In last week’s Bespoke Report newsletter sent to clients, we provided our first in-depth read on the first quarter earnings season. Our Earnings Explorer tool that’s available to clients also provides real-time updates so that users can stay on top of overall beat rates as well as results from individual companies. It’s an amazing feature that you should really check out if you have not yet done so! Start a two-week trial to Bespoke Institutional to access our Earnings Explorer and everything else we have to offer.
Below is a snapshot from one section of the Earnings Explorer on our website that shows the rolling 3-month EPS and sales beat rate for US companies reporting earnings. The charts show the beat rates over the last six months, but you can toggle between six months, one year, five years, and all years (20).
As shown, the bottom-line earnings per share beat rate had been trending lower since since late 2018, but in recent weeks it has begun to tick higher, indicating companies are having an easier time beating EPS estimates lately. At the same time, the top-line sales beat rate has been steadily trending lower over the last two months to its current level of 58.54%. Both the EPS and sales beat rates remain above their long-term averages, however.
When it comes to beat rates, we’d always prefer a stronger top-line beat rate than a stronger bottom-line beat rate, because it’s much easier for companies to maneuver an earnings beat than a sales beat. Unfortunately, that’s not the case right now.