ab19 January 2024Global Research and Evidence LabUS Equity StrategyEarnings Brief 4Q23: Jan 194Q reporting season will be especially difficult for investors to navigate, given the wide dispersion in expected results. Revisions for the quarter are coming in weaker than the long-term trend: however, 2024 revisions are much stronger. While 4Q earnings should be quite mixed, the 2024 outlook is more broadly positive. Autos begin reporting results next week, with TSLA on Jan 24. Earnings for the group are expected to be quite weak (-46.8%), the result of the UAW strike and price cuts by TSLA. Ex-Autos, S&P 500 EPS growth would be 5.7% vs. 4.6% when included.10.4% of the S&P 500's market cap has reported. 4Q expectations are for revenues to grow +2.5% and EPS by +4.6%. Growth among groups varies significantly:TECH+: Revs +8.7% and EPS +33.3%Financials: Revs +4.6% and EPS +8.4% Energy and Materials: Revs -8.4% and EPS -26.9% Industrials and Disc ex Internet Retail: Revs +0.5% and EPS -2.0%Health Care: Revs +4.2% and EPS -14.8% Non-Cyclical ex Health Care: Revs +2.8% and EPS +5.1%Earnings are beating estimates by +5.6% in aggregate, with 76% of companies topping projections. EPS is on pace for +9.6%, assuming the current aggregate beat rate of +5.6% for the rest of this season.Over the next 5 trading days, 74 companies representing 14.1% of S&P 500’s market cap will report results, including Schlumberger, State Street, Johnson & Johnson, Proctor & Gamble, Netflix, Abbott Laboratories, IBM, and Starbucks. Figure 1: Path of 2024 Bottom-Up S&P 500 Consensus EPS-6.3-4.2-1.6-8-7-6-5-4-3-2-101JunSepDecMarJunSepDecMar Historical Trend 2024%Source: Standard & Poor’s, Refinitiv, FactSet, UBSThis report has been prepared by UBS Securities LLC. ANALYST CERTIFICATION AND REQUIRED DISCLOSURES, including information on the Quantitative Research Review published by UBS, begin on page 11. UBS does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.Equity StrategyAmericasJonathan GolubStrategist jonathan.golub@ubs.com +1-212-713 8673Patrick PalfreyStrategist patrick.palfrey@ubs.com +1-212-713-2000Will JacksonAssociate Strategist will.jackson@ubs.com +1-212-713-2000Nicholas SamoyednyAssociate Strategist nicholas.samoyedny@ubs.com +1-212-713-2000 US Equity Strategy 19 January 2024ab 2US Equity StrategyUBS ResearchS&P 500 Figure 2: 4Q23 Earnings Dashboard – S&P 500Weighted Growth YoY (%)RevenueMarginsEarningsBuybacksEPSS&P 5002.50.63.11.54.6Cyclicals-3.0-12.6-15.62.1-13.5Energy-9.3-21.8-31.02.9-28.2Materials-5.7-17.3-23.10.7-22.4Industrials1.4-4.0-2.61.4-1.3Discretionary ex-Internet Retail-0.6-4.2-4.81.7-3.1TECH+8.723.031.71.633.3Technology6.29.715.90.916...
