ab23 January 2024Global Research and Evidence LabUS Equity StrategyEarnings Brief 4Q23: Jan 234Q 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.11.0% of the S&P 500's market cap has reported. 4Q expectations are for revenues to grow 2.5% and EPS by 4.7%. Growth among groups varies significantly:GroupEPS Growth (%)TECH+33.3Financials9.5Non-Cyclical ex Health Care 5.0Industrials & Disc ex Internet Retail-1.9Health Care-15.3Energy & Materials-27.4Earnings are beating estimates by 6.5% in aggregate, with 80% of companies topping projections. EPS is on pace for 10.5%, assuming the current aggregate beat rate of 6.5% for the rest of this season.Over the next 5 trading days, 80 companies representing 15.2% of S&P 500’s market cap will report results, including Procter & Gamble, RTX, Netflix, Abbott Laboratories, IBM, Tesla, Visa, Intel, American Express, and Pfizer. 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 23 January 2024ab 2US Equity StrategyUBS ResearchS&P 500 Figure 2: 4Q23 Earnings Dashboard – S&P 500Weighted Growth YoY (%)RevenueMarginsEarningsBuybacksEPSS&P 5002.50.73.11.54.7Cyclicals-3.0-12.7-15.72.1-13.7Energy-9.4-22.2-31.52.9-28.7Materials-5.8-17.6-23.40.7-22.7Industrials1.4-3.8-2.41.4-1.0Discretionary ex-Internet Retail-0.5-4.3-4.81.7-3.2TECH+8.823.031.71.633.3Technology6.39.715.90.916.8Internet Retail11.2297.8309.1N.A.335.9Media & Internet14.185.199.22.9102.1Non-Cyclicals3.5-9.1-5.60.6-5.0Staples2.8-0.91.90.22.1Health Care4.2-20.9-16.71.4-15.3Utilities8.210.718.9-2.816.1REITs6.4-3.72.7-3.3-0.6Telecos-1.0-4.7-5.70.8-4.9Financials4.62.97.52.09.5Source: Standard & Poor’s, Refinitiv, FactSet, UBS Note: Blend of actuals where available and estimatesFigure 3: 4Q23 Surprise Dashboard – S&P 500Surprise (%)RptdTotalRevenu...
