ab9 February 2024Global Research and Evidence LabUS Equity StrategyEarnings Brief 4Q23: Feb 09Quarterly analyst projections tend to follow a typical pattern: they begin too optimistically, decline as companies pre-announce, only to be topped by positive surprises. While 4Q EPS revisions are 520 bps weaker than normal, 1Q and 2024 estimates are running 50 and 340 bps above their respective trends.77.1% of the S&P 500's market cap has reported. 4Q expectations are for revenues to grow 3.4% and EPS by 9.1%. 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+39.9Financials10.6Non-Cyclical ex Health Care 6.7Industrials & Disc ex Internet Retail4.0Health Care-10.6Energy & Materials-21.4Earnings are beating estimates by 7.2% in aggregate, with 72% 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 1.7% vs. a historical average of 1.7%, while ones missing on both are underperforming by -4.2% vs. -3.1%.Over the next 5 trading days, 62 companies representing 6.2% of the S&P 500's market cap will report results, including Coca-Cola, Airbnb, Marriott International, Cisco Systems, Kraft Heinz, and Deere. This 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 14. 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 9 February 2024ab 2Figure 1: Path of 2024 Bottom-Up S&P 500 Consensus EPS-6.3-5.1-1.7-8-7-6-5-4-3-2-101JunSepDecMarJunSepDecMar Historical Trend 2024%Source: Standard & Poor’s, Refinitiv, FactSet, UBSUS Equity Strategy 9 February 2024ab 3US Equity StrategyUBS ResearchS&P 500 Figure 2: 4Q23 Earnings Dashboard – S&P 500Weighted Growth YoY (%)RevenueMarginsEarningsBuybacksEPSS&P 5003.44.17.51.69.1Cyclicals-2.0-7.9-10.02.2-7.7Energy-9.9-14.9-24.83.2-21.7Materials-5.9-15.2-21.10.7-20.4Industrials2.92.35.21.56.8Discretionary ex-Internet Retail1.7-3.4-1.61.70.1TECH+10.128.138.21.739.9Technology7.113.220.30.921.2Internet Retail13.6375.1388.7N.A.420.7Media & Internet16.393.0109.33.0112.3Non-Cyclicals4.5-6.9-2.40.6-1.8Staples2.62.14.70.24.9Health Care7.0-19.1-12.11.4-...
