Earnings season has now begun with Alcoa’s (AA) report this morning before the open. With AA down 10% on the day, things aren’t getting started on a great note.
Now that earnings season has started, what do expectations look like? Below is a look at the historical “beat rates” for bottom-line EPS and top-line revenues for every quarterly earnings season going back to 1999. Over this period of 17 years, the average quarterly earnings beat rate (% of companies beating their consensus analyst EPS estimate) has been 62%. The average revenue beat rate has been slightly lower at 60%.
As shown in the first chart below, earnings beat rates were much higher during the bull market of the mid-2000s, and a lower bar has been set over the last five years. Last quarter, though, we saw the highest earnings beat rate since Q4 2010 at 64%. Can we beat that this quarter?
As shown in the second chart, revenue beat rates have steadily trended lower over the years, but notably, we’ve seen a quarter-over-quarter increase in top-line beat rates over the last three earnings seasons. Last season, the revenue beat rate came in at 56%, and investors will want to see another quarter-over-quarter increase this season.
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.