Make Or Break Week For Q4 Earnings Season

 | Jan 25, 2015 12:19AM ET

The picture emerging from the 2014 Q4 earnings season at this stage is one of weakness, with earnings and revenue growth rates tracking below levels that we have been seeing in other recent periods. Weak results from the Finance sector has been a big drag on the aggregate picture at this stage and the growth rates improve once Finance is excluded from the aggregate numbers. But aside from high proportion of companies beating EPS estimates, the results thus far don’t compare favorably to the recent past, whether looked at with or without the Finance sector.


The reporting cycle really accelerates this week, with almost 500 companies coming out with Q4 results, including 136 S&P 500 members. This week’s line-up packs plenty of leaders from all the key sectors, ranging from Google (NASDAQ:GOOGL) and Facebook (NASDAQ:FB) to Caterpillar (NYSE:CAT), Dupont (NYSE:DFT) and much more in between. As such, it may not be unfair to characterize this week as a make or break week for the Q4 earnings season. This week will either fully confirm the weak start we have had thus far or turn it around in the opposite direction. But the trends established this week will carry through the rest of this reporting cycle with only minor changes.

The Q4 Scorecard (as of 1/23/2015)

We have seen Q4 results from 91 S&P 500 members that combined account for 25.5% of the index’s total market capitalization. Total earnings for these companies are up +3.2% from the same period last year, with 73.6% beating EPS estimates. Total revenues are up +2.1% from the same period last year and 50.5% of them are coming ahead with top-line estimates.

The table below shows the current scorecard for the S&P 500 index