There’s been a lot of talk on Wall Street recently about the divide between “hard” and “soft” economic data. Under the confines of this Wall Street narrative, measures like Consumer Confidence (which have been hitting multi-decade highs recently) are dismissed. The hard data hasn’t caught up yet, they say.
How about this for hard data?
So far, 305 of 497 companies in the S&P 500 have reported aggregate year-over-year sales and earnings per share growth of +7.7% and +15.6% respectively. If current growth holds that would mark the highest EPS growth since the first quarter of 2011. Meanwhile, the sales and earnings of big tech stocks in the Nasdaq 100 are up 9.7% and 21.1% year-over-year respectively.
“These are real numbers. This is hard data. It’s not someone opinion on what’s happening,” says Hedgeye U.S. Macro analyst Christian Drake in the video from The Macro Show above.
This growth isn’t financial engineering either. We all know the game that’s usually played in corporate America. At the start of the year, companies set a high-water mark for earnings only to progressively lower estimates throughout the year and then beat those battered expectations at the back end of the year.
Instead, because earnings growth is picking up along with growth in the broader U.S. economy, companies sticking to their guns and flat-out beating earnings guidance. Earnings per share revisions in the past few quarters have been 0% for the overall S&P 500. Meanwhile, the percentage of S&P 500 companies beating earnings expectations is above 5%, also well above the 5-year average beat percentage.
To sum it up, “Earnings and sales are accelerating. They’re accelerating faster than expectations. And they’re beating on an un-lowered bar,” Drake says.
Talk about hard data.
