Top Line Numbers Not Bad

With everyone worried about the top line revenue numbers this earnings season, we've been tracking this data closely. As shown below, 59% of US companies have beaten revenue estimates this quarter, which is the highest reading over the last 5 earnings seasons. While it's not in the 70%-80% range we saw during the last bull market, the direction of the revenue "beat" rate is trending higher, which is a positive for the market.

click to enlarge

Comments

[Robert Mart...:]

BIG:

Do the positive revenue surprises reflect growth overseas? The S&P 500 is tilted towarnds non-U.S. sources, and this may influence the numbers. Alternatively, maybe revenue growth simply reflects a global reflation rally (nominal growth rises during a liquidity boom, as at present).

Nevertheless, revenue surprises are a very valuable signal. If you have geographic data, that would be great.
Rob

Nov 10 03:38 PM

[logicalthought:]

Playing the "beat the estimates" game is lots of fun, but the actual numbers show nothing more than stabilization at awful levels. This is a recipe for significant PE multiple compression. As to when that occurs, your guess is as good as mine, because right now, I'm "short and wrong".

Nov 10 04:01 PM

[ryanclarke:]

Your not the only one short ... and thus not the only one "wrong." Give your shorts another six months ... inflationary commodity pressures are building ... household debt on the whole is not being washed away with bankruptcy ... top line revenue is nowhere near it's peak in 06-07. Look no further than MS for a company that's somehow making money with revenue about half what it used to be ... and yes, I know it's because MS dumped a ton of "good assets" onto Uncle Sam's Fed balance sheet.


On Nov 10 04:01 PM logicalthought wrote:

> Playing the "beat the estimates" game is lots of fun, but the actual
> numbers show nothing more than stabilization at awful levels. This
> is a recipe for significant PE multiple compression. As to when that
> occurs, your guess is as good as mine, because right now, I'm "short
> and wrong".

Nov 10 05:19 PM