Earnings Beat Rates By International Exposure

As earnings season approaches its mid-point, we looked to see how companies are reporting based on their international revenue exposure. Using the Russell 1000 as our universe, we grouped companies based on the percentage of revenues each one derives from international sources. We then calculated the percentage of companies in each group that have reported better than expected earnings. As shown, it pays to do business outside of the US.

So far this quarter, of the 450 companies in the Russell 1000 that have reported earnings since March 1st, 57.3% percent of them have beat EPS expectations. However, of the 95 companies that derive more than half of their revenues outside of the US, the beat rate rises to 68.4%. This contrasts to the 54.4% beat rate of companies that get less than half of their sales outside of the US. Even worse is the subgroup of 163 companies that have no international exposure. The beat rate for these companies is only 46%.