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Beats | Are | Working

Takeaway: Getting 4Q13 Earnings right has paid on balance more so than in previous quarters. So far. Stocks getting punished for misses especially.

Editor's note: This is an unlocked excerpt from Hedgeye Macro Analyst Christian Drake. You can follow him on Twitter @HedgeyeUSA

Beats | Are | Working - ben55

BETA or BEAT-MISS?  Relative to 3Q13 where Macro completely monopolized price action, "The Print" has had a moderately impactful influence on subsequent price performance thus far in 4Q.  Below we chart company Beats & Misses vs subsequent market adjusted 3-day performance. 

  • EPS:  Earnings performance has shown a stronger relationship with performance as 62% of companies beating EPS estimates subsequently outperformed the market by 4.1% on average while 38% went on to underperform the market by an average of -3.0%.  EPS misses have been sold heavily with 78% of companies missing EPS estimates subsequently underperformed the market by -5.4% on average.  

Beats | Are | Working - beats

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