S&P 500 Earnings Beat the Street by 4.5% So Far

S&P 500 Earnings Beat the Street by 4.5% So Far
S&P 500 Earnings Beat the Street by 4.5% So Far

The S&P 500 is widely regarded as the best single gauge of the large-cap U.S. equities market, and therefore is considered a bellwether for the American economy. And so far this earnings season, S&P 500 companies have reported an average 4.5% earnings per share surprise, according to Capital IQ's Earnings This Week report.

By the end of last week, 288 of the 500 the companies had reported earnings since the season began on Jan. 10. "For the current quarter, 71% have reported earnings better than street expectations," Capital IQ earnings analyst Michael Patton said. "This is 6% below last year at this time, where 77% of the S&P 500 companies reported better than expected earnings."

However, earnings are definitely higher this quarter, Patton added, suggesting that for the latest quarter "analysts were predicting higher forecasts as opposed to a slumping 2009."

Financials were the best reporting sector so far. With 60 of the 81 in the index having reported, they are beating the Street on earnings per share by 14.6%. Of those, 63% have reported earnings above estimates. But there were disappointments as well, with 35% reporting earnings below estimates, including America's largest bank, Bank of America (BAC).

Also among the winners, thus far, the health care sector has reported a 6.9% EPS surprise and information technology companies have beaten the street by 6.6%.

Information Technology Extends a Good Run

The worst performing sector so far, has been consumer discretionary, which underperformed EPS expectations by 15%. With companies such as automaker Ford (F), home builder DR Horton (DHI) and photography products maker Eastman Kodak (EK) in this group -- all of which reported disappointing earnings -- this isn't surprising.

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However, only 30 of the 79 consumer discretionary companies in the index had reported by Feb 4, and many, such as clothing retailer Gap (GPS) and fast food giant McDonald's (MCD), managed to surprise on the upside.

In terms of numbers of companies reporting better than expected earnings, the health care and Information technology sectors led the way with 82% of firms topping estimates. Interestingly, last year, information technology shared the lead with the consumer discretionary sector, when both had 88% of their companies beating EPS estimates.

Another 59 companies report earnings this week, including such iconic brands as Walt Disney (DIS), Cisco Systems (CSCO), Pepsico (PEP) and Coca Cola (KO).

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