What Has Credit Suisse Learned Form Q2 Earnings Season?

Now that Q2 earnings season is drawing to a close, Credit Suisse analyst Lori Calvasina took some time to take a look at the overall results for the quarter up to this point. Calvasina looked at what Q2 earnings season says about the strength of the U.S. economy and the health of the bull market.

Earnings

Now that nearly all of the S&P 500 has reported Credit Suisse has determined that 74 percent of large caps, 71 percent of mid caps and 63 percent of small caps have beaten Q2 earnings expectations. These numbers are slightly stronger than the numbers from Q1.

Sales numbers are a bit weaker in Q2, although still relatively good. According to the report, 51 percent of large caps, 50 percent of mid caps and 54 percent of small caps have beaten consensus sales expectations.

Guidance

Coming into Q2 earnings season, guidance was one of the major concerns. After some initial weakness at the beginning of earnings season, guidance trends have since turned around. In fact, guidance for the S&P 500 is now tracking nearly in-line with Q1 numbers.

Calvasina notes that guidance weakness in Q2 has come from Semis, Energy and Materials, while guidance strength has come from Health Care, Software & Services, REITs and Consumer Services.

Growth Over Value

One of the biggest trends this earnings season has been the performance of growth stocks over value stocks. “While the divergence has been alarming for many investors (particularly those with value oriented investment style), the data does not change our view that a shift from growth back to value may be on the horizon,” Calvasina writes.

She notes that the percent of companies that have beaten EPS expectations in Q2 has improved over Q1 for growth indices but not for value indices.