The cerebral enervation is peaking today after three days of mind-numbing, testimony laden #JuryDuty and an early morning parsing of jobs mania, so we’re going with the twitter’esque summary update in this week’s earnings scorecard.
The trifecta of takeaways below sufficiently summarizes the prevailing trends.
OPERATING PERFORMANCE: IF EVERYONE LOSES, NOBODY LOSES
While consumer companies were the notable fundamental laggards in 4Q13, decelerating operating momentum has been pervasive to start 2014.
At the three-quarter mark, just 46% and 44% of companies have reported sequential acceleration in sales and earnings growth, respectively. Less than half of SPX constituents have reported sequential operating margin expansion as well.
Easy forward comps is one way to frame it up for the panglossian-colored glasses contingent, I suppose. #Weather
BEAT-MISS TRENDS: The sales beat percentage worsened W/W and, at 52%, is tracking at its lowest percentage since 1Q13. EPS beats, meanwhile, are tracking at their best level in years as proactive earnings management continues to reward both investors and management teams
THE PRINT: Fundamental forecasting has mattered for a second consecutive quarter, particularly on the bottom line. While the correlation between EPS beats and subsequent performance has been equivocal, of the minority of companies that have missed bottom line estimates, 75% have gone on to underperform the market by -3.7% on average over the subsequent 3 trading days.
Christian B. Drake