ab25 January 2024Global Research and Evidence LabUS Equity StrategyEarnings Brief 4Q23: Jan 254Q 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.21.5% of the S&P 500's market cap has reported. 4Q expectations are for revenues to grow 2.6% and EPS by 4.8%. Growth among groups varies significantly:GroupEPS Growth (%)TECH+33.6Financials9.1Non-Cyclical ex Health Care 5.1Industrials & Disc ex Internet Retail-1.0Health Care-15.4Energy & Materials-27.1Earnings are beating estimates by 5.1% in aggregate, with 75% of companies topping projections. EPS is on pace for 8.9%, assuming the current aggregate beat rate of 5.1% for the rest of this season.Over the next 5 trading days, 99 companies representing 24.9% of S&P 500’s market cap will report results, including Visa, Intel, American Express, Pfizer, Danaher, United Parcel Service, Microsoft, Alphabet, AMD, and Qualcomm. Figure 1: 4Q23 S&P 500 EPS Growth4.8-4.833.69.15.1-1.0-15.4-27.1%TECH+Non-Cyc ex-Health CareIndustrials & DiscretionaryHealth CareFinancialsEnergy & MaterialsS&P 500S&P 500 ex-TECH+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 25 January 2024ab 2US Equity StrategyUBS ResearchS&P 500 Figure 2: 4Q23 Earnings Dashboard – S&P 500Weighted Growth YoY (%)RevenueMarginsEarningsBuybacksEPSS&P 5002.60.73.31.54.8Cyclicals-2.7-12.5-15.22.1-13.1Energy-9.4-21.9-31.32.9-28.5Materials-5.7-17.0-22.70.7-22.0Industrials2.4-3.0-0.71.40.7Discretionary ex-Internet Retail-0.4-4.8-5.21.6-3.6TECH+8.823.232.01.633.6Technology6.310.016.40.917.2Internet Retail11.2298.8310.0N.A.336.9Media & Internet14.383.697.92.9100.8Non-Cyclicals3.6-9.2-5.60.6-4.9Staples2.70.32.90.23.1Health Care4.3-21.1-16.81.4-15.4Utilities8.310.118.4-2.815.6REITs6.5-3.62.8-3.4-0.5Telecos0.4-7.2-6.80.8-6.0Financials4.62.57.11.99.1Source: Standard & Poor’s, Refinitiv, FactSet, UBS Note: Blend of actuals where available and estimatesFigure 3: 4Q23 Surprise Da...
