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Earnings season starts after the close today with Alcoa’s (AA) report. Bespoke Institutional members have access to our Interactive Earnings Report Database, which contains detailed quarterly information for nearly every US company that has reported numbers over the last 15 years. We recently analyzed the more than 70,000 individual earnings reports that have been released over the last ten years to put together some notable sector stats. In the chart below, we highlight the percentage of companies that have beaten consensus analyst earnings estimates by sector over the last ten years.
As shown, the earnings beat rate for all stocks that have reported over the last ten years has been 62%. So just over six stocks in ten beat their quarterly EPS estimates. Technology sector stocks beat earnings at a much higher rate — 69%. That’s six percentage points above the next closest sectors — Consumer Discretionary, Health Care, and Industrials, which all have beat rates of 63%.
The Telecom sector has the lowest beat rate and the only beat rate that is less than 50%. Utilities, Materials, Energy and Financials all have beat rates below 60%.
In terms of stock price volatility in reaction to earnings, the average one-day change on the first trading day following earnings for all stocks that have reported over the last ten years has been +/-5.3%. That means you can expect any given stock to move just over 5% (up or down) on its earnings reaction day. (For stocks that report in the AM before the open, we use that day’s change. For stocks that report after the close, we use the next day’s change.)
While it has the highest earnings beat rate, Technology stocks also experience the biggest moves in reaction to earnings. As shown below, the average Tech stock that reports earnings experiences a one-day change of +/-6.97% on its earnings reaction day. That’s nearly 1.7 percentage points higher than the average for all stocks. Behind Technology is Consumer Discretionary, whose stocks average a one-day change of +/-6.33% on earnings. Health Care ranks third at +/-5.64%.
While Tech stocks see the biggest moves in reaction to earnings, Utilities stocks see the smallest moves. The average Utilities stock that has reported earnings over the last ten years has moved just +/-2.02% on its earnings reaction day.
It makes total sense that Technology stocks would move more in reaction to earnings than Utilities stocks. The numbers below just show you how much more.
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