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Record Percentage of S&P 500 Companies Beating Sales Estimates For Q4

Written by John Butters | Jan 26, 2018

As of January 25, 24% of the companies in the S&P 500 have reported actual earnings and sales numbers for the fourth quarter. Of these companies, 81% have reported sales above estimates and 19% have reported sales below estimates. How does this 81% number compare to recent averages?

During the past year (four quarters), 64% of the companies in the S&P 500 have reported sales above the mean estimate on average. During the past five years (20 quarters), 56% of companies in the S&P 500 have reported sales above the mean estimate on average. Thus, the percentage of companies reporting sales above estimates to date for Q4 2017 is running well above both the trailing one-year average and the trailing  five-year average.

If 81% is the final percentage for the quarter, it will mark the highest percentage of companies reporting sales above estimates for a quarter since FactSet began tracking the data in Q3 2008. The current record for the highest percentage for a quarter is 72%, set in Q2 2011.

Seven of the 11 sectors have more than 90% of companies reporting revenues above estimates to date, led by the Energy (100%), Health Care (100%), Real Estate (100%), Telecom Services (100%), and Utilities sectors.

Companies are also beating revenue estimates by wider margins than average for the fourth quarter. In aggregate, companies are reporting actual sales that are 1.1% above expectations. This percentage is above the trailing one- year average (+0.8%) and the trailing five-year average (+0.6%).

Sector-Level Breakdown

At the sector level, the Real Estate (6.6%) and Consumer Discretionary (+3.3%) sectors are reporting the largest upside aggregate differences between actual sales and estimated sales.

It is interesting to note that companies are beating an even higher bar for estimates now relative to expectations at the start of the quarter, as revenue estimates in aggregate actually increased during the fourth quarter. On September 30, the estimated revenue growth rate for Q4 was 5.7%. By December 31, it was 6.7%. Because of the number and magnitude of these upside surprises (and continued upward revisions to revenue estimates after the end of the quarter), the blended revenue growth rate for the quarter has increased to 7.0% today.

For more, download the complete Earning Insight report.