UBS Equities-US Equity Strategy _Earnings Brief 2Q24 August 15_ Golub-109872206(1)

ab15August2024GlobalResearchandEvidenceLabUSEquityStrategyEarningsBrief2Q24:August15With2Qearningsseasonwindingdown,attentionnaturallyshiftsto3Q.Yesterday,wenotedseveralkeyobservationson3Qforecastsvs.recentquarters:�3QEPSrevisionsarein-linewithhistoricalaverages,butmuchweakerthan2Q.�AnalystsprojectEPSgrowthof5.9%in3Q,buthistoryindicatesresultsmaycomeincloserto8%.�3QEPSgrowthisin-linewithhistoricalaverages,butbroadlyweakerthan2Q.86.5%oftheS&P500'smarketcaphasreported.2Qexpectationsareforrevenuestogrow5.1%andEPSby11.1%.Growthamonggroupsvariessignificantly,asshowninthetablebelow(ablendofconsensusestimatesandreportedresultswhereavailable):GroupEPSGrowth(%)TECH+28.7Financials13.3Utilities13.2Non-Cyclicalsex-Utilities4.3Cyclicals-0.3Source:Standard&Poor’s,Refinitiv,FactSet,UBSEarningsarebeatingestimatesby5.5%inaggregate(vs.ahistoricalaverageof4.8%),with73%ofcompaniestoppingprojections.EPSisonpacefor11.5%,assumingthecurrentbeatratecontinuesthroughtheendofreportingseason.FirmsbeatingonbothrevenuesandEPSaredeliveringamorepositiveresponsethantypical,outperformingthemarketby2.9%vs.ahistoricalaverageof1.7%.Thosemissingonbothareunderperformingby-1.9%vs.-3.1%.Overthenext5tradingdays,17companiesrepresenting3.3%ofS&P500’smarketcapwillreportresults,includingPaloAltoNetworks,Medtronic,Lowes,andTarget.Figure1:PathofBottom-...