Global Markets Strategy09 February 2024J P M O R G A Nwww.jpmorganmarkets.comContentsGlobal Earnings4S&P 500 Estimates and Revisions5S&P 500 Earnings Calendar8S&P 500 Post-Reporting Performance11Appendix: S&P 500 Company Specific Comments (Cont.)12Equity Macro StrategyDubravko Lakos-Bujas AC(1-212) 622-3601dubravko.lakos-bujas@jpmorgan.comKamal Tamboli(1-212) 622-5794kamal.r.tamboli@jpmorgan.comBhupinder Singh(1-212) 622-9812bhupinder.singh@jpmorgan.comNarendra Singh(1-212) 622-0087narendra.x.singh@jpmorgan.comArun Jain(1-212) 622-9454arun.p.jain@jpmorgan.comJ.P. Morgan Securities LLCBeats/Misses. With 65% of S&P 500 companies having reported, 73% are beating 4Q net income expectations (vs. 71% avg. last 4Qs, see Figure 1Sales and Earnings Scorecard (based on curent constituents, botom-up agregation):) and 64% are beating revenue estimates (vs. 64%). Among Mag7 stocks, with 6 out of 7 having reported, 83% are beating on 4Q net income expectations (vs. 75%) and 83% are beating revenue estimates (vs. 79%). For the S&P 500, notable sectors for earnings beats so far this quarter include Healthcare, Staples and Industrials:•Healthcare. With 69% of Healthcare companies having reported, 81% are beating 4Q earnings (vs. 79% avg. last 4Qs) and 89% are beating revenue estimates (vs. 73%). •Staples. With 55% of Staples companies having reported, 81% are beating 4Q earnings (vs. 75% avg. last 4Qs) and 43% are beating revenue estimates (vs. 62%). •Industrials. With 78% of Industrials companies having reported, 80% are beating 4Q earnings (vs. 77% avg. last 4Qs) and 69% are beating revenue estimates (vs. 68%). Surprise/Growth. S&P 500 companies so far have surprised on net income by 5.1% (vs. 2.9% last 4Qs, ex-Financials at 6.3%). For companies that have reported, 4Q revenue growth is 3.9% y/y and net income growth is 6.2% (vs. 6.7% ex-Financials). We expect S&P 500 companies to deliver earnings surprise of ~3% this quarter (see Report). As it relates to the Mag7, earnings surprise was roughly in-line with previous quarters at 6.8% (vs. 7.0% avg last 4Qs). Both sales and earnings growth exceeded the index for this cohort with sales growth of 11.4% and net income growth of 47.9% y/y.EPS Revisions. Since the beginning of the earnings season (i.e., 1/12), 4Q23 EPS have been revised up 4.4% to $56.66 (+7% y/y) with 2023E EPS revised up 2.4% to $224.55 (+3% y/y). Despite 4Q23 EPS coming in a bit stronger so far, 2024 estimates remain largely unchanged since the beginning of the earnings season at $243.12 (+8% y/y). Note, both 1Q24 and 2Q24 have experienced downward revisions of -1.4% and -0.8%, respectively. Performance. Average price performance relative to the market 1D post-earnings has been +0.1% (median performance +0.1%). Overall, earnings beats have been rewarded (avg excess performance: +1.1%) though misses have been faded far more (-2.5%). So far, Communication (+1.5%)...
