A total of 2,450 companies reported earnings during the just-completed first quarter earnings season. Of these 2,450 reports, exactly 1,500 of them reported better than expected EPS numbers. That’s a 61.2% earnings “beat” rate.
Below is chart that shows the one-day stock price reaction for every single earnings beat, miss, or inline report this season. As you know, not all “beats” translate into price gains, but on average, the stocks that beat EPS estimates this season gained 1.97% on their earnings reaction days.
While 61.2% of companies beat EPS estimates, 29.8% missed estimates, and these stocks averaged a one-day decline of 3.21% on their earnings reaction days. Given that misses are much less common than beats, it makes sense that stock prices get hit harder on a miss than they gain on a beat.
Finally, 9% of companies reported inline EPS this season. In this day and age where companies are pressured to “beat the quarter,” it should come as no surprise that the average stock that reported inline EPS fell in reaction to the news. As shown in the chart, the average stock that reported inline numbers fell 1.59% on its earnings reaction day.
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