JPMorgan shares are up more than 2% today after reporting earnings that beat consensus estimates. Not so fast. As our Macro team points out in a note sent to subscribers earlier this morning, overcoming analyst earnings expectations isn't the metaphorical albatross the media makes it out to be:
"JPMorgan kicked off bulge bracket earnings this morning and the headlines of the top stories all centered around JPM 'beating' estimates. As you can clearly see [in the chart below] where we show an earnings beat/miss heatmap (where companies print relative to where consensus expects) everyone beats estimates. It’s part of modern financial reporting, and much less relevant than Y/Y earnings growth. JP Morgan reported a -1.4% hit to net income in Q2 Y/Y to kick off what we think could be another disappointing earnings season for Q2."
In essence, companies rarely miss consensus earnings estimates. That's why it's the year-over-year earnings and sales numbers that matter.
Click the image to enlarge.
While we're on JPMorgan...
Hedgeye Financials analyst Josh Steiner has the brief breakdown of JPMorgan's results today:
https://twitter.com/HedgeyeFIG/status/753549882586112000
https://twitter.com/HedgeyeFIG/status/753550683295526912