ab16 February 2024Global Research and Evidence LabUS Equity StrategyEarnings Brief 4Q23: Feb 16Brick and Mortar Retail begins reporting next week in earnest with Walmart and Home Depot on Tuesday. EPS are projected to decline -1.9% for the group; however, trends at HD and LOW are quite poor as elevated mortgage rates weigh on housing. Excluding both, the bottom-line is forecast to grow 4.6%. 83.7% of the S&P 500's market cap has reported. 4Q expectations are for revenues to grow 3.3% and EPS by 9.6%. Growth among groups varies significantly, as shown in the table below (a blend of reported results and consensus estimates for unreported companies): GroupEPS Growth (%)TECH+40.5Financials11.1Non-Cyclical ex Health Care 7.2Industrials & Disc ex Internet Retail5.4Health Care-10.7Energy & Materials-21.3Earnings are beating estimates by 7.2% in aggregate, with 71% of companies topping projections. EPS is on pace for 10.8%, assuming the current beat rate for the rest of this season.Firms beating on both revenues and EPS are outperforming the market by 1.5% vs. a historical average of 1.7%, while ones missing on both are underperforming by -3.7% vs. -3.1%.Over the next 5 trading days, 54 companies representing 9.1% of the S&P 500's market cap will report results, including Home Depot, Walmart, NVIDIA, Synopsys, and Intuit. Figure 1: S&P 500 Price ActionCurrentHistorical Average%%BeatsHits/MissesBeatsHits/MissesBeats1.5-0.60.7Beats1.7-1.40.9Hits/Misses-0.6-3.7-2.1Hits/Misses-0.3-3.1-2.41.1-1.71.1-1.5Revenue Surprises EPS SurprisesRevenue Surprises EPS SurprisesSource: Standard & Poor’s, Refinitiv, FactSet, UBS Note: Surprised calculated based on revenue beat/miss by +/- 0.25%, earnings beat/miss by +/- 1%. Price performance -1 to +1 daysThis 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 13. 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 16 February 2024ab 2US Equity StrategyUBS ResearchS&P 500 Figure 2: 4Q23 Earnings Dashboard – S&P 500Weighted Growth YoY (%)RevenueMarginsEarningsBuybacksEPSS&P 5003.34.78.01.69.6Cyclicals-1.9-7.3-9.22.2-7.0Energy-9.8-15.2-25.03.1-21.8Materials-5.7-14.2-19.90.7-19.2Industrials3.03.36.31.67.9Discretionary ex-Internet Retail1.7-1.8-0.11.71.7TECH+10.228.638.81.740.5Technolog...
