morning before the open, that day’s trading is its earnings reaction day. For companies that report in the evening after the close, the next day’s trading is its earnings reaction day.)
As shown, Technology stocks are by far the most volatile on their earnings reaction days with an average absolute one-day change of +/-7.23%. That’s a huge move, but it’s one you can expect to experience for the average Tech stock essentially once every three months. Consumer Discretionary stocks are the second most volatile on earnings with an average one-day change of +/-6.25%, followed by Telecom (+/-5.85%), Health Care (+/-5.72%), and Industrials (+/-5.42%). On the flip side, Financial stocks are the second least volatile on earnings with an average one-day move of just +/-3.56%, and Utilities are the least volatile at +/-2.23%. Given their low-growth, defensive nature, it’s not surprising that Utilities stocks barely budge when they report quarterly numbers.
If you’re new to Bespoke or you’ve simply never looked into our research subscriptions, earnings season is a great time to try us out. Click here to start a 14-day no-obligation free trial. We’ll be updating the charts below and many other earnings-related data points all month long.
Below is the historical earnings beat rate (% of companies that beat consensus analyst earnings per share estimates) by sector going back to 2001. While Technology stocks are the most volatile on their earnings reaction days, they also beat earnings estimates at the highest rate (66.3%). That’s more than four percentage points better than the 62% beat rate for Consumer Discretionary in second place. On the flip side, even though they’re still above 50%, Utilities, Energy, and Telecom have the lowest earnings beat rates.
The Technology sector also has the highest top-line revenue beat rate at 66.5%, but it’s Financials — not Consumer Discretionary — that have the second highest revenue beat rate at 62.2%.
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