Revenues And Guidance Take A Hit

by: Bespoke Investment Group

So far this earnings season, 67.2% of companies have beaten bottom-line consensus EPS estimates. As shown in the chart below, earnings beat rates are doing just fine relative to other quarters over the last few years.

While bottom line numbers aren’t raising any red flags this season, revenues certainly appear to have a problem. Only 56% of companies that have reported have beaten top-line revenue estimates. The drop from previous quarters is clear in the chart below. As it stands right now, this season is tracking to be the worst quarter for revenue beat rates since late 2016. There is still time for the revenue beat rate to turn around before mid-November when earnings season ends, but for a market grown accustomed to strong top and bottom line numbers, it is easy to see why investors have been selling early on this season.