S&P 500 Q4 Earnings Surprise To The Upside

Goldman Sachs Group Inc (NYSE:GS) Portfolio Strategy Research released a report last Friday titled “U.S. Equity Views: S&P 500 4Q 2013 Earnings Update”. This report provides both an overview of S&P 500 (INDEXSP:.INX) earnings for the fourth quarter and updates for company for earnings next quarter from various market bellwethers.

S&P 500 positive earnings surprises

The Goldman Sachs Group Inc (NYSE:GS) report highlights the fact that the overall earnings season has been positive in terms of revenues for most companies. “More companies surprised positively on revenues than in a typical quarter. 43% of firms beat consensus sales expectations by more than one standard deviation (vs. 40-quarter average of 35%). But top-line beats have not translated to the bottom-line as earnings results were in line.”

Einhorn Tells Investors: Tesla Is Gaming S&P 500 Index Committee

david einhorn, reading, valuewalk, internet, investment research, Greenlight Capital, hedge funds, Greenlight Masters, famous hedge fund owners, big value investors, websites, books, reading financials, investment analysis, shortselling, investment conferences, shorting, short biasThe Federal Reserve has poured unprecedented levels of stimulus into the U.S. economy to deal with the pandemic, and most experts agree that inflation is just around the corner. David Einhorn has positioned his Greenlight Capital to benefit from inflation when it arrives. Q2 2020 hedge fund letters, conferences and more SORRY! This content is Read More

Others figures of note for 4Q earnings include the fact that 43% of firms beat consensus sales expectations by more than one standard deviation (compared to a 10-year average of just 35%). On the other side of the coin, only 11% of firms disappointed on sales by the same magnitude magnitude (compared to 20% on a 10-year basis).

Overall, S&P 500 (INDEXSP:.INX) companies beat consensus EPS estimates by 8.4%. If you take out accounting adjustments, then reporting companies only beat estimates by 3.3%.

Information technology sector boasts revenue growth

The Goldman Sachs Group Inc (NYSE:GS) report also points out that more than 75% of S&P 500 (INDEXSP:.INX) information technology companies beat consensus revenue figures in the fourth quarter. “Info Tech represents about 20% of reported companies, but 40% of revenue beats. The percentage of tech sales beats is at the 40-quarter high. The strength of revenue beats varied by company. While some firms noted stronger demand, several guided next quarter sales below consensus.”

A total of 62% of info tech companies surpassed earnings expectations last quarter.

S&P 500 IT

Mixed bag future guidance for info tech

However, despite the generally positive 4Q earnings results, future guidance from companies has been far from uniform. “Microsoft (MSFT) exceeded sales expectations by 3% on strong consumer sales during the holiday season. Companies like F5 Networks, Inc. (NASDAQ:FFIV) and TE Connectivity Ltd (NYSE:TEL) beat revenue expectations and guided sales above consensus for next quarter, while Computer Storage & Peripherals stocks like Western Digital Corp (NASDAQ:WDC) and SanDisk Corporation (NASDAQ:SNDK) beat expectations but guided sales below consensus. Texas Instruments Incorporated (NASDAQ:TXN) beat estimates but announced 1,100 global job cuts. One of the larger Technology companies, IBM, missed revenue expectations.”