Earnings Update and HighlightsMay 13, 2014
In the Asia-Pacific region, about two-thirds of companies have reported Q1 earnings. Of those companies, about 57% have surprised on the upside, versus just 42% that have disappointed expectations. The Health Care sector has generated positive surprises in 85% of its earnings releases so far. With nearly all of the companies in the Information Technology sector having reported results, the number of constituents in the sector with positive growth in earnings is more than twice the number with negative earnings growth.
With just over half of the companies in the MSCI Europe index having reported Q1 earnings thus far, the majority of results have been neutral (~3.5%) to positive (~52.5%). The Information Technology sector has generated the greatest number of positive surprises while the Energy sector has surprised by the widest margin on the upside. While growth in earnings has been positive for more Industrials, it has been below expectations and has so far resulted in the most negative surprises for any sector. The Consumer Staples sector has seen the largest positive price impact as a result of generally better than expected results.
Turning to the North American region, where nearly 90% of the constituents have reported earnings, we find the largest percentage of positive surprises (68.5%) of any MSCI World region, led by the Information Technology sector. Companies with positive earnings growth outnumber those with earnings declines by nearly five-to-one in the Utilities sector; conversely, more than half of the companies in the Materials sector reported negative earnings trends. In spite of 77% of the Health Care sector companies having beaten estimates, the impact on share prices has mostly been negative.