Recent Earnings Strength Tied to International Exposure

Hickey and Walters (Bespoke) submit: In the chart below, we took the 274 S&P 500 companies that reported earnings in April (through 4/27) and broke them up into groups by the percentage of their total revenues that are derived from US operations. We then took these groups and looked at how their actual reports compared to analyst estimates.

From this analysis we found that companies that have more of a global presence have been more likely to beat earnings and revenue estimates this quarter. Just 64% of companies whose total revenues come entirely from the US have beat their EPS estimates in April compared to an average of 71% for all companies.

click to enlarge

The list below highlights S&P 500 companies which derive at least 30% of their sales abroad and are scheduled to report earnings this week. As we previously highlighted, so far this quarter, this cohort has seen the highest percentage of earnings and revenue beats.

Comments

[jbs:]

UNSURPRISING

I can't say this information is surprising, especially considering it's what everyone's been saying since we started worrying about an economic slowdown.

But your chart is anything but conclusive. Theoretically, the companies with less than 50% exposure to the US should have beat earnings more than those companies in the 50-60% range. The fact that they haven't says that there is something else at work here. And what's going on with the 90-99% group?

MISLEADING CHART

If you used even ranges of 10% then you're grouping at the high end should be 91-100%. By doing JUST 100% you aren't representing the data properly. I know why you did it, but it isn't correct.

On top of that, you should not use the

2007 May 02 12:42 PM

[jbs:]

Well it looks like my comment got truncated without me being told it was too long.

My point was: by using inconsistent groupings of the data (1%, 10%, and 50%) you are not accurately representing the data.

Furthermore, your trend line has one data point below, and six data points above.

I would be curious to see what the data looks like when it is accurately presented.

2007 May 02 12:47 PM