The Q2 reporting period is set to begin next Monday, July 11th when Alcoa (AA) reports earnings after the close. Between now and next Monday, Bespoke will be publishing a good amount of earnings related-content. We’re able to do this because we have a gigantic database of quarterly earnings reports for individual stocks going back 15 years to 2001. This database — the Bespoke Interactive Earnings Report Database — is available to Bespoke Institutional subscribers right on our website. If you’re interested in gaining access, you can learn more about it here.
We have more than 130,000 quarterly earnings reports for individual stocks in our database, and we can combine and filter these reports in a number of ways. One way is to analyze earnings trends by sector. Below we provide a chart showing the historical earnings beat rate by sector. The “earnings beat rate” is the percentage of time a company reports actual earnings that are stronger than consensus analyst earnings estimates. Before looking at sector stats, we want to point out that for all quarterly earnings reports over the last 15 years, the average stock has beaten earnings estimates 61% of the time.
Notably, just three sectors have earnings beat rates that are stronger than the average beat rate of 61% for all stocks across all sectors. These three are Technology, Consumer Discretionary, and Industrials. The Technology sector has far and away the strongest earnings beat rate at 70%. That’s important because Tech has the largest weighting in the S&P 500 at 20%. Consumer Discretionary has the second strongest beat rate at 63%, and Industrials ranks third at 61%.
Health Care, Consumer Staples, and Financials have beat rates just under 61%, while Telecom, Energy, Utilities, and Materials have the lowest beat rates in the market.