ab23 February 2024Global Research and Evidence LabUS Equity StrategyEarnings Brief 4Q23: Feb 23This week, the last of the largest 6 TECH+ companies—Nvidia—reported results. A review of the data highlights the link between the group's YTD outperformance (13.5% vs 6.7% for S&P 500) and their superior pace of EPS growth in 4Q and 2024. 92.8% of the S&P 500's market cap has reported. 4Q expectations are for revenues to grow 3.4% and EPS by 10.3%. 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+42.0Financials11.1Non-Cyclical ex Health Care 7.8Industrials & Disc ex Internet Retail5.6Health Care-9.8Energy & Materials-21.4Source: UBSEarnings are beating estimates by 7.2% in aggregate, with 70% 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 1.6% vs. a historical average of 1.7%, while ones missing on both are underperforming by -3.5% vs. -3.1%.Over the next 5 trading days, 41 companies representing 5.2% of the S&P 500's market cap will report results, including Berkshire Hathaway, Lowe's Companies, and Salesforce. Figure 1: Largest 6 TECH+ CompaniesReturnSurpriseGrowthNameYTD4Q234Q232024ENvidia58.611.8486.475.5Meta37.57.6202.833.8Amazon14.924.23233.342.4Microsoft9.75.326.316.5Alphabet3.12.956.217.2Apple-4.13.916.07.6Top 6 TECH+13.56.968.224.4S&P 5006.77.210.39.0Source: Standard & Poor’s, Refinitiv, FactSet, UBSNote: Blend of actuals where available and estimatesThis 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 23 February 2024ab 2US Equity StrategyUBS ResearchS&P 500 Figure 2: 4Q23 Earnings Dashboard – S&P 500Weighted Growth YoY (%)RevenueMarginsEarningsBuybacksEPSS&P 5003.45.38.71.610.3Cyclicals-1.9-7.2-9.12.2-6.9Energy-10.0-15.1-25.13.1-22.0Materials-5.2-14.7-19.90.7-19.2Industrials3.23.46.61.68.2Discretionary ex-Internet Retail1.8-1.60.21.71.9TECH+10.529.940.31.742.0Technology7.615.122.70.923.6Internet Retail13.7380.6394.3N.A.426.7Media & Internet16.393.0109.33.0112.3Non-Cyclicals4.3-5.6-1.30.6-0.8Staples2.9...
