With the results of 110 of the S&P 500 companies on Thursday, 85.5% beat analysts’ estimates for earnings per share, according to data from Refinitiv.
Although still early in the earnings period, a record percentage of first-quarter earnings reports from major US companies are exceeding analysts’ expectations.
Profits are rebounding from last year’s pandemic-fueled lows, but many companies have been reluctant to offer advice, making it harder for analysts to estimate results for this year. Some strategists have said that higher-than-expected earnings could help support the market even if valuations are seen as expensive.
With the results of 110 of the S&P 500 companies on Thursday, 85.5% beat analysts’ estimates for earnings per share, according to data from Refinitiv. If this trend continues throughout the reporting season, it would be the highest beat rate on record since 1994.
On average, 78% of companies have beaten earnings estimates over the past four quarters.
Stronger-than-expected results from major banks and other businesses pushed up expectations for the quarter. Profits are now expected to have risen 33.3% in the first quarter from a year earlier, down from 24.2% at the start of the month, according to data from Refinitiv.
This is expected to be the strongest quarterly earnings growth since 2010 after the financial crisis.
To be sure, the S&P 500 has been up less than 1% since mid-April, when the earnings period shifted into high gear. Wall Street fell on Thursday as sources said US President Joe Biden will propose raising taxes on the rich next week to fund around $ 1 trillion in investments.
A resurgence of coronavirus cases around the world has added to investor concerns.
Additionally, earlier this week, Netflix Inc. said that the slowdown in TV and movie production during the pandemic hurt first-quarter subscriber growth and that its shares fell sharply. .
Despite some high-profile disappointments, “corporate earnings dynamics appear positive,” wrote Mark Haefele, global investment manager for wealth management at UBS AG, in a note this week.
“Overall, the results season in the US has started well.”