Better-Than-Expected Bank Results Set the Tone for Q3 Earnings Season

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Q3 S&P 500 EPS growth is expected to come in at 4.1%, the fifth consecutive quarter of growth.Peak weeks for the Q3 season run from October 28 - November 15.

One major thesis leading into this earnings season was that lowered sell-side estimates heading into reports would lead to bigger beats and happier investors. That’s more or less what happened with the banks, with some caveats, of course.) surpassed revenue estimates. Most of these names saw their stocks rewarded as a result of better-than-expected results, even WFC’s stock price popped 6% on the day of their earnings report despite missing on the top line.

The LERI tracks outlier earnings date changes among publicly traded companies with market capitalizations of $250M and higher. The LERI has a baseline reading of 100, and anything above that indicates that companies are feeling uncertain about their current and short-term prospects. A LERI reading under 100 suggests that companies feel they have a pretty good crystal ball for the near term.

On November 5, the US will elect its next president, and that week is typically a peak one for the Q3 season. Many companies that would usually report that week have pushed off their announcement to the following two weeks to avoid getting lost in the election coverage. As of October 11, there were 105 late outliers and 34 early outliers.Next week is not quite peak season yet, but contains some highly watched earnings reports.

 

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